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.
i have a large inheritance due is it worth paying off mortgage and bills with it or leave it in the bank
Definitely not in the bank! There is terrible interest there.
Yes, certainly pay off debts first if you have them. Then it’s probably a good idea to pay off at least some of your mortgage, if not all. It depends on what the interest rate is, but it’s certainly a nice safe investment.
If you have money left over then put some into a stocks and shares ISA and/or a pension product to build up wealth for yourself later on.
How can i improve my credit rating?
There are lots of ways to do this. Check out our article here https://www.moneymagpie.com/article/10-easy-ways-to-improve-your-credit-record on 10 easy ways to improve your credit rating.
It includes taking out an expensive credit card and making sure that you pay off the (small) bill every month for a few months; making sure you’re on the electoral roll and also seeing if you can put an explanation on your credit report if there is something wrong on it.
My nephew has got into lots of debt as he’s out of work & back living with his Mum after a split with his partner. His Mum has helped him out as much as she can but just can’t see a way forward. My Dad said he should declare himself bankrupt, do you have any advice that may help
It’s quite possible that he may have to go bankrupt, but it really depends on his circumstances
It’s certainly not right that his mum should keep paying for him.
I think the best thing for him to do is to go, RIGHT AWAY, to one of the debt charities and get their help and advice.
He can go to StepChange.org, or Nationaldebtline.co.uk or his local Citizens Advice centre. They are all really good at helping with debt problems so he should go to one of those as soon as possible.
I have taken early retirement and have a small pension. However, I now have a full time job paying into a different pension scheme. Under the new pension rules what is the best way to manage my pension(s) and what should I beware of?
Hmm, that’s an interesting situation Isabell. I have asked Andy James of Towry to give his view on this. He says: “It is not clear whether your existing pension is a defined benefit (final salary) or defined contribution (money purchase), neither can I be sure how you are taking benefits. However, if you are able to turn off income from the pension, you may wish to consider doing this if you are currently paying more tax than you need to. You can then switch income back on when you cease employment again. “Paying into a different pension will not be… Read more »
What do the new pension rules from April 2015 mean for someone who has been contributing to a stakeholders pension?
It means the same as it would for anyone coming to pensionable age after April 2015.
The money you are saving in your Stakeholder will be available to you to do what you like with once you are 55.
Instead of having to use most of it to buy an annuity, you will be able to take it out, invest it in other things, spend it ( or some of it) and more.
You will need to pay tax on it if you go over your income tax limit in any tax year but otherwise it’s good news!
I’m 30 and I’ve not yet prepared for a pension! What should I do?
Well now is a great time to start. If you haven’t saved anything up until now I would aim to put around 20% of your income each month into long-term investments. Maybe start by opening a stakeholder pension (you can find out about these here https://www.moneymagpie.com/article/stakeholder-pensions-simple-cheap-and-worth-having) and put 10% into that and then open a stocks and share ISA (take a look here for ideas https://www.moneymagpie.com/article/best-equities-isas-shares) and put the other 10% into that up to £15,000 for the year. If 20% seems like too much of your income to put away, start with 10%…that will be a good amount although… Read more »
Could I go bankrupt without losing the home I own with a mortgage?
Hmm, this is a tricky one so I have asked my friends at StepChange.org to give their opinion. This is what they say: “There is no simple answer to this question and it will depend very much on your individual circumstances. It’s usually possible to keep your home if you have negative equity and you can afford to keep up with your mortgage payments. You may have to sell your home if you have equity. In some cases a partner or family member can pay a lump sum to help you keep your home. This can be complicated, so we… Read more »
I have just lost my job, who I can ask to seek financial advice, every where I go seems to send me somewhere else without giving me answers
There are a number of places you can look, the Money Advice Service is a good place to start. If you are looking to tackle debts or are having trouble paying back what you owe, then contact a specialist debt advice organisation like StepChange Debt Charity.
What’s the best way to encourage children to start saving from an early age?
I was given pocket money by my gran at primary/junior school age. She gave it to me in 10 pence pieces and I had to count it out and divide it by my siblings and myself. Did me no harm!
Plus we all had a savings account opened for us.
I agree with Neil that having a savings account opened for you and having to work out pocket money is a great way. Also, take your children to the supermarket with you, show them how to find the cheapest versions of thngs and then get them running round the shop finding the best offers. Have regular family meetings where the children are involved. Talk through the family finances and see what the children can come up with in terms of money-saving and money-making ideas. Once children know the facts and the rules they can be quite ruthless in sticking to… Read more »
Unfortunately in my past I was refused a bank account and I feel it would be a black mark against me when switching bank accounts, im afraid to give it a go – would my past affect swopping bank accounts? ive been good ever since which is about 7 years now!
A lot of people have this problem Ellie. I’ve asked Experian about it and they say: “Based on the information provided, I’m assuming that you are concerned that your application for a bank account more than seven years ago was declined because of past financial difficulties. The information contained in your credit report shows how you’ve repaid any money you’ve owed over the last six years. When scoring your application, the bank will be most interested in how you’ve repaid credit more recently, so having had some financial slip-ups more than seven years ago is unlikely to affect your credit… Read more »