The past year has been absolutely tragic, but I am so pleased to have had the opportunity to take my first step onto the property ladder. I can 100% guarantee that I would not be saying this, had I not been forced to stay at home and prevented from socialising with my friends! When I look back on 2019, I had just returned from a year abroad, £6,000 in debt and unemployed. I managed to return to my previous job at Thomas Cook, to lose it only 3 weeks’ later without pay due to the company going into liquidation. The prospect of owning a house seemed unattainable at any point in the not-too-distant future.
However, I was fortunate enough to secure myself a stable job few weeks’ later where I am still employed today. I appreciate that a lot of people have truly struggled throughout the pandemic, and I am forever thankful for the opportunity that I have been given. Initially, I started paying off my credit card little by little, saving a very small, fixed amount each month, and budgeting. Corona gave me a lot of time to think, and really enabled me to re-evaluate my spending habits. I looked at various ways in which I could save and earn money by doing very little. These suggestions may not work for everyone and of course it helps to be able to go halves with a partner. I hope that you will at least learn something you didn’t know before that may help you to grow your funds in the long run!
FYI – whilst the image is of my absolute dream house, it is sadly not what we have purchased!
Government Bonus (Help to Buy or LISA)
Unfortunately, my lack of attention to detail let my down and I wasn’t eligible for any government bonus. I had both the Help to Buy and a LISA account set up with the hope that I could use either of them when it came to purchasing a property. As of November 2019, you are no longer able to open a Help to Buy account, but I would highly recommend opening and investing in a LISA – even if you are years away from your first property! The LISA account needs to be open for at least a year since the first deposit of funds in order to be able to claim the government bonus and you can invest up to £4,000 a year. This would give you a bonus of £1,000 per year. If you withdraw ahead of time, you lose the bonus and are charged 5% of whatever is invested in the account. I opened my LISA under a year ago ☹ Fortunately for us, the 5% fee had been waived due to Corona but it will be introduced again from the beginning of April 2021.
If you already have a Help to Buy account set up from times of old, you need to ensure that it has at least £1,600 in the account to be eligible for the bonus. You are only allowed to invest £200/month into the account so keep it up little and often. I made the mistake of withdrawing my savings to buy a car and hey ho, no bonus!
My advice to you? Always read the small print before opening of these accounts. Get it right, and you can receive up to £3,000 towards your first home! Lesson learnt!
Stocks and Shares
This is something that I started playing around with at the start of the first lockdown, when the market crashed. I use an app called Trading212 which I originally heard about through my sister. She shared her referral link with me which meant that we both got a free random share, courtesy of the app once my account had been funded with the minimum deposit. The share can be up to £100; we both got shares in Shell which were worth about £10 each. I earned around £8 from this as the market price rose over time, before selling.
I started off by investing a very small amount, to play around with. This was around £25, partially due to the fact that is all I had to spare at the time too! I invested portions of this into a variety of companies including Tesla, Country Wide, and Wetherspoon, which helped me to figure out trends and where to invest more money when I had it. Google is also a great source for investment tips.
I have since invested around £350 of my own money and the value of my account is approximately £800. I have kept a close eye on my investments, selling when they appear to have peaked, and have also been quite lucky with the volatility of the market in these COVID times.
This definitely beats the low interest rates that savings accounts are offering at the minute and I will be investing more money as time goes on. In hindsight, I could have earned a small fortune if I had been willing to risk my pay cheque but that was a risk I was not willing to take! If you’d like to give it a go yourself, you can use my referral link so that we both get a free share;
Do you want to get a free stock share worth up to £100?
Create a Trading 212 Invest account using this link www.trading212.com/invite/FMXdu4yD and we both get a free share!
In a way, it is similar to gambling so invest responsibly and not beyond your means!
Budgeting (living off of an allowance)
One thing that has always helped me to limit my spending is to give myself a fixed amount per week to live off of and transfer the rest of my money into another account that isn’t so accessible. If you overspend one week, try spending less the following week to balance it out. Always try to plan ahead, noting down essential costs and leaving some spare cash for personal enrichment.
Try to stay within your allowance as best you can and have a 0% interest credit card or some easily accessible cash, for emergencies!
Meal planning is very closely aligned with budgeting except it is specifically for food, and also encourages you to try new and exciting recipes. Planning meals in advance helps to significantly decrease the cost of food shopping. Whilst the saving is fairly minimal, it really helps you to budget for this aspect of your life as you know exactly how much you need to spend on food each week. I tend to go through what food ingredients I already have and plan meals around those, buying anything additional and top-ups for my weekly shop. It also helps to minimize food waste which is extremely important in today’s climate.
It’s also a great way to mix things up. I tend to try and ensure that we have different meals every day, and challenge myself to trying a new recipe once a week. I even factor in takeaways, usually on days when I know I will be hungover, but once a week in lockdown to keep things interesting. Whilst the majority of us love home cooking, sometimes you need to take a day off!
Having a huge clear-out of all of your belongings can be great for clearing your space and your mind. Getting paid for it is even better! Whilst you often don’t get paid much for second-hand items, you can occasionally find hidden treasures and you will feel so much better for not hoarding. There are loads of sites which enable you to do this now; Facebook Marketplace, eBay, Gumtree and Shpock, to name but a few!
It can be fairly time consuming, but it’s not as if there is much else to do at the moment! Plus, it saves you having to lug everything around from house to house when you finally move!
Money from working abroad
If you have ever worked abroad, you may be entitled to reclaim some pension or taxes that you paid during your time there. Having worked in Australia for a year, my employers were paying into a Superannuation fund which is their version of a pension. You aren’t able to access it during your time working in the country until you reach retirement age. However, you can access it early if you are no longer residing in the country and don’t have plans to return for work. It is very heavily taxed (65% I think?!) but worth it for a lump sum. I managed to claim about £1,200 back to my UK bank account which really helped towards my savings goal.
The rules will be different from country to country so I would recommend checking on the procedure on the individual government website. I found the process for re-claiming my super to be fairly straightforward, but you will need details of the visa and tax number you used whilst working in the respective country.
High interest savings account
This one goes without saying and everyone should be aware of high interest savings accounts as a solid method of saving money. It’s the safe option for those who don’t want to invest. If you have decided against investing, once you have contributed the maximum amount into your LISA, you should put your money in a high interest savings account. Be mindful when setting this up, of whether you will need to access the money within a certain period of time. Some accounts have a higher interest rate but won’t allow you to access the money within a year or more, without a hefty fee. Some accounts also require a minimum deposit to open. Money saving expert has some good comparisons; https://www.moneysavingexpert.com/savings
The interest rates are currently at rock-bottom though so whilst this is a safe method of saving, it isn’t the best way to grow your funds!
A small bump, but you can earn up to £200 each time you switch bank accounts! It’s as easy as entering your details and letting the bank work its magic for you. They transfer all of your funds, payment contacts, direct debits, and even salary payments to the new account. Be sure to check the small print though as there are requirements that need to be met. These can include a minimum monthly payment into the account, having a certain amount of direct debits, and ensuring that you switch to paperless communications. The new bank will also expect you to use the account as your main one.
You can switch a couple of times a year, providing you haven’t had an account with the bank you are switching to in a certain time period and meet the criteria for the payment. https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/ highlights the best rewards for switching!
For those of you who already have your deposits saved, the stamp duty holiday is likely to be extended past its current end date of 31st March 2021 when the budget is announced this month. That means you could save £1000s on your stamp duty fee if you get in there quick!
I can’t wait to share our new home with you as we move in and decorate! Happy house buying 😊