I was quoted in The Times on Saturday, in their Wealth Check feature providing advice to a reader on how he might get his finances in better shape.
The ‘patient’ for this Wealth Check was 31 year old Willard Foxton from London. In the article it describes him as being “terrible with money”.
His income from employment as a television producer are supplemented with freelance earnings. With no savings and nothing left at the end of each month, he often falls back on payday loans to see him through.
Here is what I had to say:
“There are no get-rich-quick schemes or wizards to sort out Willard’s finances. He needs to start budgeting quickly and put in place a written financial plan before a mistake lands him in real difficulties.
“Willard should put aside money for his future tax liabilities in a high-interest regular savings account. Failing to do so will result in a big tax bill, which is a trap that many freelancers fall into. Because there is a long time lag between earning the money and paying tax on it under the self-assessment system, Willard could earn up to 18 months’ interest on this cash before having to pay Revenue & Customs. But he must make sure that he moves the money into his current account in plenty of time before the tax deadline or he could end up losing any interest earned through a withdrawal penalty.
“Willard must get out of the habit of using payday loans – if he does not pay them off quickly enough, he will be hit with eye-watering charges. To break this cycle, he needs to build up an emergency fund to cover between three and six months’ outgoings.
“It is difficult to budget when earnings are irregular, so Willard should make sure that the expenses he is committed to each month do not exceed his regular income from his TV job.
“Any additional earnings from his freelance work can go towards paying off his credit card debt and saving for a house deposit. Until these basics are covered, Willard will not be in a strong enough financial position to consider making pension contributions.
“It may take two or three years to get to this stage so Willard needs to commit to a financial plan for this length of time. He should not feel guilty about submitting expense claims. He could use a smartphone application to keep on top of expenses claims, which would allow him to scan in receipts and file them in a folder ready to submit.”
Photo credit: Flickr/surroundsound5000
