Young, gifted and broke — navigating the cost of living crisis

This is an audio transcript of the Money Clinic podcast episode: ‘Young, gifted and broke — navigating the cost of living crisis’

Claer Barrett
Happy new year, Money Clinic listeners! If you’ve got a money problem that’s bugging you, then we want to hear about it. Make it your resolution to email us money@ft.com with your ideas for topics we should be covering in upcoming episodes. Welcome to Money Clinic, the weekly podcast from the Financial Times about personal finance and investing. I’m Claer Barrett, the FT’s consumer editor.

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Claer Barrett
Just before Christmas, I hosted an event aimed at helping people navigate the cost of living crisis. It was called Young, Gifted and Broke, and it was organised by the FT’s Financial Literacy and Inclusion Campaign, otherwise known as FLIC. Well, we were inundated with questions. How to invest when you’re cash-strapped? What to do if your portfolio has taken a turn for the worse? How to overcome mental barriers about money, and what to do if you think your landlord is unfairly demanding more rent? Well, I was on hand with a panel of four experts to tackle these questions and many, many more. So listen up and take notes. Coming up, I’m gonna play you a recording of that event. It’s packed with tips and guidance that could help you really rethink your financial plan this year. But it comes with our usual health warning. The episode is intended as general information and does not constitute individual financial advice. For that you’ll need to find an independent financial adviser.

Claer Barrett
(Applause) Welcome everybody to Young, Gifted and Broke, your guide to navigating the cost of living crisis. We’re thrilled that you can join us this snowy lunchtime in London from the heart of the FT’s headquarters. Now I’m going to introduce today’s panel to you one by one, and I’m gonna get them all to start off by giving me their one top tip about how they are navigating the cost of living crisis. Starting with the wonderful Margot de Broglie. She is the founder of a new finance app you might have noticed called Your Juno. It’s for women and non-binary people. But frankly, Margot, the advice you give, it’s great news for anyone who wants to follow you on Instagram or check out the modules on your app. So what’s your one tip for everybody watching today?

Margot de Broglie
I would say obviously money is tight for most people, so make sure that you’re maximising the money that you can get from your employer. So the first thing is really negotiate your salary. Be proactive about it every six months to a year. In our community, we have people who are creating something called a “Wins” folder. Basically, every time they achieve something at work, they take a screenshot of a review, something they’ve done positively. They can add it on to a folder of their computer, and then when the salary negotiation time comes, they have an amazing record of all the amazing things they’ve done at work.

Claer Barrett
The “Wins” folder. I like that very much. Well, great news. Obviously, if you’re in the private sector that’s gonna help you. Public sector . . . (Laughter) (inaudible). Let’s move on to Timi Merriman-Johnson. Timi is better known on social media as Mr MoneyJar. Timi, tell us a little bit about why you’re here today and what your message is to everybody watching.

Timi Merriman-Johnson
So I previously had a monthly finance routine. I realised, hey, I’m actually spending money like everyday, multiple times a day. So I actually manage it weekly now. And this has made it way easier for me to remember. I’ve been spending my money on way less overwhelming in the current climate and has given me a much greater sense of control over where my money is going. So a weekly money day is just my doctor.

Claer Barrett
Brilliant. Weekly budgeting. Now, our third guest today is Dan Wilson Craw. He is the deputy director of Generation Rent. Tell us a little bit about where you’re coming from and what your top tip will be in today’s session.

Dan Wilson Craw
Absolutely. So Generation Rent, well, we represent old private renters in the UK. My top tip for anyone who’s worried about their housing situation is if your landlord is threatening you with a rent increase or eviction, even if you or you come to an end of the fixed term, you feel like you need to move out. You actually don’t. Basically, as long as your landlord hasn’t served a formal notice or a rent increase, then you’re still OK. There’s still room for negotiation.

Claer Barrett
Brilliant. We’re gonna go into more detail about that. So we have lots of questions about, people worried about renting. And last but not least, one of our FT columnists is here to join us. Jason Butler, better known on social media as JB the Wealth Man. Tell us a little bit about why you’re here today and your top tip for people watching.

Jason Butler
Yeah, we had to have someone to bring the sort of age up to a higher level (Laughter) with all these young guns here. I’m 53, so I grew up in the ‘70s, so we had a cost of living crisis like unbelievable, 25.8 per cent inflation in 1975. So I grew up all through the ‘70s with 10p in a metre. I know what it’s like to have no money and debt collectors knocking on the door more frequently than friends. My top tip is to work out what, what job you can afford. What I mean is rather than say, “This is my cost all by the way, I haven’t got enough money”, so OK, what is my ideal lifestyle? Which includes fun, saving for the future, dealing with the past, day to day, whatever it is, and work out what you need to earn from whatever source, what you need as opposed to what someone’s giving you. And then you can work out whether you’re in the right job, whether you’re in the right sector, because unless you know what good looks like, it’s very difficult to achieve it.

