|
Hi Heather,
My name’s Wendie. I am a support worker and earn about £1,600. I struggle to make savings due to all my commitments but I desire to start no matter how small. Please advise. 
Thanks for this question Wendie…rather than talking about all the different ways you can save, I thought I would tackle your question by talking about 9 of the top mistakes that people make with money. Also, you haven’t given me any extra detail about your life like your marital status, age and whether or not you have kids so some of these things may not apply to you.
So, what are 9 of the most common mistakes people make with money? 1. Not believing you can achieve financial independence If you don’t believe, you don’t bother. If you don’t bother you’re less likely to achieve. Wealth is very rarely ever an accident and when it is an accident, like when you win the lottery without having pre-planned how that money will be spent, you usually lose it. According to cnbc.com, “Lottery winners are more likely to declare bankruptcy within three to five years than the average American.” This result is not going to be very different for the average Briton. Easy come, easy go, as they say. 2. Not thinking about money You don’t want to overdo thinking about money but it is important to think about it at least a few times a year to make sure you don’t get to retirement age and realise you’re done working or worse, that your body’s done working but you don’t have the resources to stop working. 3. Not talking about money or at least reading about money A LOT of the things I have learnt about money come from people I just chat with and even more from reading random books on money. I have had tips shared with me on what to invest in, what to read, how to save money and so on. And, if you want something to read that will inspire you I’d recommend to classics: The Richest Man in Babylon by George Clason and The Millionaire Next Door by Thomas Stanley and William Danko – I read both of those within a couple of years of graduating from university (15 years ago this year) and I still inspired by those books today. 4. Not getting a will If you have anyone that depends on you to survive, you need a will, period. This is especially important if you have children under 18 and amplified if you’re not married but in a relationship, possibly to a man that isn’t the father of your children. 5. Not getting life insurance Again, if you have anyone that depends on you to survive, you need life insurance, period. I went onto moneysupermarket.com to work out the cost of £250,000 of level term insurance for 25 years for a 40 year old healthy but overweight support worker. The cost was only £19 from a reputable insurer like AIG. 6. Not getting critical illness cover on your main home The most shocking thing about getting seriously ill is that absolutely no one ever expects it to be them, no one. That’s why it’s a good idea to have it. Most people get enough to cover the cost of paying their home off if they get critically ill and to keep the price low they get decreasing term cover. With this type of cover the amount of insurance money you get falls over time just as your mortgage would. It makes the cover more affordable. 7. Not tackling debt Debt increases your risk of ruin. Risk of ruin is a concept from the fields of gambling, insurance, and finance and it relates to the likelihood that someone will lose all of their investment capital. For general life, I use risk of ruin to mean that you end up in extreme financial problems. A few financial setbacks can lead to you not having the money to pay of bills, credit cards and loans and the more debts you have, the higher the chance that even small setbacks will send your financial life tumbling. If you have debts, it’s a good idea to get rid of them and never get back into debt again. If you can avoid credit cards, your chances of accumulating debt will fall. Although credit cards can build up points, travel miles, the fact is, the biggest thing that they build up is long-term, excruciatingly expensive debt. They’re debt traps. They can catch out even the smartest of people and they often do. 8. Not buying a home I think this is the biggest mistake you can make. Rent or mortgage payments are typically people’s largest expense. If you can wipe this cost away then you need so much less money to live in old age or whenever you’ve wiped the mortgage off. 9. Not investing in your self Investing in your self is about getting the qualifications and the type of experience that will lead to higher paid opportunities. If you think you don’t have the money to pay for education looks into grants. I decided to check out the cost of taking a degree course at the Open University and it looks like a degree taken part-time over 6 years would cost about £6,000 in total over those 6 years (that’s about 1,000 a year) which is 5 times cheaper than the £28,000 that students now pay for a three-year degree from a regular university. If your personal income is £25,000 or less, or you’re on certain benefits, you could qualify for the Part-Time Fee Grant and funding to cover 100% of your course fees. Definitely look into how you can improve your CV to move up the food chain in the job market. Last but not least, I decided to look into what Support Workers earn to see what a career path in Support Work could look like. In one google search I found the following Support worker salary statistics on adzuna.co.uk. These were the live stats on 1 February 2020 from Adzuna’s database of over 1 million job ads.
The salary varied a lot from area to area: The average in Newbury was £28,500 based on 67 jobs and the average in Caerphilly County was £54,000 based on 51 jobs – have you thought about moving areas? This is a huge difference in earnings, it’s the difference between struggling to pay off debt and saving well. Go to adzuna’s salary stats centre and study your profession. [link in blog] 1. Not believing you can achieve financial independence 2. Not thinking about money 3. Not talking about money or at least reading about money 4. Not getting a will 5. Not getting life insurance 6. Not getting critical illness cover on your main home 7. Not tackling debt 8. Not buying a home 9. Not investing in your self Hope this helps, Wendie. Good luck hitting your saving goals Have a money question for me?
If you have any personal finance questions send them to [ME] – I will answer whatever piques my fancy via a blog post.
0 Comments
|
Heather on WealthI enjoy helping people think through their personal finances and blog about that here. Join my personal finance community at The Money Spot™. Categories
All
Archives
September 2023
|
RSS Feed
Heather Katsonga-Woodward, a massive personal finance fanatic.
** All views expressed are my own and not those of any employer, past or present. ** Please get professional advice before re-arranging your personal finances.