Let’s Talk Money

Money, money, money….It’s not very British discussing sterling is it but as you know, it’s an area I’m completely transparent about here.

That’s why I was excited that this week the Money Advice Service has launched Talk Money Week is a new public awareness week from the Money Advice Service designed to help encourage people to have more open conversations about money.

I want us ALL to feel empowered when it comes to cash whether that’s making a saving or creating your dream career online, and during Talk Money Week, the Money Advice Service and their partners are encouraging we Brits to sit down with our friends, loved ones and family to speak about personal finances.

Talk Money Week is designed to increase financial well-being among Brits by encouraging us to discuss personal finance issues including savings, debt, using credit, financial education and retirement.

I’m going to cover two key areas below when it comes to finance, educating our kids on money management and retirement plans for self employed people, like myself.

 

EDUCATING KIDS ON MONEY

Take your kids shopping

From a young age, my kids accompanied me to the shops and supermarket and would follow a visual, and later, a written list to discover which items we needed and the prices, comparing products side by side. I would show them how to find bargains and the difference in price. Now aged 8 and 6, I often give them each a budget of £5 for fruit and veg so they feel they have some autonomy over managing money and making purchases. It’s never too late to get your children involved in buying, and it’s helped them save, and spend smartly when it comes to pocket money which leads me to the next tip…

Reward extra chores

My kids do standard chores without payment i.e: clearing and wiping the table, tidying away their toys, putting their clothes away, running a bath and making their beds but they also have the opportunity to do extra chores in return for a weekly allowance. These include cleaning the car, vacuuming, helping me cook, cleaning the bath, dusting, folding clothes and Oliver helps his brother with his homework. This teaches children the value of money and the reward in earning when you work hard. Consider opening up a bank account for your children too so they can save their money and get used to seeing statements and making trips to the bank.

Talk to them about money

Talk candidly about money. I explained my job to my kids early on with ‘Mummy is working now’ and I constantly explain how money I earn from writing and making videos allows me to buy food, pay our bills and allows us to enjoy ourselves with entertainment and days out. A visit to Kidzania where children have the opportunity to try out jobs and earn pretend money was a fruitful exercise in learning about money too.

 

PENSIONS FOR FREELANCERS/ THE SELF EMPLOYED:

Saving for a pension can feel harder for we freelancers and self-employed peeps than those who are employed, as there’s no one to advise us on the best pension scheme and equally there are no employer contributions either. Add to that uncertain and irregular income patterns and cash flow issues and making preparations for pensions can be a pain.  

I read up about pension funds on the brilliantly useful The Money Advice Service site and I’ve since committed to setting one up after swatting up on the benefits. I hope this inspires you too.

First-off, although you’re entitled to a flat-rate State Pension (as of April 2016) based on your NI record, for the tax year 2018-19 it’s only a £164.34 a week so that’s unlikely to stretch far when you stop working. Do note, if you worked for someone else rather than yourself in the past, you might have built up entitlement to additional State Pension under the old system and get more than this so check that out) so do your research and start making a plan.

According to the Money Advice Service, a whopping 45% of self-employed people between 35 and 55 have no private pension. When it comes to pensions, most freelancers/ the self employed opt for personal pensions for their pension savings as these allow you to choose where you want contributions invested from a range of funds offered by the provider.

The provider will claim tax relief at the basic rate of tax on your behalf and then add it to your pension savings.

The amount you receive back depends on how much is paid in, how well your savings perform, and the level of charges you pay too hence asking all the right questions, comparing pension schemes and considering external advice from regulated financial adviser.

There are three types of personal pension:

• Ordinary personal pensions – offered by most providers
• Stakeholder pensions – where the maximum charge is capped at 1.5% and you can stop and start premiums without penalty.
• Self-invested personal pensions – a huge scope of investment options, but usually higher charges.

Alternatively, self-employed people/freelancer can use NEST (National Employment Savings Trust) which is the workplace pension scheme created by the government for automatic enrolment. It’s run as a trust by the NEST Corporation which means there are no shareholders or owners and it’s run for the benefit of its members. While primarily for those employed some self-employed people can potentially opt to save with them.

You can find out if you’re eligible to save with NEST here.

All different schemes have their pros and cons of course, so do seriously consider enlisting the advice of a regulated financial adviser who can make suggestions to you based on your own personal circumstances and needs. An adviser will scope the whole market for you too, which can be pretty baffling and time consuming without specific expertise in that field.

The additional benefit of taking regulated financial advice is that you’re protected if the product purchased becomes unsuitable or the provider folds.

Money Advice Service says, ‘You can save as much as you like towards your pension each year, but there’s a limit on the amount that will get tax relief. The maximum amount of pension savings benefiting from tax relief each year is called the annual allowance. The annual allowance for 2018-19 is £40,000 (or 100% of your earnings for the year if less). If you go over £40,000, you won’t get tax relief on further pension savings. You can usually carry forward unused annual allowance from the previous three years’.

I know it might seem like years away but 1999 only feels like yesterday to me and it was almost 20 years ago!!!!

Please leave any thoughts and questions in the comments as I’d love to hear from you.

Talk Money Week is being held from 12-18 November and will include events and activations across the UK designed to help people have more open conversations about money.

Find out more here: https://fincap.org.uk/en/articles/talk-money-week

Please leave any thoughts and questions in the comments as I’d love to hear from you.

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