A question from The Group Hug Community.
We receive emails from The Group Hug Community all the time and we are now starting to publish them as an added resource… Finance Expert Katie Nutting of Obiter Wealth Management replies…….
I am 47 years old and have two children who live with me 50% of the time following divorce. I don’t have my own house and came out of my divorce with no maintenance payments from my ex and no money for a home. I am working earning around 18k per annum in an office. How do I start planning for my future on such a tight budget?
I rent my home which is a large outgoing and I often feel scared of the future financially. I don’t feel that I have any spare cash to plan for my future. My ex played the family court system really well and I came out with absolutely nothing. I had a company pension years ago but haven’t paid into that for at least ten years. Starting again is really scary.
KM – Northants
It’s great that you felt able to reach out! The first step is to understand your current position. That relates to your assets, liabilities, income and expenditure. I find it works best to write everything down so you have a clear picture of what you have to work with. The next exercise is to create a budget planner, which sets out your monthly expenditure on areas such as rent, utilities, transport, food, direct debits, childcare costs etc…. I would recommend looking through your bank statement and taking the figures from there, as that will be a realistic representation of what you spend. This should also show you if you are running at a surplus or deficit when you compare the final figure to your income. It might also flag up a few areas that you could cut costs on, for example, you might be paying for Netflix and now tv, or you might be paying for phone insurance but you actually get this through your bank account.
Once you know your budget you will feel much more in control of the situation. You can also start to look into ways of maximising your income, which might include claiming a form of universal credit if you are a working parent.
Next will be to gather information on your assets which usually includes old company pension plans. We often forget. About pensions until we start thinking about retirement, but this can be too late. It is good to understand where your pensions are, how much is invested, the charges associated with the plans and how much risk you are taking. We often consolidate pensions for the right client which can result in lower costs and a more consistent investment strategy.
If you have any liabilities I would suggest listing them out with the interest rate you are paying so you can start to priorities what needs to be paid down first. You might also look at consolidating your debts with specialist advice to reduce your interest rate and payments.Money worries most people, but understanding your position will allow you to feel more in control and enable you to take the right steps to achieve your goals.
You never start a journey without first knowing where you are and where you want to get to, the route might change when you are travelling along the road but that is much easier to deal with when you feel fully informed and in control.
Do get in touch if you want to chat further – Katie Nutting features in The Hug Directory