Kia: Hey, it's Kia. Welcome to another episode of A Little
Kia: Bit Richer, brought to you by my friends at Legal & General.
Kia: There have been so many nuggets of financial wisdom on
Kia: this show, too many to count, but I've been going
Kia: back through the archives and have handpicked 10 of my
Kia: favorite money tips from all of our episodes so far,
Kia: to send you into the next year as a financial
Kia: whiz that I know you are. So let's dive in.
Kia: Number one, first up is the toughie but a goodie.
Kia: Iain Russell from Money Hub talked to me about the
Kia: importance of financial discipline, and how not to lose sight
Kia: of your goals. Even though it could be hard, it's
Kia: worth it in the end.
Iain Russel: So number one I say is, maintain that financial discipline.
Iain Russel: Just take a second when you're thinking about purchases. Is
Iain Russel: it definitely what you need? If it's new clothes, are you
Iain Russel: going to wear it enough to justify the price? Would
Iain Russel: you potentially visualize that money? Would you prefer it to
Iain Russel: be in one of your savings accounts or knocking off
Iain Russel: a bit more of your credit card? So it really
Iain Russel: all adds up. So just taking that little bit of
Iain Russel: time to just have a think before you spend. Number
Iain Russel: two is living below your means. So again, we're going
Iain Russel: back to looking at your spending habits. Look to make
Iain Russel: those choices that prioritize the long term financial goals and
Iain Russel: give you that ability to top up your emergency fund
Iain Russel: and save for the future. And finally, start early. So
Iain Russel: new year is perfect.
Kia: Good time.
Iain Russel: It might be cliche, but it really is the perfect time
Iain Russel: to build those savings, pay off debt, pop some more
Iain Russel: money into your pension, because the earlier that you start
Iain Russel: to do that, the better you feel. And like I
Iain Russel: said before, even if it's just 10 pounds a month
Iain Russel: or it could be up to 100 pounds a month,
Iain Russel: it really doesn't matter, it's building that habit, and the
Iain Russel: earlier you start that, the better.
Kia: Number two, before you do any kind of investing, it's
Kia: imperative you save towards an emergency fund that will look
Kia: after any unexpected short- term costs that might pop up.
Kia: No one could put it better than Mr. Money Jar himself.
Kia: Timi Merriman- Johnson.
Timi Merriman-Johnson: The other thing to look at is, so we said
Timi Merriman-Johnson: investing is a long- term form of saving, but short-
Timi Merriman-Johnson: term savings are important too. And so the very first place
Timi Merriman-Johnson: to start is your emergency fund. So the way to
Timi Merriman-Johnson: think about your emergency fund is, if you were to
Timi Merriman-Johnson: lose your primary source of income, or an emergency was
Timi Merriman-Johnson: to happen, do you have enough money to get yourself
Timi Merriman-Johnson: through that without having to rely upon debt? Saving an
Timi Merriman-Johnson: emergency fund before you invest means that, should your investments
Timi Merriman-Johnson: fluctuate in value, which they will do from time to time,
Timi Merriman-Johnson: you have a pot in cash that you can draw upon.
Timi Merriman-Johnson: The other thing to look at is things you'd like
Timi Merriman-Johnson: to do or have in the next year or two.
Timi Merriman-Johnson: As we said, investing's for the long term. We tend to think of
Timi Merriman-Johnson: it in terms of years and decades rather than in
Timi Merriman-Johnson: weeks or months. So if you're looking at the next
Timi Merriman-Johnson: one to two years and you have things that you'd like to do
Timi Merriman-Johnson: or have, this could be buying Christmas presents, going on holiday,
Timi Merriman-Johnson: saving for a house deposit will be a big financial
Timi Merriman-Johnson: milestone for a lot of people. Making sure that you're
Timi Merriman-Johnson: saving towards those goals as well is very important. Then
Timi Merriman-Johnson: anything over and above that can go into investments. That's
Timi Merriman-Johnson: money that you don't need today and that's going to
Timi Merriman-Johnson: work for you going forwards. And if you find the
Timi Merriman-Johnson: concept of an emergency fund tricky to visualize, think of
Timi Merriman-Johnson: it in the same way as an overdraft. So of an overdraft,
Timi Merriman-Johnson: that's almost like the basement of your bank accounts. Your
Timi Merriman-Johnson: bank account goes to zero, and then you have the overdraft.
