A money journalist’s personal finance revolution: Part 1
It would be a fair assumption that, because I write about finance, my own finances are in tip-top shape: I am fully prepared for the future, do not indulge in reckless spending, and only put my money in the most sensible investments. This isn’t quite true. In fact, I’m not sure it’s true at all. While not quite a poster child for financial indiscipline, I definitely need to shape up. So this is the year of my personal (small) financial revolution.
It seems that my all-round slack attitude to tidiness also extends to my finances. Indeed, the two seem to be intertwined: I found £8 in the bottom of my handbag and another £35 in the pockets of my jeans. This might not change my financial fortunes overnight, but it is a clue perhaps that I’m not as careful as I should be.
But can I really do anything with £43? Not quite, but most ISA savings accounts start at £50 per quarter. I have an account that I started 10 years ago with Witan, a large global investment trust that has performed pretty well over time. I have paid in £50 every three months and have barely noticed it leaving my account. It’s now worth over £4,000. Not life-changing, but undoubtedly worth having in the event of leaky roof, defunct boiler or sick cat.
If I’ve raised £43 through a literal ‘tidy up’, there should also be a metaphorical tidy up. I need to take a long hard look at my bank statements and check that no-one was receiving my money that shouldn’t be. Step up, insurance to Carphone Warehouse for a long-defunct phone, or – yes, this is actually true – house insurance for a house I no longer inhabit.
Those can go straightaway, but other things bother me more: Pet insurance. Arguably, the best answer to a sick cat and something I’ve always used, but our decrepit cat is now costing us £70 per month. Might we not just be better saving the money and paying it out when something happens? I know I’m going to regret saying this, but how could he possibly need anything that costs £840 a year? The trouble is, no-one wants to be the idiot who gives up the cat insurance the day before the cat gets some dreaded cat pox, only treatable with a vastly expensive pill. One to ponder…
The second one is the vegetable delivery. Yes, it’s only £30 a month, but how long am I going to pretend that I like vegetables? How often can I de-goop the fridge from icky vegetable goo from all the vegetables I haven’t eaten? I need to be strong. It goes.
Finally, I think if I’m going to make a real commitment to this financial improvement stuff. I have to give up something I like. Unfortunately, this means a long, hard look at my clothing budget. I realised this was out of control when I found a year-old unworn pair of trousers that I’d bought, hung up and forgotten about. I make no firm commitments, just a promise to ‘cut back’.
From this exercise – without the cat insurance – I reckon I’ve raised about £100 per month. This is certainly enough to start saving into a stocks and shares Isa. I could do an in-depth exercise to pick a platform to start my investment, but I go with the easy option and set myself up on Hargreaves Lansdown. There are undoubtedly cheaper platforms and were I particularly canny I would try and work out all the charges to see which suits me best. But I’m not, so I don’t.
But what to invest in? I don’t want cash, because it pays nothing. I don’t want bonds because they also pay nothing, so I opt for a nice bog standard equity income fund on the basis that if I save for long enough, it might pay me a nice, tax-free income of around 4-5% per year. Again, I could be very technical in picking the right fund, but I look down the Hargreaves Lansdown recommended ‘Wealth 150’ list and pick one called the Marlborough Multi-cap Income, which invests across all different types of company, big and small, in pursuit of capital growth and income. Let’s see if it makes my fortune. Or at least pays for the cat.
Find out how Cherry’s financial revolution goes in her next instalment, coming soon.
Cherry Reynard is a freelance journalist