“Whilst I am a big fan of a Lush bath bomb or a nourishing face mask, self-care seriously needs to extend to financial wellbeing too. In fact, I think financial self-care needs to be everyone’s focus for 2021. Given the obstacles which 2020 has thrown at many of us, we need to learn from those lessons and prepare ourselves better for changes to our circumstances, including income.
So here’s my list of ways you can better look after your financial wellbeing to protect yourself now as well as your future self, so you can live without fear or regret.
Pay Yourself First
American radio host and personal finance specialist Dave Ramsey says, “You will not save money when you get the next payrise. You will not save money when your car is paid off. You will not save money when the kids have grown up. You will only save money when it becomes an emotional priority!”
The reason why you need to pay yourself is quite simple. You will never be bullied into saving money, mainly because banks want to make money from you not pay you to save! However, bill repaying, debt repayment, even council tax payments are even called council tax DEMANDS! They’re designed in this way to put pressure on you to pay that next installment and worded as such so you feel like that they’re the priority and it tends to work.
So instead of getting your salary, paying your bills, and just spending/saving from when is leftover, start paying yourself first instead. As soon as you have a payday, make sure your first action is to put some money into savings to benefit your future self. This will motivate you to earn more to cover the bills and payments where the marketing is already in place to get you to pay.
Whether it is to specifically save for Christmas, a new car, or your next holiday, pay yourself first and put the money aside to prevent the temptation of popping these things on credit. A great way to get started is with something like Park Christmas Savings. They will provide you with a really simple way to put away a little money that you can set up an easy monthly direct debit to pay straight into. Having a structure in place will really help you get started the right path. Your future self will thank you!
Protect your income
If you lost your job and indeed this may have happened to you recently, would you be able to cope without your income?
If you’re in a dual-income household, the best advice I can give is to not fall into the two-income trap. For a lot of people, as your income goes up by having another person to split the bills with, your standard of living increases too. Maybe you get a nicer car, a bigger home, more lavish or more frequent holidays. Whilst I definitely advocate living your best life and feeling the benefit from working hard, trying to stick to a budget that works within just one of your incomes, will provide you so much resilience in case a job is lost for any reason.
Of course, if you’re a single person and especially if you’re a single parent like me, there isn’t a second person to split the bills with in the first place. However, there are still similar options that can be made.
Your first option is to start a side hustle and there’s never been an easier time to give this a go. In fact, one in three people of working age in the UK now has a side gig creating a second income. Having more workstreams gives you a safety net if one income should suddenly stop.
This is exactly what I’ve done and made sure that my side hustles add up to the same if not more than my “normal” job. As a project manager in the public sector, I’m always on temporary contracts without any real guarantee that there will be another project to start straight after the current one.
Of course, there are also insurances you can purchase to protect your income but starting with the above means you’re starting to change your own habits to secure your financial wellbeing.
When I received a complaint at work last year, it could have felt very lonely and daunting. Fortunately having a lawyer on my side from the start made the whole experience less scary. I knew I was in the right and the complaint unfounded but the professional advice and support really raised my confidence through the process.
Thankfully I was in a financially comfortable position at the time so could afford the legal help but the most affordable way to protect yourself from these kinds of malicious attacks is to get legal insurance. This is really easy to do. Just make sure you check what you’re going to get for your cash and do plenty of comparisons to ensure you’re getting the best value.
Before you start shopping around though, check your home insurance as frequently legal protection is included as standard. This year I made sure that I paid the extra £1.20 a month (yes it’s that cheap!) to get my own legal insurance so I don’t have to pay out again for this help.
Escape Plan Fund
Whether you’re in a job that you hate or a relationship you need to get out of, don’t let your financial situation be the barrier to breaking away. I’ve been in both of these situations in the past and since learned my lesson to always have money aside (in my own name) that can be accessed in the event that I need to take a leap away.
It’s not about keeping one eye on the door, it’s simply that you’ll never stay just because you can’t afford to go. This is a great way to achieve a healthier relationship with your partner or workplace. In the jobs I didn’t feel I could afford to leave, it left me dreading going on a Monday morning and being almost held to ransom by them. I felt like they knew I couldn’t afford to quit and were taking advantage of this insight into my circumstances.