Claer Barrett
OK. Well, really great tips there. We’re gonna talk a little bit about investing now because that was probably the second most common question. Should I start investing now or should I wait? That was one that came up quite a lot from people where you have got a little bit of money spare still. But the more common one was “I started investing, but I’ve lost money. Now, what?” Now, Margot, you on your Juno community have a lot of people here really having second thoughts about having dabbled in investing. Maybe under lockdown when we had more spare cash. Tell us what the lay of the land is.

Margot de Broglie
Yeah, absolutely. I think it’s a common trend. We saw a lot of people have picked up investing during the pandemic and everyone thought there was, they were an expert investor because the market was going up every year. The portfolio was in the green and everyone was very confident. And now what we’re seeing is a lot of first-time investors are seeing their portfolio in the red for the very first time and they’re panicking. And so, yeah, in terms of content, I mean, learning what it means to recession-proof your investments and really understanding that investing is a long-term strategy. And we’ve seen cycles of recessions over and over again, but it never historically has lasted forever. The stock market has always gone back up. So what I recommend to people is just getting educated about the things that you’ve already invested in. Now is a chance to build your financial confidence and really understand how the market works, and that will build your confidence that it’s gonna go back up again eventually.

Claer Barrett
And Timi? 

Timi Merriman-Johnson
Yeah, I agree with everything Margot’s just said. If you look back to the early 20th century, we’ve actually had a recession at least once every decade, lasting from anywhere from six to 18 months. It’s actually quite a regular feature of a modern-day economy, and the stock market does recover. I think it’s also important to note with investing that if you pay into a pension, you are an investor already. That money is not sitting there in cash. It is being invested. And the reason why we don’t think of it that way is because we don’t check it. But what you’re doing is you’re investing over the course of your career. It’s like 40, 50 years and you’re investing regular amounts over time. And the idea is that if you do it over a long period of time with money that you don’t need, when you then come to sell those investments, they will have appreciated in value. And on the point about your investments disappearing, we need to distinguish between your investments falling in value and having to sell them at the value that they fall into so they can reduce in value. But if you don’t need to cash in at that point in time, you haven’t lost anything. It’s just the value of them.

Claer Barrett
Mmm. I think that’s one of the biggest problems. The fundamentals of investing are: you must build up an emergency fund so that if you do get to the stage where something bad happens and you need some cash, you don’t have to be forced into selling your investments when the market’s down, you can leave them alone. So hopefully reinflate. But Dan, turning to you now, we have had a great question. I live in London, this person says, there are great opportunities here, but the cost of living is horrific. What do the panel think about the trade-off of moving somewhere else and working remotely? I mean, this presumably is something that gets talked about in the Generation Rent offices quite a bit?

Dan Wilson Craw
Yeah. London has always been a lot more expensive than other parts of the country. I think we worked out that even this was, you know, several years ago, the rents were about twice as high as they were in the rest of England. But the salaries, that the average wages were only about 25 per cent higher. So you earn a bit more, but possibly all of it gets just split up in rent.

Claer Barrett
Mmm. So let’s say someone’s watching. They’ve had their landlord say, “You’ve been here for a year. We’re gonna pick your rent up by 30 per cent upon renewal”, which is not uncommon from what Money Clinic listeners and FT readers are telling us. Briefly, and there’s more on the Generation Rent website and Instagram page, what can you do if you’re a tenant in that situation?

Dan Wilson Craw
The important thing to remember is that this is usually, unless it’s a formal notice, this is normally your landlord just trying it on basically. It’s often the letting agent who’s doing that because the letting agent has even more of an incentive to push up the rent.

Claer Barrett
They get a percentage of the rent.

Dan Wilson Craw
Indeed, yes. So landlords, in our experience, tend to be a bit more willing to keep a tenant on, you know, someone who has reliably paid to pay the rent for the past year. But what you can do is, look at what other properties nearby are going for. You should also think about just yourself as a tenant. Have you been reliable? Would the landlord be taking a risk if you moved out? You should also just try to understand: is the property you’re living in, is it actually decent quality to be re-let? So if there’s anything wrong with it, then you can go back to your landlord and say, “Actually, we don’t think this property is worth what you’re wanting for it.” You know, that might be a negotiation you can do in terms of, you know, if you do pay a higher rent, can they make repairs or improvements to the property as well?

