Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
8 Money Questions You Should Know the Answers To
Jennifer Birtles
21st Feb 2024
At MoneyMagpie, we’re always receiving loads of money questions and queries from our readers! We love being able to help you out with all your finance-related worries.
To truly understand the amount you might need to live off interest and maintain your lifestyle, you can think about it like this: if you’re aiming to live comfortably without touching your principal investment, you’ll need $1,282,467. This estimate provides a gauge for planning financial stability through passive income. Now’s the time to ask yourself key financial questions and align them with this long-term goal.
We’ve compiled a list of key money questions you should know the answers to. It covers things from dealing with debt to investing in the stock market. We’ve got you covered with a range of tips and starting points to help you become more financially stable.
Here’s the 8 money questions to ask yourself!
- Do I Spend More Than I Earn?
- What is My Credit Card Balance?
- How Much Debt Do I Have?
- Am I Paying More For Anything Than I Need to Be?
- What Happens to a Mortgage If You Split?
- Should I be Investing on the Stock Market?
- Is Paying for a Warranty Worth It?
- More Money Questions
Am I Financially Prepared for an Emergency?
If 2023 has taught us anything it’s the importance of being prepared for an emergency! It’s hard to know exactly what you will need until the time comes, but 3 – 6 months of necessary spending is a good guide. You need the money to be in an easily accessible savings account, ready for when you need it.
However, it’s a fine line between having enough and putting too much in there. Interest rates on savings accounts are shockingly low at the moment. In fact, interest rates are lower than the rate of inflation, so if you over-inflate your emergency fund, your money will slowly be losing value instead.
As well as having an emergency fund, do you have an asset you could borrow against if you had to? It’s not always as an ideal solution, but it can save you from the larger cost of getting a personal loan or using high-interest credit cards.
Do I Spend More Than I Earn?
You may think you don’t, but there are a shocking number of Brits who regularly spend more than they earn. According to research by the Office for National Statistics, on average each UK household spent £900 more than they received in income in 2017 alone. The problem for many people is that they’re simply unaware of how much they’re spending!
Due to cards and contactless, it is so easy to lose track of how much you’ve spent. The best way is to create a regular habit of checking your bank statements and monitoring where your money goes. Take some time to sit down with your accounts and face reality. How much do you actually earn? Once all your living costs have been taken out, how much do you have left? Create a budget and stick to it! Your finances dictate the lifestyle you can afford to have, not the other way around.
what is My credit card balance? (and what are the interest rates on it?)
Credit cards are great when they’re used properly, but they have made it far too easy for us to overspend without a second thought! Only purchase something on a credit card if you know you’ll have the funds at the end of the month to pay it off. However, life sometimes does throw surprises our way. There may be a month when, for some reason, you might not be able to pay the balance off in full. In preparation for this, make sure you’re aware of your credit card interest rates, how much it’ll cost you, and always use the card with the lowest APR if you might not be able to pay the full sum.
Remember to monitor you balance carefully to make sure you’re staying on top of payments. Find out more on how to use credit cards to build your credit score here.
how much debt do I have? And How to Pay It Off
Debt can be overwhelming and if you don’t stay on top of it it can easily spiral. When asked, a lot of people tend to underestimate how much debt they really have by 25%. UK citizens actually owed £1.6 billion in debt at the end of January 2020. While the average debt total (including mortgages) per adult was £31,845, higher than the average annual income.
Prioritise your debts by paying off the ones with the highest interest rates first, or think about applying for a debt consolidation loan. Check out our article How to Stop Debt Overwhelming You for more information, and see what MoneyMagpie founder, Jasmine, has to say about paying off debt below:
Am I Paying More For Anything Than I Need to Be?
Recurring expenses are something that we don’t think about often. They just come out of our account automatically without us ever paying much real attention to them. Meaning plenty of us are left paying for products and subscriptions long after we still need them, simply because we forget to cancel.
Go through your accounts carefully and question every expense. If you’re not using something anymore, or not using it enough – cancel! You’ll obviously still have things you’ll need to continue paying for, like insurance. But it’s always worth negotiating with your provider to try and get a better deal. Never simply auto renew a policy – you can almost always get it cheaper.
What Happens to a Mortgage If You Split?
Sadly, many people who do get mortgages together, whether friends or partners, do end up going separate ways. Knowing your options in advance can help you to prepare for the worst case scenario, as managing a mortgage in a break up is no small feat.
The key thing to remember is you’re both liable for all repayments. A mortgage provider doesn’t care about your personal life, so just because your partner is no longer paying their share it doesn’t mean they’ll let you only pay half. If you fall behind on repayments it will negatively impact both your credit scores.
The options you have are:
- Sell the house – Pay off whatever remains of your mortgage and split the rest of the money. If you’re in negative equity (when the value of your house falls below your mortgage balance), then you’ll have to divide the outstanding debt between you.
- Buy the other partner out – If you can afford to, one of you could buy out the other. However, you will have to prove to your lender that you can afford to continue the repayments on your own.
- Keep a stake in the property – Buying a proportion of your partner’s stake is an option if you can’t afford to buy their whole share. This way, one of you would own most of the property but the other could keep a stake in the home. They’d also be entitled to a percentage of the value if the house is sold at a later date.
Find out more about how to handle this situation in the video below:
Check out How to Prepare for a Post-Lockdown Divorce for more details, too.
Should I be Investing on the Stock Market?
This is one of the money questions we hear a lot, and the simple answer is yes. Everyone who can afford to do so should be investing – even if it’s just £10 a month. Really, investing is the best way to save for the long term. Interest rates on savings accounts are shockingly low so investing is the only real way to see a return on your money.
