Choose the situation most like yours, watch the interview, then read our expert’s response.
Ally, Sue and their daughters, Swindon.
Ally: Hi my name’s Ally. This is my wife Sue, sitting on my knee is my daughter Victoria and over to my left my daughter Aeron. We’ve lived in Swindon now for about five years. I have two daughters, they both go to local schools and at the moment, we’re sort of quite comfortable with life really, financially. Although, along with a lot of people, I think we have a lot of concerns as to where things are going and our financial commitments really.
[Family at home playing Monopoly, dad says ‘Oh, I owe you some money do I?’]
Ally: Every day seems to be ‘how many jobs have been lost’, ‘another institution has cut 1,000 jobs’- that is a major worry, it really is.
Sue: I work at the Great Western Hospital in Swindon which is the main district hospital and I’m the medical secretary.
Ally: I work for Stan James the sports book-maker at the moment and things seem fine but you never know what’s going to turn up the next day when you see an institution like Woolworths going down then you wonder, could it happen to your own company, which is a worry.
Sue: We have to be careful. We haven’t go as much excess money as we used to have with rising utility bills, food prices, so you have to watch what type of food you’re buying. You want to provide healthy meals for your family but with the rise in costs on some food products that’s harder. Well, we’re fine from day-to-day, month-to-month, but for those extras, they’re just on hold at the minute.
Ally: Our mortgage is with Cheltenham & Gloucester in eventuality that I was going to lose my job, that’s why we took out a mortgage protection policy. We pay a premium of approximately £30 a month which in the event of me losing my job, would pay us approximately £1,100 a month.
Sue: You can’t risk losing your home in this insecurity. You need to insure and safeguard your home and your family.
Ally: I think one positive really that’s come out of it all is that it’s made us so much more careful with out money and made us more cautious with how we’re spending it, you know with car insurance, utility bills, that sort of thing, actually reduced my annual premium, both my annual premiums, by about £100. [To Sue] Yours was about £50 wasn’t it? So it does pay to do that and it’s something we never used to do but nowadays I think you have to really.
Ally: We’ve really become more financially astute (?) I suppose you could say.
Even though their family is financially secure at the moment, Ally and Sue aren’t complacent.
Their main concern in the current climate is his job and the impact on their family if he lost it. Nowadays they’re much more careful with their spending too – in fact, they think this is one of the good things to come out of the credit crunch.
Ally and his family are comfortable at the moment and don’t have any immediate concerns. They are aware that times are changing and that they have to keep a close eye on their finances. Dependant on their circumstances, taking out an income protection plan maybe a sensible option as for a fixed monthly fee they have peace of mind that the bills will be paid should Ally be out of work in the future.
One thing that Ally could check is the benefits that he and his wife can claim from their employers. There are many examples where employers can offer benefits that can help when insurance matters such as life cover. Making such provision in uncertain times is always prudent and there are many ways this can be done.
Ally and his family have recognised the benefits of shopping around for things like car insurance and utility bills, something we can all look into.
One thing that Ally might consider if he hasn’t already is to set up direct debits and standing orders for those regular bills he knows he needs to pay. Arranging these for a date just after salaries are received into his main account is a quick and easy way to ensure the bills are paid on time and you know how much is left each month.
Having a regular savings plan is also a very good idea for someone in Ally’s situation. You never know when those extra funds will come in handy. It’s important to maximise your returns on any savings you do have, firstly by maximising your tax free savings allowance in ISA accounts, then looking at other savings methods such as fixed rate savings accounts.
The single professional
Adam the IT Manager, Croydon.
Hello, I’m Adam. I’m 22 from south-west London and I’m an IT Network Manager. I work at a school in south-west London; I’m running the IT systems, phone systems and security systems there. At the moment, my job is quite secure; I feel quite happy where I am although in the long term I’d like to move into the Private Sector but the way jobs are at the moment it means holding on to the job I’ve got now where I know its safe, until I can start looking again.
I’d say I’m stable. I’ve got no loans. My credit card is always paid off at the end of the month. I’d like to think of myself as quite wise with money, although wants do take over at times. Being a technical person, I like to buy all the latest gadgets that are coming out; the latest phones, the latest computers, the latest software. I’ve just gone out and bought a new car. Financially, I didn’t have the money but it was a want and before I knew it, I was signing the paperwork over for it. Although I do love my car, financially it wasn’t viable.
I don’t think I’d make the decision again to buy the car. The recession is affecting my spending habits. I’m after a flat-screen TV at the moment; I know they’re really really cheap- do I need it? Not really.
Its very frustrating seeing that electrical goods – very cheap – but as I don’t need it, I won’t buy it.
My family and friends all use Lloyds – I’ve been with Lloyds a couple of years now. Went online the other night – when I’m normally chatting to my friends I often log on to the Lloyds TSB website and have a look at some of my current finances. I feel a lot more secure in my self if I know how much money I’ve got at hand.
I’m currently living with my parents; ideally I’d like to move out at some point this year, depending on what happens with the market of house prices. Realistically, now I’m looking at the way the market is, it doesn’t look like I’ll be able to get a place this year. I mean, it looks like 2010 before I can actually afford to get a place but we’ll see how that goes and hopefully if I’m lucky I can get a mortgage and if I can’t, it just means another year with the parents.
Adam, 22, says he’s glad he works in the public sector as he thinks his job is more likely to be secure.
Although currently living with his parents, he’s hoping to buy his first home in the next year or so. He’s pretty sensible with money, although he wishes he hadn’t splashed out on a brand new car last year. At least he doesn’t have any debts, and he’s managed to resist the temptation of purchases like a flat screen TV because he knows it isn’t really necessary.
The single professional.
Adam currently has a secure job and can meet his outgoings but like many people he has concerns about the future. Having recently bought a car he recognises that this was a bit of an impulse purchase but is happy enough that he can meet the payments.
Adam has been looking at getting onto the property ladder but feels that now is not ideal. He is very good at managing his day to day expenses and recognises that his personal situation may not allow him to make those purchases he could have made in the past.
One thing that’s clear from Adam’s situation is the need to clearly think through what his future may hold. He’s done the right thing by not over extending himself and only taking on a debt he can afford, but had he not purchased a car he may be in a better position with his current goal of buying his first property.
Adam says he does worry about the future and how that would affect him. He regularly monitors his banking and knows where he is with his finances. This is a good position to be in, but he still may have questions he’d like answered. This is where a financial review could help. There are many sources of help and information available, one of which is your local branch.
Two things Adam should consider for his short term future is maximising the return he is getting on his savings by using any tax free allowance he has in the form of an ISA. Then looking at the protection he has in place for his current debts. Should the worst happen and Adam lose his job, making sure he has provision to continue making debt repayment is very important, especially when it’s for something as important as your main transport. A factor that could be vital to gaining future employment should he need to.
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