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 don’t have a credit rating as I have never owned a credit card or had any debt. How can I get one without having debt. Recently I was refused a store card due to this. Thanks.
Yes, this is an annoying situation. Many people have this problem! I have asked Equifax to give their views: “When an individual applies for credit, such as a store card, the lender is required to assess their ability to afford the repayments. Lenders will often look at the individual’s credit history to see how they have managed debt in the past. If there is limited information available it could make their decision more difficult. Some lenders also use information held by credit reference agencies to verify the potential customer’s identity. “We therefore suggest that anyone planning to apply for new… Read more »
How long would a late payment or a default stay on my credit report and affect my rating?
Hi Emilia, our friends at Experian say: “Missed / late payments and defaulted accounts will stay on your credit report for six years. The reason they can negatively impact on your credit score if you apply for a new credit product is because they suggest to lenders that you may not be reliable in meeting agreed credit repayments in the future. Defaulted accounts can naturally have a significantly greater impact on how credit worthy some lenders may view you but remember that it is your more recent history of managing credit that counts the most and the impact will lessen… Read more »
Do you recommend releasing equity in your home after the age of 70?
I don’t generally recommend it but it can be right for some people. Also I think it’s better for 80+ people rather than 70. For a start, you get more money then. Equity release is a very tricky product and even though it’s much more regulated now, there are still many people who have regretted taking it out. I have found that some couples have arranged equity release, have upgraded their home and then the husband has died leaving the widow with a large house and not enough energy/wherewithal. In MANY cases, it would be better for people to sell… Read more »
Is it better to sell my house to clear debt, or just let the bank reposess? I’m not worried about being blacklisted as I am sure I already am, but don’t want to be left utterly penniless if I can avoid it.
Personally I would sell it if you possibly can simply because that way you control things and you will probably get more money than the bank would.
Definitely, though, speak to Shelter NOW. They might be able to stop you doing either of those things. The quicker you get to them the better – go to www.shelter.org.uk, phone them up and get their help as soon as possible.
I have no savings or pension to look forward to as I have been unable to work for many years due to health problems.What will I live on???
Which are the best ways to top up your income from home (in addition to full time work? I would like to boost the holiday fund to ensure a Summer getaway in 2015.
Good idea and great to have a goal like that to work to. It will make it a lot easier for you to collect the money. What you should do is SCOUR the ideas we have in our make money section https://www.moneymagpie.com/category/make-money and see which ideas fit the time you have and the skills you possess. I recommend that you get the whole family involved too – start with going through the house picking up items you don’t want and selling them online and at a car boot sale. Maybe you could set up a party/dance or other entertainment of… Read more »
What is the best physical thing to invest in? For example is you have a few k windfall would you buy art, wine or a classic car or something else?
Well that very much depends on you! There is certainly money to be made out of collectibles but these are the things you need to think about: – like anything else there is risk with collectibles. No one can really predict what will make money in the long-run, although there are experts in the field who can help. Whatever you choose you should read up on it whether it’s art, antiques, wine, classic cars or Action Men…study it before you buy. – with collectibles the most important thing is that you love whatever you’re buying. Ultimately you’re likely to have… Read more »
What is a capital gains savings wrapper?
Hmm, I haven’t heard of one of those.
With a stocks and shares ISA you save on the gains you make on stocks and shares in your ISA. That might be what this refers to.
What’s the best way to avoid getting into debt
Simply put, the way to keep out of debt is to make sure that you spend less than you earn at all times. This is not always easy but on the whole, so long as you know what money you have coming in each month and keep your spending down below that amount as often as you can, you should be all right. A few steps to follow in order to help yourself: – Do a budget (use our budget calculator here https://www.moneymagpie.com/manage_your_money_categories/budget-planner – that’s the really important first step as it will show you what you’re making each month… Read more »
how much do i need to save per month from age 20 to retire at 55 i am hopeing to finish with 300.000 pounds.
Less than you would think! In fact, because you are starting at the age of 20 you only need to put around £220 a month, every month for the next 35 years – assuming you get an average 6% on your investment (probably a pension product) in order to have £313,436.27 by the time you are 55. The only problem is that with inflation it’s likely that £300,000 won’t be anywhere near enough to keep you going nicely. If I were you I would aim for more than that…probably at least £600,000. To get that you should put away around… Read more »