Claer Barrett
Sure. And also, as your website says, you can keep, when you’re negotiating with your landlord until you’ve signed a new rental contract, the rent will stay the same. I mean, obviously they could take steps to do section 21 and go for eviction notice and go through the motions with that. But you do have the opportunity to negotiate. It’s not like on the date that the tenancy runs out, that’s it, the rent is going up. The onus is on you to start that conversation.

Dan Wilson Craw
Yeah, that’s right. So you are vulnerable to a section 21, which is an eviction notice the landlord can use and they don’t need a reason to. And they can also formally raise the rent with a bit of formal notice. But you can challenge that at a tribunal.

Claer Barrett
Sure. Well, Timi, you’ve rented for a long time and you are actually the embodiment of the original question: “Should I move out of London to save money?” Live somewhere different because you’ve done just that. Tell us a little bit about that and what advice you would give people.

Timi Merriman-Johnson
So I know that the market is slightly different now, but don’t just factor in your rent if you’re moving. Also factor in the cost of travel because you’re just, you’re gonna have to do that anyway. I have just moved out of London to Brighton, unfortunately, I cannot recommend that as a cost of living too, because Brighton’s very expensive, but that is just a financial metric. What I have gotten from moving to Brighton is a much slower, much more relaxed, happier pace of life. On a Sunday evening, seemingly everyone in Brighton will just be on the beach watching the sunset. You know, and it’s a lot nicer. And I think in times when — I’m not saying this to be a downer — but like things are gonna take months, if not years, to get better economically. We must prioritise for wellbeing, happiness, purpose, all of the non-financial metrics that actually make life worth living.

Claer Barrett
OK, well, we’re gonna move on from property now to pensions. Now, Timi and then, and then Margot, a question came in before the event from people saying, “I’m really strapped for cash right now. Would I, you know, what, what would the consequences be if I stopped paying into the company pension?” So Timi, we’ll get you to tackle that first. But then another question has come in — we’re gonna go to this next — from somebody saying, “Is it better to pay into my company pension or invest into an Isa?” So, Margot, maybe you could tackle that one. So, so Timi, people are thinking about saving money by stopping paying into their pension.

Timi Merriman-Johnson
Yeah, that’s a very difficult position to be in. And that’s something that I’ve heard people raise a lot. So without giving any specific pension advice, all I would say to be austere is to try and pay in the minimum. So if you’re an employee, you’ll be paying in 4 per cent of your gross earnings into a pension. You’ll get 1 per cent tax relief on that. So that will be 5 from you and 3 per cent from your employer. If you pay in that minimum, you will get that 3 per cent minimum contribution from your employer and some employers will pay even more. And this is free money from your company, essentially it’s like getting a free pay rise.

Claer Barrett
And opting out is similarly a pay cut.

Timi Merriman-Johnson
. . . a pay cut.

Claer Barrett
I mean, if you’re in a really bad place and it’s the only way that you can free up some cash to pay down very expensive debts or temporarily stop your contributions. I think everyone on the panel agree it’s not a nice lever to have to pull, but as a last resort is something that you can do. I would say for me, the most important thing is restarting those contributions as soon as you can. If you can do what Timi says and drop down to it to a lower level, that’s one way of dealing with it. If you do have to stop, then don’t forget to start again. Now Margot, the second question that we have come in, which is all about investing into a company pension versus investing into a stocks and shares Isa, it comes back to your point at the beginning about that free money that we can get from our employers.

Margot de Broglie
Absolutely. So we really recommend a three-steps checklist before people start investing on their own. The first one, as you mentioned, is get out of high-interest debt. So that is consumer debt. It’s not your student debt and it’s not your mortgage because those fall into a different category of debt. The second one is build an emergency fund. So you don’t want to start investing on your own before you have that emergency fund. And the third one is max out your employer contribution, the free money, as you mention. Now, once you’ve done those three steps and you feel comfortable starting to invest in the stock market, I really recommend starting first with educating yourself on what is out there. Don’t go blind because fees matter a lot when it comes to investing and some of the platforms that kind of prey on beginners actually charge quite high fees. So you can get educated, it’s really not as difficult as it’s made out to be. In a few hours you can, you can learn everything you need to know about passive investing. And you’ll be saving a lot of money on fees and making much more confident investment decisions.