Timi Merriman-Johnson: An emergency fund is simply an overdraft that you fund yourself.
Timi Merriman-Johnson: That's all an emergency fund is. So if you need
Timi Merriman-Johnson: that cash, you're not going for a loan, you're not
Timi Merriman-Johnson: reaching for the credit card.
Kia: You're going for your own savings.
Timi Merriman-Johnson: You have that money, you're putting yourself through that situation yourself.
Kia: I love that. I love that. Number three, consumer debt can have
Kia: a massive impact on our finances, and financial advisor Orann
Kia: Coyle had some great advice around this and what to
Kia: avoid doing.
Orann Coyle: Consumer debt is a killer of people's finances, and it's
Orann Coyle: something that can really badly affect your finances in the
Orann Coyle: long run. When you make naive decisions when you're young,
Orann Coyle: I'm talking about credit cards, leasing vehicles, personal loans, payday loans, overdrafts,
Orann Coyle: anything that has a high degree of interest that once
Orann Coyle: you get into it's going to be difficult to get
Orann Coyle: out of. And a real- world example at the moment
Orann Coyle: is buy now, pay later. And so that is a massive,
Orann Coyle: massive impacting thing on your finances in the long run,
Orann Coyle: because if you are not able to service those debts,
Orann Coyle: or you get caught in that trap, in the long term,
Orann Coyle: that affects your ability to buy a home, your credit
Orann Coyle: be affected, it could affect your relationships, because money is a
Orann Coyle: massive part of personal relationships. And so my opinion is,
Orann Coyle: you have to be very conscious of your spending when
Orann Coyle: you're young. And leading back to when people should seek
Orann Coyle: out information in their 20s and 30s, that's why you should, because
Orann Coyle: you need to make sure that the bad decisions are
Orann Coyle: signposted so that you can try and avoid them as
Orann Coyle: best as possible. So things like high- interest vehicles, there
Orann Coyle: is no need for that. So trying to avoid those
Orann Coyle: things can make a big difference. And obviously just overspending
Orann Coyle: and frivolously spending money. In reality, the first thing that
Orann Coyle: you should be thinking about is, " I need to get
Orann Coyle: a rainy- day fund behind me so that I know
Orann Coyle: I'm safe." And yeah, if you spend some money, that's okay,
Orann Coyle: you have to love your life, but you have to
Orann Coyle: always be aware, " Do I have a cushion to fall
Orann Coyle: back on if things don't play out the way I
Orann Coyle: wanted them to play out?" And that's really important, and
Orann Coyle: that's the foundation of a conversation I have with anyone.
Kia: Number four, if you know me, you know how much
Kia: I love talking about pensions. Legal & General's Kim Brown and
Kia: I went deep on workplace pensions, and she has some
Kia: inspiring advice on what you want your dream retirement to
Kia: look like.
Kim Brown: But the amount that you should be contributing is based
Kim Brown: on you. It's based on what's affordable, but it's also
Kim Brown: based on when you want to retire and what that
Kim Brown: retirement looks like. So my best advice would be to
Kim Brown: use some of the tools available to help you plan.
Kim Brown: There's some brilliant free resource if you go onto Money Helper,
Kim Brown: they've got a retirement planner, you can put in details
Kim Brown: about what you earn, when you want to retire, as
Kim Brown: I say, and they will show you your projected income
Kim Brown: at retirement. But they've also got good sliders that you
Kim Brown: can adjust, " What happens if I paid more? What happens
Kim Brown: if I retired later?" Companies like ours, like Legal & General,
Kim Brown: will have similar things, retirement planner tools, so get on
Kim Brown: one of those free tools through your pension provider or
Kim Brown: generally available and just look and think about it. And
Kim Brown: your point on younger savers is so true, save as
Kim Brown: much as you can as early as you can, because
Kim Brown: that money has a really long amount of time to
Kim Brown: work for you.
