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.
My question is which is the best bank account for my student daughter? Thanks
It depends on a few factors: – which banks are close to her university and where she lives. Sometimes it can help to have a branch nearby – how much of an overdraft she would like. It’s a good idea to speak to a few banks to see what they would offer to students and how helpful they are. – once she has found a few she likes then she could look at the incentives they offer to students. Some give good stuff like a free student railcard or an iTunes giftcard. Obviously this isn’t the most important thing but… Read more »
I’m having a post Christmas de-clutter, but I’m finding after eBay fees that it’s possibly not worth the effort to sell my low-ish value items. Is there any other alternatives? Thanks! 🙂
I’ve tried websites like zapper.co.uk or musicmagpie.co.uk in the past which take CDs, DVDs, books and computer games. They tend to give about 20 pence minimum per item if accepted when I last tried zpper. The alternative is sites like gumtree. No fees, but may need customers to go to your home to collect some items if you do not want to pay postage. Also could try facebook.
Some good ideas from Neil. You can also try Amazon marketplace and there’s Greenmetropolis for books – they guarantee £3 per book which is good.
I would like to start a small business next year, in addition to my main salaried job. Obviously I want everything to be legal and above board with respect to taxation. What should I be aware of and what is the best way to go about it?
You don’t need to tell the HMRC that you are setting up a business immediately. You can do it within three months of starting. However, it is a good idea to let them know so that they can give you your tax number and you can start everything off. Also, do keep receipts for anything you spend in the run-up to starting your business that could be counted as part of the start up. That’s stuff like a computer, travel to see possible clients, equipment and more. Also I suggest you set up a second bank account – it doesn’t… Read more »
My husband has been at his current job for six years at the local council. After three years of a pay-freeze they have now been told their wages will DROP by £2k a year! Is there anything we can do?! The higher ups at the council are blocking every form of appeals, etc.
Caroline, this is a tricky one without knowing the specifics.
However, I have spoken to Unison – the union that covers Council workers, as you know – and they say that they would need to know where your husband works and how this situation has happened in order to help properly. Therefore, they say, “we can’t give specific advice, other than to speak to their local UNISON representative and join the union – this type of advice is exactly what we are here for”
So if your husband isn’t already a member, get him to join and ask their advice.
How do you invest a lump sum (£50k) for the best return. . ISA’s?
The first rule when you get a windfall is to pay off expensive debts – so if you have credit card debts or loans, pay those off first. The second rule, when it comes to investing, is to spread your money. So, yes, investment ISAs are a good idea You can put up to £15K into one of those (i.e. a stocks and shares ISA). I suggest you put that amount in now (ideally into something simple and cheap like an Index-tracking fund https://www.moneymagpie.com/article/index-tracking-funds) and then another £15,250 after April 6th as the limit goes up then. It’s also a… Read more »
after having to apply for a debt relief order over two years ago i am still finding it difficult to get a mortgage, will this ever improve ? thankyou
Sharon I’ve checked with David Holingworth at London & Country (who do our mortgage comparison by the way https://www.moneymagpie.com/comparisons/mortgages) and he says this: “Debt relief orders (DRO) are an alternative to bankruptcy for those that owe less than £15,000 and have little spare income or other assets. This will show on your credit file and will of course have an impact on lenders’ decision to offer a mortgage. In fact many lenders will view it so seriously that they will not consider offering a mortgage until the DRO has been discharged for some time, more than 6 years in some… Read more »
if a savings or bank account is opened for an under 18 and regular money deposited into it will it count towards their credit score in the future when they may need to apply for mortgages etc
Hi Tracey – you would think that it would help but because you’re talking about ‘savings’ rather than ‘borrowing’ (i.e. ‘credit’) it actually won’t count towards a credit score. The daft thing is that some people who have been sensible and have saved for years and have never borrowed money actually have a bad or zero credit score simply because they haven’t borrowed and so the lenders don’t know anything about them! It is still a very good idea to put money into a savings account for a child on a regular basis and an even better idea to teach… Read more »
How easy is it to get a busines loan nowadays? I have a rather large mortgage but am hoping to get my business off and running this year.
FionaLynne I’ve asked Mitch Hahn of Nordens.co.uk on this and he says: “There are a variety of finance solutions available to small businesses , due to the emergence of government backed schemes and incentives such as funding for lending, enterprise investment scheme (EIS) and various industry specific grants. There has also been a significant growth in peer to peer lending through various crowdfunding platforms. A key consideration of being shortlisted and then accepted for any form of finance is to have a strong polished business plan, as lenders will consider both long term potential and viability as well as current… Read more »
Can you make money from writing blogs?
Well some people do, certainly, but far more bloggers don’t. We’ve got info here about how you can make money as a blogger https://www.moneymagpie.com/article/how-to-make-money-from-a-blog. As we point out, blogs can be a good vehicle for you to get freebies even if you don’t make actual money. If you love music you could set up a blog reviewing concerts and/or new releases so you could get free tickets and free downloads. Publicise it through social media (really go for it there) and by writing on other websites and linking to yours and gradually you will build up the traffic you need… Read more »
Thanks for the article I have never been sure whether it is worth switching my current account so useful things to consider. My queston? Do you consider investing in premium bonds a serious investment or is it more a bit of fun?
Personally I don’t see Premium Bonds as a serious investment at all. On average the return is about the same as you would get with savings accounts, even taking into account the tax saving. I tend to say to people that if they would otherwise stick the money on the dogs or the horses then they should certainly put it into Premium Bonds instead as that is a safer form of gambling! But if you’re looking for something that will give you a decent return then you’re better off putting into a peer-to-peer lending vehicle like the ones we mention… Read more »