Claer Barrett
A great, a great answer. Now, slightly different way of asking this either-or question, which I’m gonna feed to Jason: is it better to invest in your stocks and shares Isa, with any spare money that you’ve got to hand or, pay off your mortgage? Question from a property owner.

Jason Butler
I don’t think it’s either-or. I think it very much depends on your preferences. So if I was being pragmatic, I’d say do both. A little bit of your mortgage and invest regularly into a global equity index fund. Not a recommendation. (Laughter) So because that’s just a no-brainer, you never, you’re gonna get the market return and you’re not gonna overpay for it. Right, OK? However, having paid off my own mortgage, for me it was a big sense of achievement to say we own all of our house. No one can ever take it away from us. When you’ve got no payments going out, you can then invest. So as we’re moving into a period where we have higher cost of borrowing, particularly on mortgages, overpaying mortgages — whether that’s regular or one-off amounts that come in — starts to become more attractive than investing in the stock market. And the other thing is, if we have a period of property stagnation, even if there’s not a fall, it’s quite nice to be able to get your loan to value down. So the more equity you can build into your property, perhaps that could be a strategy for when you come up for renewal. If you can get yourself below sort of have more than 25 per cent equity for when you come up to it, that might make sense either by putting the money aside in cash and then using it to lump it down or overpaying as you go on. Or you might want to think, well OK, I put some of that in a stocks and shares Isa. I might want to take some of that out, but there could be a chance that that’s fallen in value in the next three or four years. So I don’t I think, I think everyone’s different, but things are changing.

Claer Barrett
OK. While we’re on the subject of interest rates, which could go up again this week, a really good question has come in about why haven’t interest rates on savings accounts gone up as much and where can I get the best deal? Timi, are you aware of where the best deals are currently as we speak, about 5 per cent I think you can get on regular savers.

Timi Merriman-Johnson
There’s some you can get seven.

Claer Barrett
Oh! I lost more.

Jason Butler
Yeah. That’s correct.

Timi Merriman-Johnson
Yeah. So I’ve actually started to see more, more banks say that savings rates are going up, but savings rates generally will never be as high as the equivalent rates on consumer debt. And so that’s just one thing to be mindful, which is why Margot says you should pay off interest debt before saving. But I mean, regular savers, which are the types of savings accounts where you have to pay every month and then you get a lump sum interest payment at the end, are offering some of the highest interest rates at the moment. Right now, some will let you pay into it monthly and then you have to keep your money in this savings account for a whole year and some will let you withdraw when you want to. Just figure that out for yourself, because I opened the first direct regular saver, and when I wanted to withdraw my money and they were like, you have to close it. So that’s just something that I found out. And whether you can withdraw the money or not, I actually really like regular savers because they help you to build a habit of saving monthly.

Claer Barrett
I’m totally with you. I have a regular saver. I did it with Nationwide, which was the best rate 12 months ago. It’s a good discipline to get into. You have to save the fixed amounts of money that you want to put aside every month into this account. And then at the end of 12 months, boom, you get the whole lot back with interest.

Jason Butler
It’s also just worth mentioning, if you or anyone you know is receiving or entitled to even a pound of means-tested benefits, you can open the government’s Help to Save account and you save between £1- £50 a month for up to two years, they give you 50 per cent return into your bank account, risk-free, tax-free, and then you can continue for another two years and they do the same thing.

Claer Barrett
So that’s if you’re on universal credit, income support, those kinds of benefits. But again, you only have to receive a very, very small amount.

Jason Butler
Pound. And you have to have an entitlement to a pound. OK? And then at the time you open the account and it’s the most and you can have instant access to your money, that and pension credit are the two most underutilised. So all accrue real benefits really.

Claer Barrett
OK, and very good points come in over the iPad. Should I use a regular saver to save my emergency fund? Well that’s a bit of a curveball, isn’t it? “Come and get the money,” as you said.

Timi Merriman-Johnson
But you know what, I closed it but I will reopen it in the new year. The reason why I closed it was because I did the max. So £300 is going in every month. I got to this month I was like, I have no money left in my current account. What am I doing? So I closed it but I will probably start it again in the new year with a much smaller monthly saving amount. And I think in a way it is kind of appropriate for an emergency fund because you literally have to break the glass open to be able to withdraw the money.

Claer Barrett
Now, credit scores, some follow-up questions coming in from the panel. Margot, I put this one to you first. “I’m 18. I have a credit score of 266 — now normally scored out of a thousand — so that’s pretty low. I’ve been rejected from two different credit card providers. How can I increase my chances?” What do you mean? Credit cards are a big topic of conversation on Your Juno.

