AMA/Expert Q&A - Money Management
Former Member
Deactivated Posts: 508 Incredible Poster
Who are the experts?
Nick from the charity MyBnk
Hi, I’m Nick, and I’m the Head of Education for Young Adults at MyBnk. My job usually involves planning, designing and delivering financial education training to young people aged 16-25, as well as managing a team of trainers who deliver our courses in bespoke training sites.
MyBnk exists to bring financial education to young people –we want a nation of young people who are confident and comfortable with their financial situation. We work with 7 – 25 year olds and deliver work in schools, colleges, youth clubs and now in your own home with the lockdown. We also make resources to support learning about money – you can check some of those out on The Mix!
If you want more info about our courses,
resources or anything else MyBnk, you can email me on nick@mybnk, check out our
website at www.mybnk.org or
call 020 3581 9920
(although email might be best at this point in time 
)
We also have Holly-Rae from the Carers trust, who work to improve support, services and recognition for anyone living with the challenges of caring. Since it is Carers Week, Holly-Rae will be able to answer any Carer specific money worries!
Holly-Rae is the Education Equality Manager at Carers Trust. She leads on the Young Carers in Schools programme, which helps schools identify and support their young carers. She also works with colleges and universities to ensure that they are offering appropriate support for young adult carers.
Holly-Rae will be online on Tuesday 16th of June
Comments
I'm basically in need of a 'How to Get a Mortgage for Dummies Guide' :joy
There are so many different kinds (instant ones, fixed ones, etc) and I don’t really understand them all.
What? Except robbing a bank?
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
Current Account
Overdraft
Savings account
ISA
Standing order
Credit card
Payday loans
Just curious about it because I had to do something very similar for some homework.
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
I'm a community moderator. I'm here to help guide discussions and make sure Community Guidelines are followed. I can't send DMs, but you can message @TheMix or email community@themix.org.uk with questions or concerns.
I'm just going to read through the questions that were left and start answering - give me a couple of minutes
Thanks everyone!
A credit card and debit card are very different products. Debit cards are for you to access your own money, Credit Cards are a way to borrow money from a lender via a bit of plastic.
If you need to pay for things and you don't have money to pay yourself, a credit card might be an option for you. BUT - Credit cards can cause real issues if you don't plan. If you only pay the minimum bills, it can sometimes be impossible to pay back the balance. I know of people taking £200 credit cards and spending £2000 on repayments.
Some people will take a credit card out to help their credit score - you need to borrow to have a score, no-one has a credit score as a default! - but you should be careful you don't borrow more than you can afford. Any borrowing you take on should be planned and worked out to make sure you can afford to clear the debt before you start.
In short, unless you want to borrow money or build a credit score, there's not much use to having a credit card over a debit card
Hope that answers your question! Do let me know if you want to ask any follow ups!
Lets tackle the most important thing you need to know if your saving... LOOK FOR A SAVING ACCOUNT WITH A HIGH AER RATE. This percentage will tell you how much extra the bank will give you every year for saving with them. The higher the AER, the higher the free money!
And as for get rich schemes...can't help there I'm afraid! (If I could I'd be sat on a tropical island myself!!) but there are ways to make a bit of side cash if you need to - we covered side hustles on a episode of our MyMoneycast - you can check that our here: https://www.youtube.com/watch?v=c9lvBmed8EY&t=442s
In terms of savings accounts, your main options are a normal, high street savings account, an ISA of some kind or some form of bond.
Instant Saver - means you can take your money out whenever you want, but usually have the lowest rate of interest paid and you'll pay tax on any interest earned!
ISA (Individual Savings Account) lets you save at usually slightly higher rates, and you don't have to pay tax on your interest but you can only put £20,000 each year into an ISA. (Side note, since you're 17 you can technically open a Junior ISA and an adult one and have £29,000 of allowance until you're 18, in case you have a lot to save!)
A bond is like the opposite of borrowing FROM a bank - they take your money for a fixed amount of time in return for a higher interest rate. You can't pull your money early usually so this is a long term solution.
When you hear fixed rate, it means the amount of interest they pay won't change if the Bank Of England interest base rate changes for a set amount of time = most banks will change their rates in relation to the BoE base rate - these are also known as variable.
Hope that all makes sense, but do lemme know if there's anything else you'd like to know!
You've actually asked 2 different questions!
In terms of SAVING money - it depends what you need. (See my reply to @independent_ for a basic breakdown of saving accounts) Saving accounts and ISA are both good options as they will give you more interest than a current account (your normal day to day account) but any of those 3 is better than none at all!
In terms of MAKING money, none of those is an income source really. Some of them are ways to BORROW money but they will need to be repaid so not a good way to MAKE money.
Credit cards - borrowing from banks with a card, lets you buy things now and pay later in return for you paying more than you took
Payday loans are a specific type of lender who borrow for short amounts of time (30 days usually) but
this will cost a fortune - you can double your debt if you borrow from a payday lender
Overdrafts are a bank facility attached to your current account - it will let you go below 0, but again you'll need to repay more than you borrow.
