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Are you scared to look at your bank statements? Are you unable to take cash out because you hate spending money? Or are you ashamed by your inability to save?


You’re not alone. We all have money hang-ups. Some are not too troublesome, others can really get in the way of daily life.


Here are some tips on how to face some of the most common money fears:





Fear: "I don’t want to get into debt"

Tip: Debt is really hard to avoid, thanks to tuition fees, the cost of housing and availability of low cost credit but you can minimise it, for instance, by refusing a massive overdraft if it is offered by your bank, avoiding the use of credit cards for general spending and if you are in the red, making sure you are paying the least interest possible.


Fear: "I am worried I won’t be able to pay off my debts"

Tip: If you have credit cards, pay off more than the minimum each month whenever you can, or if you are struggling to meet existing repayments, call up the lender and see if they are happy for you to make lower repayments for a longer period. Talking to lenders rather than avoiding them can be surprisingly helpful.

Remember that with most loans, overpayments and early repayments are allowed. If you are in debt already, don’t take out more credit to pay off other debts – this can quickly develop into a debt spiral. Again, make sure the interest rate you are paying is as low as possible.





Fear: "I’m not paying the right amount of tax"

Tip: If you are one of the six million or so self-employed or contract workers in the UK, your tax affairs are more complicated than those on PAYE through employers. Good accountants can be worth their weight in gold – you can search for one here

Accountants charge a fee but can often save you a lot more in tax through helping you to use allowances properly. A phone call to HMRC to ask any questions is worthwhile. The Revenue runs webinars from time to time explaining things like VAT and company dividends, and there’s a checker on its website here


Fear: "I’m not saving enough into my workplace pension"

Tip: How much is enough depends on your age, your planned retirement date and how much income you think you would like in retirement. As a guide, basic living standards cost £9,400 a year rising to £35,000 a year if you want a lifestyle that includes a weekly meal out and a monthly health club membership, according to Standard Life. If you live for 20 years after you retire, that means you’ll need £200,000 in your pot, to afford the basics, or £700,000 for the fun version.

You may have the option of paying more into your workplace pension. If you can afford it, this is always a good idea. You can save into your own pension on top, too. There’s also now a Lifetime ISA, which enables you to save for retirement and offers a Government bonus of 25 per cent when you retire.





Fear: "I will never be able to afford my own home"

Tip: You will be surprised at how quickly savings start adding up once you begin putting aside some money every month. If multiples of £100 each month seem like too much, try the Moneybox app, which rounds up your spending to the nearest £1 and puts the rounded up amount into an investment account for you. Be as specific as you can with your savings goal by researching how much you will need for a deposit and legal fees to buy the kind of home you want. Ask parents and other relatives if they are prepared to help. A problem shared..


Fear: "I will never be accepted for a mortgage" 

Tip: Lenders are quite picky these days and things like being self-employed or a contractor, or having young children in childcare, can all count against you. Mortgage brokers are very useful because they know what certain lenders look for or don’t like and will be able to steer you in the right direction and avoid being turned down because of a clause you weren’t even aware of. Make sure your credit record is as good as possible (sites like and if you have debts, pay them down – lenders like to see that you are reducing rather than increasing any debts when you take out a mortgage.





Fear: "I don’t have any spare money to save"

Tip: It’s hard to save if you are shelling out for debt repayments at the end of every month, so try to clear you debts first. Cut back on unnecessary spending and set up a direct debit for an amount you know you can afford to save each month. This can be just after you get paid or just before – some people like to leave their current account balance as high as possible for as long as possible during the month to avoid any overdraft fees.


Fear: "I don’t have any emergency cash set aside"

Tip: Experts recommend three months’ worth of salary should be kept in cash savings “for emergencies”. That sounds quite a lot and if you are struggling with living costs and trying to save for a home/ retirement. Typical emergencies are the boiler or breaking down. This can end up costing thousands. Build this pot up over time, £50 a month say, and don’t dip into it for anything except real emergencies. But if you have a lot of debt, it is better to pay this off first before saving your cash reserve.






Fear: "If I became really ill and couldn’t work, me and my family would suffer"

Tip: There are different types of protection out there, such as life insurance which pays loved ones a lump sum or income if you die, income protection if you are unable to work and critical illness if you fall ill with one of a number of illnesses. Premiums are determined by your age and health and are usually paid monthly by direct debit. Lifesearch is a broker that can help with all different kinds of protection cover. Be prepared to answer lots of health-related questions. 


Remember: If you’re in debt and need advice, help is at hand. There are a number of organisations that can help you deal with the problem and help you get your finances back in balance. Both Citizens Advice and StepChange provide a wealth of useful information on their websites. Take the first step to financial EQ and setting your mind at rest about your money.



What is Money Means?

Money Means is a news and information series written by independent financial and consumer journalists and experts*. FSCS launched Money Means in 2016 to help give people clear and useful information about personal finance, to increase their understanding and confidence when dealing with money.


9/8/2017 2:31:40 PM