Money questions you should know the answer to

If the pandemic and cost of living crisis has taught us anything, it's the importance of being prepared for an emergency. It's hard to know exactly what you will need until the time comes, but 3-6 months of necessary spending is a good guide. You need the money to be in an easily accessible savings account, ready for when you need it. 

However, there is a fine line between having enough money and putting too much in there. Interest rates on savings accounts are shockingly low, despite base interest rates increasing. In fact, because interest rates are still lower than the rate of inflation, if you over-inflate your emergency fund, your money will slowly be losing value. 

You may think you don't, but there are a shocking number of Brits who regularly spend more than they earn. The problem for many people is that they're simply unaware of how much they're spending. 

Due to cards and contactless, it is so easy to lose track of how much you've spent. The best way is to create a regular habit of checking your bank statements and monitoring where your money goes. Take some time to sit down with your accounts and face reality. How much do you actually earn? Once all your living costs have been taken out, how much do you have left? Create a budget and stick to it! Your finances dictate the lifestyle you can afford to have, not the other way around. 

Credit cards are great when they're used properly, but they have made it far too easy for us to overspend without a second thought. Only purchase something on a credit card if you know you'll have the funds at the end of the month to pay it off. 

However, life sometimes does throw surprises our way. There may be a month when, for some reason, you might not be able to pay the balance off in full. In preparation for this, make sure you're aware of your credit card interest rates, how much it'll cost you, and always use the card with the lowest APR if you might not be able to pay the full sum. 

Debt can be overwhelming and if you don't stay on top of it, it can easily spiral. When asked, a lot of people tend to underestimate how much debt they really have by 25%. Personal debt was at a staggering £1,839.3 billion at the end of 2023. This is around £34,580 per adult – around 103.3% of average earnings. 

Prioritise your debts by paying off the ones with the highest interest rates first or think about applying for a debt consolidation loan.  

Recurring expenses are something that we don't think about often. They come out of our account automatically without us ever paying much real attention to them. Meaning plenty of us are left paying for products and subscriptions long after we still need them, simply because we forget to cancel. 

Go through your accounts carefully and question every expense. If you're not using something anymore, or not using it enough - cancel! You'll obviously still have things you'll need to continue paying for, like insurance. But it's always worth negotiating with your provider to try and get a better deal. Never auto renew a policy - you can almost always get it cheaper. 

Sadly, many people who do get mortgages together end up going their separate ways. Knowing your options in advance can help you to prepare for the worst-case scenario, as managing a mortgage in a breakup is no small feat. 

The key thing to remember is you're both liable for all repayments. A mortgage provider doesn't care about your personal life, so just because your partner is no longer paying their share it doesn't mean they'll let you only pay half. If you fall behind on repayments it will negatively impact both your credit scores. 

The options you have are: 

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money. 

Read more:  Credit card types and how to choose the best one for you

Read more: Easy ways to boost your property value

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