Kia: Amazing. I think that's really important, like you said, and
Kia: I'm not too far away. So 30 is, it's approaching
Kia: for me, it's coming. Is there a certain amount that
Kia: people like myself, around that age, should aim to have
Kia: in their pension pot?
Kim Brown: I thought you were saying you're not that far away
Kim Brown: from retirement, I thought-
Kia: No, gosh, no. Gosh, no.
Kim Brown: Not quite.
Kia: Not quite.
Kim Brown: Not too far away from 30. Okay. I think it's worth looking at, and thinking now,
Kim Brown: but I would just regularly review it. So I think
Kim Brown: what can be really important is when you get a
Kim Brown: pay increase, before you get used to that money in
Kim Brown: your pocket, log back onto one of those planners, think
Kim Brown: about the difference it could make over the longer term
Kim Brown: if you invest. Same is true if you get a bonus,
Kim Brown: it's a really tax- efficient way of using your bonus money.
Kim Brown: And again, before it goes in your pocket, think about
Kim Brown: retirement you and what that could mean then.
Kia: That's good. I'm going to, I think I've said this before, pina colada
Kia: on the beach, I'm going to have that in mind
Kia: when I come thinking about my pensions. That's really good. Number five,
Kia: when it comes to paying pensions, there are many gaps
Kia: between men and women. Emilie Bellet, host of The Wallet,
Kia: came on to share what women need to know about money,
Kia: and had lots of practical ways women can manage their
Kia: money and build their wealth.
Emilie Bellet: When we think about money, finances, investing, that can be
Emilie Bellet: quite scary and overwhelming and you don't know where to start.
Emilie Bellet: So it's just trying to start with the basics, and often,
Emilie Bellet: when we run our courses and boot camps, we try
Emilie Bellet: to have these conversations about money. There's still such a
Emilie Bellet: big taboo around money because they have this lack of
Emilie Bellet: education and money being this thing where it's quite, I mean,
Emilie Bellet: I've always been taught that it's quite impolite to talk
Emilie Bellet: about money, that girls shouldn't talk about money. When you
Emilie Bellet: look at the statistics, girls actually receive 20% less pocket
Emilie Bellet: money than boys. So I think doing a little bit
Emilie Bellet: of work on your money mindset by having a conversation,
Emilie Bellet: trying to write your money story, maybe seeing a money
Emilie Bellet: coach also. Financial advisors can also help you, but really doing
Emilie Bellet: the work for yourself. And then it's organizing your finances,
Emilie Bellet: not being worried about checking your bank account. And I
Emilie Bellet: know that's quite scary for people who never look at
Emilie Bellet: their finances, but on the morning, try to check your
Emilie Bellet: bank account once a day, you'll feel empowered, you know
Emilie Bellet: exactly how much you have. And the same is going
Emilie Bellet: to go for debts, trying to understand how much debt
Emilie Bellet: do you have, how much savings do you have, and try
Emilie Bellet: to understand your basic numbers. So having a little spending plan,
Emilie Bellet: trying to check for the past months or for the
Emilie Bellet: past three months, how have you been spending your money?
Emilie Bellet: So this is the first part. And then thinking more
Emilie Bellet: broadly about wealth, we all should think about wealth. And
Emilie Bellet: of course here we're talking financial wealth, but knowing a
Emilie Bellet: few numbers. So maybe trying to calculate your net worth,
Emilie Bellet: which is the sum of all your assets, minus the
Emilie Bellet: sum of your liabilities. If you are quite early in your working
Emilie Bellet: life and if you have a lot of student debt, you will have
Emilie Bellet: a negative net worth, but that's okay. It's just a matter
Emilie Bellet: of improving this number over time and knowing your numbers,
Emilie Bellet: knowing how much savings you have. So really knowing these numbers,
Emilie Bellet: also your credit score, and writing them down, and having
Emilie Bellet: maybe a little date with yourself and your money once
Emilie Bellet: a month, and I'm sure you talk about that also
Emilie Bellet: with your friends and communities and on your podcast, but
Emilie Bellet: it's having this regular catch- up with money I think
Emilie Bellet: is really helpful, and not judging yourself, really detaching your self-
Emilie Bellet: worth from these numbers. They don't define you. The amount
Emilie Bellet: of money you earn, the amount of debt you have,
Emilie Bellet: they're not your personality, so trying to separate the two
Emilie Bellet: I think is quite important. But be very realistic about
Emilie Bellet: how much money you have, how much money you don't have,
Emilie Bellet: and what are your goals going forward.