No-one and nowhere has that hold over me these days. Start small with an extra % of your income into a separate bank account just for this reason and let it grow. Monitor how it increases but don’t give it too much thought. It’s a worst-case scenario fund but needs to be easily accessible should an emergency “fleeing” situation arise so check the terms. You need to be able to take your cash out without having to give notice to your bank.
Avoid Being Scammed
According to Lloyds Bank, dating scammers have been cashing in on lockdown loneliness, pocketing an average of £8000 per victim in 2020. This shocking statistic should be enough to shock us all into thinking again about our relationships. Particularly when online dating, it is far too easy for people to set up fake profiles.
For these situations the best tips are:
- don’t share your bank details
- take time to stop and try not to get carried away with the romance of any conversation
- talk to your own family and friends about how your dating is going for their perspective
- don’t help people move money about
But it’s not just online dating where you can lose money to love. It can be easy to lose yourself when you have feelings for someone and naturally want to help them out.
Avoid being rinsed by a relationship by having open and honest conversations right from the start. Get an understanding of each other’s financial position. Are they bringing a lot of debt into the relationship? Are there any expensive vices or bad money habits you should be aware of? It could be something serious like gambling addiction or something more subtle like always living in their overdraft.
By understanding the situation and having the facts, you can set out your own boundaries from the start. Knowing if you’re going to split the bills 50/50 or if you’re going to adjust this depending on income can prevent you from being used. This will also prevent any resentment building if you’re the one always footing the bill and not feeling things are shared out fairly.
Seeing Someone Who Has Been Married Before
Similar to above, those conversations about finances are even more important if there’s been a previous marriage or children. Is your new partner dependent on someone else’s income? Or maybe they are the sole provider for someone else that they’re no longer in a legal relationship with? Where children are also involved this can lead to even more complications if you leave the financial situation to fester.
If someone has been married before, the main thing you need to know is if they are actually divorced yet and what the parting financial arrangements are. Make sure this happens prior to taking on any joint debt or credit arrangements and linking your finances in any other way like opening a joint bank account. You need to know exactly what you are or could be liable for.
Ask whether there is a clean break agreement in place? This leaves each party free from each other’s financial situations should one inherit a sum of money or have a lottery win in the future. They get to keep 100% of the money and not be liable to share it with anyone else.
If they don’t have one of these in place, get an understanding of the terms they have divorced under. Are they still paying spousal maintenance or have they agreed on a lump sum at the point of divorce? Likewise, if they’re currently in receipt of spousal support, this is likely to end if you formally get together with this person and it’s worth asking them if are they ready and willing to accept this?
If there are children involved, is either party paying child maintenance? Hopefully, by this point you know the age of the children and how long there is still left for this formal payment to be made but obviously, parental responsibility doesn’t just stop when a child becomes an adult. In fact, then the bank of mum and dad can be even more costly! But whilst they’re at home there are little things which can really add up. If you have more children than them or your little ones spend more time in your house than there’s do, have you talked about how you’re going to split the cost of grocery shopping for instance?
There’s no right or wrong way to do any of financial blending but being fully informed is crucial and you only get that through transparency. Be kind to yourself, even if you find talking about money awkward at the beginning. I promise you’ll feel much better for it afterwards.
Leading on from the above, whether you’re in a relationship or not, taking time to know where your financial boundaries are is super important for your financial and general wellbeing.
If it’s getting towards the end of the month and things are a bit tight for you but your friends are suggesting another takeaway or your partner is wanting to slide an extra bottle of prosecco into the trolley with the weekly shop, you need to be confident enough to say no.
It’s okay to be selfish but there’s an art to it so you don’t become unlikable! The key is knowing and living your values. If you know you want to stay in the black, stay out of debt and you value being able to afford your summer holiday more than an extra bottle of wine then just live and breathe these values and you’ll probably attract someone similiar whilst you’re doing it!
This is probably where a bubble bath with bath bomb and a face mask can come into play with your financial wellbeing. By taking some time to yourself and switching off from “real life” you can figure out exactly what your values are and what your financial goals need to be. Then you’ll find the joy of being selfish and the confidence in saying no will follow.
Anyone who is worth your time will respect your boundaries and buy themselves another month in your company!
Disclosure – This post is written in collaboration with Park Christmas Savings and contains affiliate links.