Laura Whateley - Money - A User’s Guide

I would learn, as I explained hopefully to my new editors. They, unbelievably, took me on. A money journalist is one of those things, like Tupperware and condoms, that you need more of in a recession.

Exactly a decade later, writing for The Times about consumer affairs, helping readers with their financial woes and blunders as the consumer champion known as ‘Troubleshooter’, I saw how much those few weeks changed the world, not least for those of us who received our first pay cheques in the period since the financial crisis took hold.

Lots has improved, as I’ll explain through this book. Banks are desperate to win back our trust, and technology has created countless new opportunities to make it easier to manage money well. But there has been a lasting difficult legacy, especially for those, such as my sister, who are a few years younger than me, now in 2020 facing the second recession of their short working lives. Most under-thirties, however diligent, will never be able to buy a decent-sized home in a great part of an exciting British city on their salary alone, especially not while their incomes are reduced by student loans for decades and they are simultaneously trying to save enough into a pension to afford their heating bills when they reach ninety.

Jobs are insecure, wages static. Many, whatever their age, now work longer hours in smaller teams of staff, doing more for relatively less money than their seniors ever did at the same age. I wrote, in the first edition of this book printed in 2018, that the spectre lingers of another recession and a further round of redundancies. Sadly, in 2020 this came true as the coronavirus pandemic and resultant lockdown forced the country into the worst recession since records began.

This is coupled with navigating the money-related dilemmas that come as part and parcel of growing up, whatever generation you were born into: how to become financially independent from your parents, how to work out money with your friends without being consumed by status anxiety, how to provide both for yourself and for your family, how to earn more and spend less without missing out on the things that make you happy and life worth living.

I also believe our ability to feel good about money is diminished by the fact that the financial services world loves to obfuscate. A lot of companies make their profit by exploiting our ignorance of how their products really work, maybe cynically, or maybe just because they too overestimate how financially competent their clients really are.

There is a move towards greater transparency, but there is a long way to go. Meanwhile the paralysing choice of financial products out there grows into a dizzying, offputting blur of numbers, percentages and jargon. There are, as I detail in my chapter on household bills, now about half a million subtly different mobile and broadband deals available to ‘choose’ from. Going to the pub is better by far than boring yourself to tears trawling moneysupermarket.com, and everyone who advertises on the site knows it.

The following chapters are a compilation of advice and tips I have picked up about personal finance since the credit crunch and since my student days, inspired by making my own myriad money mistakes while observing and writing about the traps that Times readers have fallen into.

IMPORTANT DISCLAIMER:I am very much not a financial adviser. The only post-school exams I passed involved words (apart from a first-year university statistics and maths resit that continues to give me stress dreams). I’m just a journalist. None of this book constitutes official, legally watertight, financial advice. What it offers are observations and suggestions formed by speaking to real qualified experts, researchers and proper financial advisers about how to avoid common errors.

Even so, I hope this information will help equip you with enough money basics to feel more confident about your own situation and whether or not you can improve it. I hope it will offer a glimpse into how to make better, more informed, more ethical choices, and how to avoid being mugged off by your bank and your mobile-phone network, which will save you far more money than cutting back on a few brunches ever can.

Good luck! If I can do it, so can you. Seriously.

To state the obvious, the best advice on how to manage your money varies depending on how much of it you have and what stage of life you are at. This presents a dilemma when writing a shortish book. I had to make some decisions about who to address, what to include and what to leave out. I have chosen to focus on advice that I think is most practical for people under the age of forty, who have probably borrowed money to study, and who are earning enough to pay tax and rent a home privately, possibly working out whether or not they can afford to buy their first place.

Most of the advice applies to the whole of the UK, but in some cases laws and processes – such as how to buy a house – differ slightly in Scotland, Northern Ireland and Wales. If you don’t live in England and are in doubt, please check.

There are also things I mention that change year by year – tax allowances, for example, a company’s financial products, or government policy – which may mean that some of what I say here falls out of date. I have written with figures, laws and product recommendations true of autumn 2020.

I write appreciating with respect that there are millions of people in the UK who have to manage on minimum wages, and rely on benefits and food banks. There are millions of Brits who could not fathom having enough cash to invest in the stock market, or contemplate buying their own home in an area of their choosing. I have also carried out research for this book by chatting to some baby boomers and some pensioners who, just like those under forty, said they could really do with tips on how to save more and spend less. So while this book may appeal most to a younger, wealthier-than-average demographic, I hope people of all ages and financial means may find something that helps them in here, whether it is to understand how to get a better deal on your energy, get help to cope with unmanageable debt, decide whether or not you should make a will, or pick the most suitable bank account.

The book has three parts. You can read it in order, or pick out any chapter – they each stand alone – to get some advice on a particular topic that is relevant or concerning to you, such as how to understand your pension.

In PART ONEI go through the areas of personal finance that I think are most relevant to the under-forties, starting with housing and borrowing, through to how to budget, where to put aside savings for your short- and long-term future, and how to understand and reduce both your household bills and the amount of tax you are paying.

In PART TWOI look at how money makes us feel about ourselves and our relationships, offer some advice gathered from counsellors about how to deal with our emotions around money, as well as some practical tips on how to split it while cohabiting. I detail how to manage money if you feel that it is making you unhappy, or exacerbating an existing mental-health condition.

If you read most of the chapters in sequence you should have enough of a grasp of your finances by the end of Part Two to decide whether you want to do something better with them, not just to make yourself richer, but with consideration for wider society.

PART THREElooks at the growing, and important, shift towards arranging our personal finances ethically, from checking the source of the energy you use, to where to invest your pension, in a way that is mindful of its impact on the environment and other people. Being good with your money is not just about making more of it.