Kia: Number six, we all love living in the moment, but Legal & General's,
Kia: Karen O'Byrne really taught me the importance of protecting your
Kia: future just in case the unexpected happens.
Koren Byrne: Just because you're not having children and you're not getting
Koren Byrne: married doesn't mean that you shouldn't have any protection insurance
Koren Byrne: in place. I am my sole dependent, and if I
Koren Byrne: can't work or something unexpected happens to me, there are
Koren Byrne: still bills that need to be paid and I'm the
Koren Byrne: one that's responsible for them. So critical illness, income protection,
Koren Byrne: life insurance, explore them, read up on them, have conversations
Koren Byrne: about them, and just see if they're right for you.
Koren Byrne: And you can also have access to things like well-
Koren Byrne: being benefits, private diagnostics, counseling, private GPs, and these are
Koren Byrne: the services that you can access right now, which again
Koren Byrne: saves you money. So there are benefits to having these
Koren Byrne: products now, not just looking into the future as well.
Koren Byrne: I'm definitely of that generation of millennial that's very much YOLO.
Koren Byrne: I've just really aged myself there in saying that. I know,
Koren Byrne: I'm definitely not Gen Z. However, I think it's a
Koren Byrne: really great attitude to have sometimes, but don't do it
Koren Byrne: at the cost of your financial security for now and
Koren Byrne: in the future. By all means, enjoy life. Enjoy the
Koren Byrne: choices that you've made, enjoy the family that you've built,
Koren Byrne: whether that's you and your cat or you, two dogs,
Koren Byrne: three goldfish and a hamster, or whether that's you married
Koren Byrne: with children, don't put things off waiting to do other things.
Koren Byrne: So just be really mindful and don't disengage from your
Koren Byrne: finances just because you're enjoying your disposable income.
Kia: Number seven, getting to know the benefits of ISAs and making
Kia: the most of them is really important to building a
Kia: personal wealth Legal & General's Fahad Ahmed explained all about stocks
Kia: and shares ISAs and how you can make them work for you.
Fahad Ahmed: So first of all, you've got that tax- free element
Fahad Ahmed: that we spoke about. So any money that you make
Fahad Ahmed: through gains on the stock market, you don't have to
Fahad Ahmed: worry about paying tax on it. The good thing about
Fahad Ahmed: stocks and shares ISAs is that if you invest for
Fahad Ahmed: the long term, and we're talking about over five years,
Fahad Ahmed: you can generally expect to see better returns than what
Fahad Ahmed: you would see if you just left your money in let's
Fahad Ahmed: say your current account, or even a cash ISA. So
Fahad Ahmed: that's another thing that's really good. I do need to
Fahad Ahmed: stress though that with stocks and shares, ISAs, it's an investment. And
Fahad Ahmed: when we're talking about investing, it's all about the long term.
Fahad Ahmed: It's all about that minimum five years. That's the key
Fahad Ahmed: number to remember. But the longer you leave your money invested,
Fahad Ahmed: the more chance there is that you'll actually see positive returns.
Fahad Ahmed: As I said though, it's an investment, so your money,
Fahad Ahmed: it will go up and down, and you could actually
Fahad Ahmed: get back less than you put in. So if it's okay,
Fahad Ahmed: I could just touch on those different options for how
Fahad Ahmed: you can invest in a stocks and shares ISA. So
Fahad Ahmed: there's two main options. The first one is what we'd
Fahad Ahmed: call a DIY approach. So this is where you pick your
Fahad Ahmed: own investments. You can pick things like corporate bonds, government bonds,
Fahad Ahmed: unit trusts. You can even go as far as to
Fahad Ahmed: pick your own individual company shares. And for me, that's
Fahad Ahmed: what seemed a little bit daunting.