If you're looking for ways to make money, check our this episode of MyMoneycast where we discuss ways to make money: https://www.youtube.com/watch?v=c9lvBmed8EY&t=442s
FYI - A standing order is when you tell your bank to make a payment for you every week or month. A lot of people who pay rent to a private landlord will have a standing order to pay them, for example
Please feel free to follow up if you'd like to ask more
I'm going to be here until 9pm tonight, so if anyone has any questions, please ask away!
Nick
A student account usually has one major perk - an interest free overdraft. This means they'll allow you to borrow a certain amount against your current account (going below zero!) for no interest - sometimes up to £2000
When you finish uni, all that money needs to be repaid and most will start charging interest when you leave education. If you don't need the overdraft, a specific "student" account is less important.
If you only have a cash account and want a full current account, you could ask your bank to upgrade your account or perhaps take a look at the new app based banks if you wanted a second account to help manage bills etc!
I checked - there actually is a "Dummies Guide to Mortgages"
A mortgage is just a LARGE loan from a bank to pay for a house. You will need to apply to a bank or mortgage provider like you would for any loan.
The big difference is that while I can have a loan for no money upfront, most mortgage providers will want to see you have a deposit saved - usually between 10-20% of the value of a house.
That means if your dream home is £200'000, you'll need to save £40,000 before the bank will lend you the other £160,000
They will also do a detailed budget of your income to see if you can afford a mortgage and the amount you can borrow is linked to how much you are earning - sometimes known as the LOAN TO VALUE ratio.
The 2 BEST things you can do now if you're planning to have a mortgage
1) START SAVING FOR THE DEPOSIT
2) START BUILDING YOUR CREDIT SCORE
In terms of paying it, they'll set up a direct debit from your bank account so it'll come out every month automatically like a phone bill! If you don't pay your mortgage, you will lose your home so it's important that if you HAVE a mortgage, you keep on top of it.
Shout if you want to know more on this!
Lets start with your first question:
Wonderful choice of career first and foremost! We don't usually talk about a figure you should aim for in terms of how much to spend on rent - ideally it would be as cheap as possible.
Some people talk about the 50/30/20 rule - 50% of your income is for essential costs like rent and bills, 30% on things you want like nights out and buying stuff you like and 20% savings or debt payments - however depending on where in the country you are, some people pay 30-50% of their income on housing.
Perhaps look into whether you can do the job you love somewhere the cost of living is lower? If you're on a low income, the benefits system might be able to help with costs as well.
Check out this site for a bit more info: https://www.moneyadviceservice.org.uk/en/articles/how-much-rent-can-you-afford
As for question 2 - if you haven't got to use the money you earn, definitely consider saving as much of it as you can. If you follow the 50/30/20 rule, that's a really good place to start!
We covered savings and investments on a livestream a couple of weeks ago, heres the link in case you want to watch: https://www.youtube.com/watch?v=0QZIefOwFc0&t=977s
Hope that helps! If you need more info get back to me
Sorry that it did not make any sense. I meant about borrowing money instead of making money. Oops! Thank you for the answer though.
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
Would it be better to get a job that just about pays for the necessities but is something that you like and feel happy doing or is it better to get a job that pays better so you can have enough for emergencies and fun but that you do not like doing?
In the future I want to be a gymnastics coach but my mum says that it is a bad idea because of the pay. Sorry if it makes no sense again.
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
What is a credit score used for?
How can you boost the score?
Do I need to worry about it as I am only 14?
The only thing that I know about a credit score is that it is mentioned in the ClearScore adverts with Moose (the super cute dog.)
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
I totally get what you mean now! If you are looking to borrow money then overdraft is technically the cheapest way to do it but it also depends on how much are you wanting to borrow?
Ultimately you should only borrow if you have to. But if you DO have to, make sure the APR is as LOW as possible and you understand how much they want you to pay back BEFORE you agree! Top Tip there
Nick
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
That is the ultimate question @Kasa2103 and a lot of adults in their older years still haven't decided the answer to that question! I guess I'm lucky that I do a job I love and get paid well enough to live well but it wasn't always that way. I've done bar jobs to survive too!
There's a quote I always liked: If you find a job you love, you never have to work a day in your life.
The real question is would you be happy in a job you hated if it meant you can have more money? I'm afraid only you can decide that for you - not even your Mum can decide that for you.
My parents hated the idea of me being a youth worker when I first told them. But when I showed them my pay, they saw I was happy and stable, and (most importantly) I'd stopped asking THEM for cash, they seem to accept my choice. Perhaps you can do a little research to see how much a coach earns and see if they helps you decide whether its for you?
According to indeed.com, the average pay for a Gymnastics coach is approx £14 an hour. If you work full time (37.5 hours a week), that works out to £27,300 a year before tax. After taxes and deductions, you'd be looking at £1,850 a month. How would that work out? Even if you start a little lower down the scale when you first start, you could still do ok as a coach!
Happy to answer!!
APR means the Annual Percentage Rate - its how much extra they add to your debt over 12 months. So if something says APR of 10%, it means over 12 months they will add 10% of what you borrowed on top...its how they make their money!
I never thought I'd be doing this job when I was a teenager! It's wonderful where life takes us!
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous
"The way that I have found the light in my life is through the expressive arts because I know that I will be accepted for the way I am." ~ Me
"I'm going to get strong again and see you soon. " ~ Anonymous