To a beginner, the stock market can seem overwhelming and rather daunting. How do you get started, or even know what to do? Read 7 Investment Tips for Stock Market Beginners for all the help you’ll need on making the first step.
Is Paying for a Warranty Worth it?
You’ve bought something nice and new and you want to protect it – that’s completely fair. The trouble is, a lot of warranties don’t actually give you that much for your money. In some cases you might get a couple of extra years, but we’ve found cases where an extended warranty cost over half the price of the product itself. And you may never end up using the warranty!
Instead, if you have contents insurance, check whether your items will be covered on that policy. What’s the excess? It’s often cheaper than the cost of a warranty. It’s always worthwhile checking as there’s no point paying to cover the same thing twice.
Also, if you are considering paying extra for a warranty check with the manufacturer and retailer first. Many manufacturers guarantee their products for a minimum of 12 months, with some up to 2 or 3 years and plenty of retailers often have their own guarantees as well.
Jasmine tells you what she thinks about paying for warranties in the video below.
Read Your Rights with Guarantees and Warranties – What You Need to Know for more advice.
More Money Questions
If you have even more money questions, why not head over to our messageboards where you can ask away and also find plenty of help from fellow readers.
Or check out one of our detailed articles answering different questions below:
- Do You Need Income Protection Insurance?
- Should You Invest in Penny Shares?
- Should I Save or Pay Off Debt? How to Decide
- Are Consolidation Loans Worth It?
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.
Very useful videos. You provide answers to questions everyone faces every day. I would also be interested to hear more about cheaper international money transfers. So far I am using options like Paysera or Transferwise and they are relatively cheap. Would love to have more information for comparison.
The nature of your transfer will often dictate what you are looking for and, ultimately, the company you choose. Service, exchange rate, transfer fee, speed of delivery, the currency you are buying and security of funds are the key criteria to consider. For example, if you are making a larger transfer, perhaps to buy a property overseas, you may find talking through your requirement with an expert invaluable. Timing the currency transfer is a key part of the money saving solution such specialists deliver after all. Others may prefer the speed and automation of an online trading platform. Some companies,… Read more »
Dear Jasmine,
What papers do I need to open a GBP bank account in UK as a Greek citizen?
Well, it rather depends on whether you are going to be living here full-time or not. The BBA (British Bankers Association) says: “If new to the UK, requirements might differ slightly by firm but typically – Proof of address UK – letter of introduction from employer or tenancy agreement – Proof of address home country – will typically want a bank statement or ID card This assumes they will be a UK resident. A lot of banks will not offer Non Resident GBP accounts for through the main branch network, but available through international or Wealth banking divisions subject to… Read more »
Can you suggest any good alternatives to eBay? I try and buy stuff to sell on eBay for a profit, but once I’ve paid postage and fees there’s barely anything left.
Yes, I know what you mean – eBay has got a lot more expensive recently. Mind you, do look out for the times when they offer free postings (often around holiday times) and make the most of those. There is also eBid which is much cheaper and Preloved.com which has loads of stuff for sale. IF it’s large things like furniture or electrical goods, try Gumtree.com in your local area. There are also marketplace sections on Amazon where you can sell your version of things…it’s particularly popular for books but isn’t confined to those. We mention a few of these… Read more »
mMany years agoI worked abroad briefly in an EU country. I have been told I may qualify for some pension.How can I find out?
It’s fairly straightforward. Scott Harrison, Chartered Financial Planner and Director at Prydis Wealth, says that you should fill in a BR19 form, available online. You will get a response detailing the state pension that you are entitled to.
Handy!
I know that if you buy stuff to sell, it has to be declared to hmrc, but I wondered, is cashback income taxable (quidco, topcashback etc)?
Well, Alexandra, my feeling is that it’s so small it’s not worth taking notice of, but I thought I would check with accountant Oscar Ip in Liverpool (www.oscarip.co.uk).
Thai is what he says: “Technically, income from cashback websites are commission to shop at online stores. If this income is received above your personal allowance from your main income, then it is liable for tax. In practice, the amounts are usually relative small and not received in regular intervals, it is unlikely HMRC is going to ask you for tax.”
Considering the likelihood of winning, is spending money on Premium Bonds a reasonable way of getting a decent return
Personally, I don’t think so. I’ve never been much of a fan of Premium Bonds. The average return has traditionally been around the same as basic savings accounts, even taking into account the tax saving. They became even more popular after the credit crunch so that is likely to bring the odds down further. I tend to say to people that if they are the sort that would normally gamble in other ways (horses, online betting etc) then it’s better to put the money into Premium Bonds – at least you’re not going to lose the original pot of cash… Read more »
If you bring friends in to house-share and split bills on a property you own, are you still subject to paying tax if you go over the threshold even though no formal contract exists and the arrangement is to cover household costs rather than for profit?
Ooh interesting question Arabella. I have asked Joe Sword at Nordens.co.uk and he says this: “When you are renting part of your home, you should consider whether rent a room relief will apply The scheme lets you earn up to £4,250 per year (the threshold) tax-free from letting out furnished accommodation in your home. You halve this if you share the income with your partner or someone else. You are able to let out a room or an entire floor. How it works The tax exemption is automatic if you earn less than the threshold. So you don’t need to… Read more »
What’s the best way to save for your children’s future?
Personally I think it’s best to split the money you invest for your children’s future into long-term and very long-term investments. Firstly I suggest you put some money each year into a pension for your child. Yes, it sounds weird but you can now set up a pension for your child as soon as it’s born! See our article here about pensions for babies https://www.moneymagpie.com/article/pensions-for-babies. Essentially you (and other members of the family) can put up to £2,880 a year into your child’s pension and the government adds in the tax you would have paid on it. The great thing… Read more »