Managing your money on a low income – an expert makes it simple

The cost of living crisis (‘cozzy livs’ to those for whom this is a daily lament), has taken its toll in the last couple of years. It’s well documented that many families have suffered and had to cut back, but the younger generation have suffered too and, as usual, their voices and stories are less likely to be heard. We talked to two young people, both living in unusual – but far from unique – situations, about their attitude to money and what they would do if they found themselves with a £1000 windfall. For an expert point of view, we spoke to a financial advisor – what are some basic financial principles that could help them? And would he tell them to do, if they found themselves with some extra cash?

Reuben is 20 years old and has lived by himself for the last four years. He moved out because of some difficult family circumstances. From 16-18 the local authority provided supported accommodation and one to one help. From 18, Reuben’s been independent.

“I enjoy the freedom of living by myself but financially it’s stressful as f***. I don’t have help from parents or the government or anyone else. It’s just me. So, I can’t always afford the things my mates can. Like lots of my friends have travelled or gone abroad on holiday. I’ve not been able to leave the country since I moved out. I’ve been asked but have never been able to go because of my money.”

Reuben admits that occasionally he doesn’t budget well, or an unexpected cost will arise and he will eat nothing but pot noodles and toast, sometimes for weeks on end. Despite this, he is reluctant to accept help.

“Mates do sometimes try to pay for things for me, like drinks or a meal. I don’t like it. I’ll try to refuse them as much as possible and when I say yes, I’ll have to chase them to let me pay them back for stuff. It makes me feel pitied. I’d rather pay my own way. I understand why they do it and where they’re coming from, but at the same time, just because I’m in this situation doesn’t mean I’m any different or that I need special treatment. I’m just a normal lad.

“I work in the warehouse at Sainsbury’s full time and occasionally do some weekend work through the summer on farms. It’s hard work and dirty but I like being outside.

“If you gave me a thousand pounds right now I’d put some in savings but I’d also fix some of the things around my flat that need fixing but haven’t been urgent enough to justify the cost yet. Like my living room light is broken and the curtain rail in my bedroom has fallen down. I’d try to keep as much as I could for the future in case I needed it.”

Lucy is a 22 year old, single mum living alone with her two year old daughter. Having a child wasn’t part of her life plan and she is doing what she can to provide for her daughter. 

“I rent a flat in my home town, which is a little bit of a struggle but I’m on Universal Credit at the moment which helps out with the rent until I can go back to work full time when my daughter goes to nursery. 

“My job is very physical, I’m a personal assistant carer to a young woman with severe additional needs and so obviously I wasn’t able to keep on working when I was pregnant. I stopped when I was twelve weeks. I also worked as a carer to a young boy with additional needs which I was able to do until three days before I gave birth. 

“I went onto Universal Credit as soon as I finished working. It sort of acted as maternity pay for me because I was self employed so when I wasn’t working, I wasn’t earning. Honestly it’s a godsend. As my daughter has grown up it’s never been the right time to send her to nursery so I’ve had to carry on claiming. But I’ll send her to nursery at three so I’ll be able to work more hours then. Fingers crossed, I can work myself away from Universal Credit. It’ll be nice to earn my own money.

“At the moment I still work part-time as a cleaner. I can take her (my daughter) with me which is great. But if it was for longer than a couple of hours a day it just wouldn’t work. Bringing a child to a job is never ideal.

“Looking forward, I’m going to try to pick up more hours of work. I loved my job. It sounds bad but at the moment my job would be a break. I’d get to sit down at least. 

“With a thousand pounds, I would put half in my daughter’s savings and keep half to ‘have’. I put as much as I can in her savings whenever I can. That’s what’s important to me. My mum always did what she could for us but she couldn’t afford to put money aside for me. I want my daughter to have more than I did. So any spare money I have always goes in her savings.”

Nigel Ryan is an independent financial advisor with over thirty years’ experience. His company helps people manage investments, mortgages and loans whether they’re on low incomes or millionaires. He sees his job being to help people to manage and protect their finances. 

“I would say the way I grew up definitely shaped my attitude to money. I’m one of six kids so from a very young age I became very acutely aware of money that we didn’t have. For example, until I got to secondary school we didn’t have a hot meal at night. I’d get school dinner then at home we’d just have sandwiches, the same every night. 

“It’s no surprise that managing money is what I do now. I was brought up a ‘skin flint’. I always want the best value for money from everything. That attitude comes across in my own life but also in my attitude to managing my clients’ money. It also helps that I can empathise with people who are absolutely ‘dirt poor’ because, well, I was.” 

We asked Nigel what he would tell Reuben and Lucy to do with a ‘spare’ thousand pounds that came their way.

“For Lucy, the starting point is always this: cash is king. Having money rather than borrowing money is the most important thing. For a normal person like Lucy who is struggling to make ends meet, the only thing I’d suggest is to keep that money to one side in some sort of savings account. It doesn’t even matter whether you put it in a cash ISA, the most important thing is having that money so if you do need to spend it, you have it and don’t have to borrow it. 

“In Reuben’s situation, living paycheck to paycheck,  you have to look at what’s called the ‘capacity for loss’. Does he have the option for that thousand pounds to be lost? The answer is obviously ‘no’. So, I’d recommend first, using that thousand pounds to pay off any or all debt he is in, otherwise keeping it available in an ordinary savings account you can have access to, for any of those unexpected costs that living alone brings.

“If you gave me a thousand pounds? My older brother was always on holiday, changed his car regularly, lived his life, spending all the money he earned. Then, on his 40th birthday, he was diagnosed with cancer. He died a couple of years later. Up until that time, I’d have put the thousand pounds in an investment or in a high earning savings account. But now, I’m more inclined to spend it, probably on something for the family. I’d probably give some to my son too.” 

The cost of living crisis and rising interest rates have affected everyone in the UK. Some have benefitted but many have suffered. One subsequent growing trend is for young people to stay at home until later in life than previous generations. For Reuben and Lucy, this option simply does not exist.

If you are in need of any financial assistance, you can access resources at .

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