Carly wrote to us as she and her husband struggle to find time to start their financial journey – Carly is not alone if our mail box is anything to go by.
Carly, 35, is married to a singer, Jamie and has four children aged between 1 and 11. She works part-time in a call-centre. They are an active family, with most days filled with school, clubs and classes.
They get by day-to-day, but are concerned about the long-term. Jamie’s earnings can be erratic: December is usually a good month, while January and February can be quiet. They have life insurance, but don’t have wills, pensions, savings or investments.
With four children and a busy life, finances get pushed to the bottom of the pile. But Carly struggles to know where to start – pensions seem complicated, and the stock market is another world. “We might take the risk on the stock market if we didn’t have children, but we feel with need a bit more certainty and stability with our savings.”
She admits that their finances are a concern and the financial world is baffling. They’ve recently bought a bigger house and need to do a lot of work to it, so that is a drain on their finances as well. Like many people, she realises she needs to do something, but needs to find the time.
You are not alone. The ‘I don’t have time and it’s so baffling’ makes up half the BM mailbag. And you’re absolutely right, pensions ARE baffling and they make the rules more complicated every year. So I’m going to suggest something slightly controversial. Don’t worry about pensions for the time being, just focus on just setting something aside every month.
You need to work out how much you could reasonably set aside. You don’t want to be living off baked beans for the next 10 years. There are online planners that will help you with this. With your husband's erratic income, you may have to shoe-horn it to fit, but this budget planner from the Money Advice Service is helpful. The Money Advice Service was canned in the last budget, however, so in case it disappears, this budget planner from National Debtline is pretty good, as is the budget planner from Money Saving Expert.
I have found it really useful to give myself a rough daily budget and then I know how much under or over I have to spend the next day/week etc. Like dieting, it can also help to write down everything (or almost everything) you spend. It can help you think twice about spending.
If you can find £25 or more a month, you have the start of a savings pot. Investment platforms, such as Hargreaves Lansdown – see online investments best buys for our favourites – will usually let you start with a direct debit of £25 a month. You should be able to open an ISA with the minimum of fuss.
The problem is that you will need to decide what to put in it. And it is here that many people come unstuck. The stock market is daunting to the uninitiated and many decide that they simply can’t face the thought of losing money. However, it has delivered better returns over time and you have a long time to invest, so it may be worth considering. Collective funds, which spread your investments over a range of companies, are usually a better option for the novice.
You could also consider one of the newer 'robo advisers' who guide you through the journey – you'll typically need a lump sum of £500 or to set up a direct debit of £50 a month. Have a look at Nutmeg or MoneyFarm.
The really important thing is to do something. People get caught up with the complexities of it all, when really the most important thing is just to be setting something aside, whether it’s for retirement or for when the roof falls in. I reckon you can get started in an hour. Let me know if it’s possible!