Kia: It's very hands- on, isn't it?
Fahad Ahmed: Exactly, exactly. So for me, it is not really the one. What
Fahad Ahmed: I like is the second option, which we call managed portfolios. Now,
Fahad Ahmed: with a managed portfolio, you can take a step back,
Fahad Ahmed: you invest your money, and you leave it to the professionals,
Fahad Ahmed: you leave it to the investment experts to invest your
Fahad Ahmed: money on your behalf. The only thing you've got to
Fahad Ahmed: do is pick what level of risk you want to take.
Fahad Ahmed: So providers that have this option, they'll generally have a
Fahad Ahmed: couple of managed portfolios, maybe three, maybe five, that all have
Fahad Ahmed: a different risk rating. So you've just got to decide
Fahad Ahmed: whether you want to go for the lower risk one,
Fahad Ahmed: a medium risk one, a higher risk one. Sometimes you'll
Fahad Ahmed: see different terminology, they might use words like cautious, adventurous,
Fahad Ahmed: things like this. But it's the same concept. That's great for beginners because
Fahad Ahmed: you don't have to have a huge amount of knowledge.
Fahad Ahmed: You can just take a step back and like I say,
Fahad Ahmed: let the professionals do their thing.
Kia: Number eight, with higher living costs and inflation, breaking into
Kia: the property market has seen more difficult than ever. But Legal &
Kia: General's Hazel Johnston shares some great tips for getting a
Kia: foot onto the property ladder. What if you don't have
Kia: access to that kind of family support? Do those people
Kia: risk being locked out the property market?
Hazel Johnston: Yes. I'm really interested to use the word overwhelming, because
Hazel Johnston: it can be so easy to feel so overwhelmed looking
Hazel Johnston: at the amount, but what I'd say, it probably comes
Hazel Johnston: to three things. I'd say, first of all, no, you're
Hazel Johnston: not locked out that market. If we're talking about savings
Hazel Johnston: and actually being able to financially get there, I'd say,
Hazel Johnston: if you're anything like me and you've got a pot
Hazel Johnston: of money saved up, you want to try and keep
Hazel Johnston: that there. And it's so easy to dip into that
Hazel Johnston: or be tempted to if your friends, I don't know,
Hazel Johnston: make a trip or something. So I would always say,
Hazel Johnston: try and save on the side. So have your property
Hazel Johnston: savings either in an ISA or whichever way that you choose
Hazel Johnston: to do that, but then there are some apps and
Hazel Johnston: tools that can help make saving on the side for
Hazel Johnston: your little luxuries really easy. So I know for example
Hazel Johnston: with my bank, it will round up automatically the spare
Hazel Johnston: change to the nearest pound, and then that's my little
Hazel Johnston: fund that actually builds up quite a bit over time.
Kia: It does.
Hazel Johnston: So I'd definitely say trying to utilize little tools and
Hazel Johnston: techniques like that can help, without it then feeling like
Hazel Johnston: a chore, trying to get those savings up. Thirdly, and
Hazel Johnston: the more practical part really, if you really can't afford
Hazel Johnston: to save or get to the savings that you want
Hazel Johnston: to or all the schemes that are available, there's lots
Hazel Johnston: and lots of details, which I'm sure mortgage advisors could
Hazel Johnston: help you on that. And then you've also got lifetime ISA,
Hazel Johnston: but essentially getting free money. They'll give you 1, 000 pounds
Hazel Johnston: for every 4, 000 pounds you save, so it's 25%
Hazel Johnston: of your savings up to 4, 000 pounds each year.
