When I was given the opportunity to interview chartered financial planner Makala Green for this feature, I messaged my girls’ WhatsApp group to see if they had any questions about money. Turns out they had plenty – my phone didn’t stop pinging for at least an hour, and responses flooded in throughout the day as they each caught up on the thread. It opened up a candid conversation about class, pride, anxiety, societal pressures and relationships, with us all agreeing that money felt like the last taboo in our friendship group, the only topic off-limits.
The Money Edit by Makala Green is out now.
Thankfully, no-one is better placed to advise 30-something women on their finances than Makala. Having worked her way up from 16-year-old Nationwide cashier to founder of a financial planning firm, she is the UK’s first Black female chartered financial planner and this week released her first book, The Money Edit. Covering everything from money and marriage to savings, budgeting, Makala’s goal is to help derail the shame around financial mismanagement, empower people to understand their finances and change their money mindset. Here, she shares her expert tips on everything from getting the best from your pension to dealing with financial anxiety.
Boost your pension pot
- Start early- I encourage everyone to get a pension as early as possible. The earlier you start, the better and the healthier sum you will achieve in retirement.
- Take advantage of employer’s contributions- Contribute to an employer’s pension where possible. In most cases, your employer is obliged to contribute, and two hands are always better than one when building a pretty pension pot.
- Contribute more than the minimum if possible – Under the auto-enrolment rules, employees contribute 4% of their annual salary towards a pension (employer 3% and government 1%). However, if you contribute more than the required minimum, you may have the option of retiring earlier or building a more fulfilling pension pot.
Invest your money wisely
- Diversify– When it comes to money, diversification is important; in other words, don’t put all your eggs in one basket. You may consider a few of the following; saving cash, investing, buying property, starting a business or even cryptocurrency.
- Avoid inflation – Ideally, only keep sums of money in cash that you hope to use in the short term to avoid inflation chipping away at your hard-earned cash. Inflation will devalue your capital over time, meaning the number of goods and services you can buy with your money will reduce. Alternatively, you may choose to keep emergency funds readily accessible in cash.
- Invest for the long term – Money you have no plans for or want to stick away for the long term, you can consider investing or topping up your pension savings. Your capital is exposed to risk, but play the long game and you have the potential to earn a greater return.
Overcome financial anxiety
- Know you are not alone – If you have money worries, avoid suffering in silence. There are many charities available to help and support, such as Turn2us or StepChange. Alternatively, speak to a friend or family member about your concerns.
- Take time out – When we are anxious, our minds can spin out of control. It is important to take a break and clear your head to avoid this happening. Build some activities to initiate relaxation into your daily routine as your mental health comes first. This might include taking a walk, listening to music, reading a book, or taking some time to yourself to reflect.
- Avoid irrational thinking – When our finances feel out of control, it’s easy to think the worst about what is likely to happen. These negative thoughts create stressful emotions. To minimise the negative impact of irrational worries, you need to keep things in perspective. Set a plan of action to give yourself something to look forward to and aid more positive thoughts.
Get budget and savings savvy
- Pay yourself first (PYF) – Too often, we put ourselves at the bottom of the payment list. PYF means automatically routing a specified savings contribution from each paycheck at the time it is received.
- Spend within your means – A budget is a great way to keep your spending under control. Firstly, analyse how much you are spending and identify any areas where you can cut back or curb to limit overspending. Remember, every month is different, so budget regularly to keep on top of your finances.
- Include savings in your budget – Once you know what you spend in a month, you can begin to create a budget. Be sure to factor in essential expenses and expenses that occur regularly, such as travel and car maintenance. Next, include a savings category in your budget and aim to save an amount that initially feels comfortable to you. Plan on gradually increasing your savings overtime or when income increases.
The Money Edit by Makala Green. Published by Yellow Kite on 31st March 2022, £16.99. Available as aTrade Paperback, Audio and ebook.