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Janeen, 44

Self-employment, teenagers, debts that last decades. It’s been challenge after challenge for Janeen, but she’s learned through trial and error that there’s more than one way to meet financial goals.

My relationship with money: "Sensible"

"I think because you have to work so hard to make it, and sacrifice things like family time, I’m good with that money and it doesn’t get wasted away on things that aren’t important. So I’m very sensible when it comes to money."

Becoming self-employed took a lot of money planning

"Because I’m self-employed, when you’re off you’re off. You don’t get any sick pay or maternity pay, so when I was pregnant I had to plan quite a lot to see how long I could actually afford to have the time off. I just put a bit more away each month and made sure the amount of money I needed was there so I could enjoy a bit of time off without getting into any real financial strife. 

"The first year that I gave up full time employment was very difficult. I’d gone from earning the same amount every month to invoicing, and it was probably about a year before I had a regular sort of income again cos you have to work and build the contacts and build that money up. There were times where I’d have no money coming in for two months and January to March is very quiet for me so I have to make sure I earn enough before then to keep me going. It’s all about budgeting and knowing when your quiet times and busy times are. Just trial and error really."

I help the kids learn from my mistakes

"When I was 18 or 19 I was very frivolous – credit cards and loans for clothes, and store cards and that. All I had to show for it was a big debt. It got quite serious and I got quite down about it and my parents found out. They said they wouldn’t pay for it because I would never learn. And it took 10 years to pay it off. So I’m definitely more careful these days. I’ve learned my lesson!

"Now I’ve got an 18-year-old and a 10-year-old. All their lives they’ve been taught the value of money – you don't just get something for nothing, you have to work for it. If they want a treat outside of Christmas then they have to save their own money for it.

"My son wanted an X-Box recently and he’d saved a couple of hundred pounds in his money box. Handing the money over, he really didn’t want to do it. But he did in the end. And now he knows the difference between getting a £10 LEGO set from the shop and a £200 games console. We’ve always tried to help the kids see the value of money."

We picked insurance over saving for the kids

"We don’t really save long term for the kids. We decided not to bother. They’ll have the house when we leave it to them, and hopefully work for themselves. We were never given anything so we think they should have the same. Earn it for themselves.

"What was really important when we chose life insurance was just knowing that money was there if they need it. It’s not a huge amount as we didn’t want a huge bill every month, and our mortgage is almost paid off anyway so we wouldn’t have to worry about that. People have been saying insurance isn’t worth the paper it’s printed on, but I like to have it just in case. Knowing that they’ve got that little something to help them should I or my husband not be here.

"Even though we’re married we have separate accounts. We’ve always been like that. We split the bills so many ways and have a joint account for family stuff, but we have our own accounts too. It just works for us and we’ve kept it like that really. So I know he would be fine and he knows I would be fine if it came to it and one of us was left on our own."

My biggest money question...

"I’m very curious about how I can save money when I pass away. I don’t mean getting around the system, but how can I save on taxes and the minefield of charges my family might have to pay?"

Answer by Zoe Dagless, Addidi Wealth

This is a common question posed about inheritance tax and what can be done to minimise it. Here are a couple of points to think about which would minimise inheritance tax and hopefully reduce some charges that the family may have to pay:

1. Ensure that you have a will

This won’t necessarily mean that your estate will reduce on taxes but will mean that your estate goes to the people you want it to and reduces complexity about appointing an administrator.

2. Gift assets

You can give assets as a gift which will mean your estate reduces and will reduce the inheritance tax bill. This can be a complex area.

However for simplicity you can gift if it is made out of your normal expenditure so effectively what that means is if you are left with sufficient income to maintain standard of living and there is a regularity of gifting, i.e. This is typically gifting of smaller amounts and a regularity.

You could gift assets and if not out of normal expenditure these gifts will be totally outside of your estate within 7 years. So after 7 years no inheritance tax to pay.

3. Use allowances

No inheritance between spouses and each individual will get £325k of nil rate band where the effective inheritance tax is 0%.

4. Pension contributions

The other key planning opportunity you could do is pension contributions for yourself. This will help with your pension planning provisions but also pensions are outside the estate for inheritance tax purposes. They are effectively in a trust. Pensions can be nominated to whoever you wish and if you die before you are aged 75 then it will go to the beneficiaries tax free and then if you die after the age of 75 the proceeds will be taxed at the beneficiaries marginal rate of income tax.

5. Protection

The other key planning opportunity is protecting your family against the tax bill using an insurance product. So you could arrange a whole of life protection policy that would be a protection policy that would pay out on your death and effectively pay the bill. There is no term on the policies and pays out on your death. For all life insurance policies ensure that these products are all in trust, so do not fall within the estate.

This is a big subject and there are many different options of how one can effectively mitigate or reduce inheritance tax and the effectiveness of passing down of assets on death. There are also many other complex arrangements not mentioned in the above which can be used, however for that I would seek full advice.