Hazel Johnston: And I just think people need to be more aware
Hazel Johnston: of that. So it's not just about buyers and purchasers
Hazel Johnston: having to do all these different things to try and
Hazel Johnston: get into the industry. A lot of big industry names
Hazel Johnston: are also supporting new and innovative initiatives. So one being
Hazel Johnston: Generation Home, that's a startup mortgage company. So there's lots
Hazel Johnston: and lots going on to try and make it easier
Hazel Johnston: for people to get on that property ladder.
Kia: Number nine, you often hear the importance of diversification when
Kia: it comes to investing. Pension expert Michael Porter from Legal &
Kia: General shared an amazing analogy to help us understand it,
Kia: not just for pensions but for an investment portfolio. Have
Kia: a listen to this.
Michael Porter: So diversification in its simplest terms, is not putting all of
Michael Porter: your eggs into one basket. So not going all in
Michael Porter: on equities or all in into a bond fund. So
Michael Porter: if you think about it a bit like going to
Michael Porter: a buffet, so when you go for a buffet, rather
Michael Porter: than taking just one particular type of food, you're then
Michael Porter: risking not liking that food and it might not be
Michael Porter: to your taste. So actually, at a buffet, you would
Michael Porter: go and try a few different types of food, and
Michael Porter: the chances are then that if there's one part of that
Michael Porter: meal that you don't like, then there are going to
Michael Porter: be other options available to you that you will like, ultimately.
Michael Porter: So that's the first thing. And the other thing I
Michael Porter: would say is that you should probably have a balanced
Michael Porter: diet as well. So not just all about pension savings,
Michael Porter: you probably want to diversify where your savings are invested,
Michael Porter: because they all serve a different purpose. So pensions, for example,
Michael Porter: saving into a pension is going to help you towards
Michael Porter: saving for retirement, but then if you've got medium- term
Michael Porter: savings goals, you might want to invest in something like
Michael Porter: a stocks and shares ISA or have a cash ISA.
Kia: At number 10, we often hear and maybe dream of financial freedom, but how do
Kia: we actually get there? Jenny Hazan from Legal & General broke
Kia: it down for us.
Jenny Hazan: Work on something that the industry sometimes like to call
Jenny Hazan: the FU fund. And that is really about having power
Jenny Hazan: and having choice. So this is the ability to walk
Jenny Hazan: away in situations where they're not serving you anymore. So
Jenny Hazan: that might be a job that you really hate that's
Jenny Hazan: really impacting your mental health, it might be to walk
Jenny Hazan: away from a relationship, it might be to walk away
Jenny Hazan: from that awful flatmate that has not washed the dishes
Jenny Hazan: since the day they moved in. And over time, you
Jenny Hazan: can continue to build that fund. So I think that's
Jenny Hazan: a really important one to think about. After that, you
Jenny Hazan: can start thinking about those savings goals, so the short term,
Jenny Hazan: the medium term, and the long term, and think about
Jenny Hazan: what sort of money you will need for those goals,
Jenny Hazan: and at what point in your life, because that has
Jenny Hazan: an impact on where you want to invest that money.
Jenny Hazan: So I think from a longer term perspective, obviously, a
Jenny Hazan: pension is a great place to start thinking about long-
Jenny Hazan: term saving. Pensions can be really tax efficient, so if
Jenny Hazan: you wanted to put 100 pounds into your pension, 80
Jenny Hazan: pounds of that would come from you, 20 pounds would
Jenny Hazan: come from the government, and also, your employer will, if
Jenny Hazan: you've got a workplace pension, will also be making contributions
Jenny Hazan: as well. And I think it's worthwhile mentioning that some
Jenny Hazan: employers will put more money in, they'll match your contributions,
Jenny Hazan: and if you are not going to that level, you're actually leaving
Jenny Hazan: free money on the table, and no one wants to
Jenny Hazan: do that.
Kia: That wraps up our top 10 money tips. I hope
Kia: you learn as much as I did, have a lovely Christmas,
Kia: and we'll talk to you in the new year. I'd
Kia: love it if you could review the podcast, spread the word,
Kia: and help others get a little bit richer too. Keep
Kia: up with the show on TikTok and Instagram at Legal & General. Thank
Kia: you for listening. See you soon.