Margot de Broglie
Absolutely. So the first piece of advice, as Jason said, is you’re already paying a rent payment if you are renting a home. So make sure to report those rent payments to the credit rating agency. You can use . . .

Claer Barrett
You can build up your, people say, you have a thin file.

Margot de Broglie
Exactly.

Claer Barrett
It’s about the only thing about me that’s thin, unfortunately, at this stage of my life. (Laughter) Because I don’t borrow lots of money on credit cards, I don’t have much of a credit record. And people who are really young, maybe they’ve got a phone contract because that counts as credit.

Margot de Broglie
Exactly.

Claer Barrett
But they won’t necessarily be on any bills, which is another . . .

Margot de Broglie
Exactly.

Claer Barrett
. . . important way that people can check you out.

Margot de Broglie
And then you also have credit builder cards. So they’re not like credit cards. So you add money every month and it contributes to your credit score. So that’s one alternative. They tend to be more accessible and an 18-year-old is likely to be approved for that. So that would be my recommendation.

Claer Barrett
OK. Interest rates on those can be quite common.

Jason Butler
If I could comment, I wouldn’t be taking out a credit card. Credit cards are not your friend. I’m totally against them. They were the worst thing I’ve ever had. Just don’t go there. If you don’t have a credit card, you can’t get into debt. The key to staying out of debt is not taking out debt. Don’t give yourself stories about points and protections and all that. I just think they are the devil.

Claer Barrett
We’re gonna wrap up with the final question that came in over the iPad about the panel’s rules that they . . . money rules that they’re trying to live your life by. I am going to start off with me very briefly. My top tip, which I reveal in my forthcoming book, What They Don’t Teach You About Money, is called the “sorted-out-on-Sunday system”. Now, I think a lot of needless spending happens because we’re not organised, we’re not well-planned. I missed one of my A-level exams at the age of 18 because I was not organised and that was like a turning point in my life. So on Sunday, I make a point of going through my diary. I still have a paper diary. It’s got a financial to-do list at the back, with things for me to tick off because I like to have a visual record of what I’m doing. I work out what days I need to be in the office, what days I can work from home. Thoughts about what me and my husband are gonna eat. But it’s all about thinking ahead. Even if you can save a few pounds a day by being strategic, all of those little savings over the course of the week, add up and it helps you to think about the bigger picture more if you’ve got the smaller picture down pat. But Margot, what would your money rule that you live your life by?

Margot de Broglie
I think something that we haven’t spoken at all about today is money in relationships, and it’s something we’re seeing a lot in the community. Women who are losing their financial independence to a partner and then find themselves in really tricky situations after. So to have a little bit of a catchy, cheesy phrase, “A man is not a plan”, I would say (Laughter).

Claer Barrett
Oh, why did you not say that before? 

Margot de Broglie
Money rule to live by: no matter how committed the relationship, make sure to have an emergency fund on the side and to always keep the knowledge of what’s happening with your finances, even if you’re managing them as a couple so that you can have an exit strategy if you need to.

Claer Barrett
Great. And just to add, I think that’s great advice for anyone who’s watching, you know, whether you are a man, woman, gay, straight, whatever — always have your own sense of your own money, and your own financial independence is absolutely crucial. Put on your own oxygen mask first. Timi, what was your money rule to live your life by be?

Timi Merriman-Johnson
I think mine is that not all returns are financial, so make sure that you can pay for your living costs, your rent and your bills and stuff. But for goodness’ sake, spend money on things that bring you joy, spend money on your health, spend money on things that make the world a better place, particularly over the coming months and years, because we’re gonna need it.

Claer Barrett
Really good. Lot of sense with that. Dan, your money rule you live your life by?

Dan Wilson Craw
Just thinking back is to what has served me well and it’s learning how to cook.

Claer Barrett
Great!

Dan Wilson Craw
And this is probably about ten years ago, I just remember going into work, everyone was like going off to prep and stuff. I had like a Tupperware full of coq au vin that I’d covered. So I was like, I mean, this is messy as hell, but anyway it tastes good. I’m really glad I learned how to do it.

Claer Barrett
No, I think that’s great. I’m a big advocate of that. And Jason, money rules that you live your life by?

Jason Butler
Yeah, I just don’t give money too much power over my life. It’s important. You have to respect it. You have to give it attention. You have to be comfortable holding on to cash. So my view is that don’t define your life as really going from what Timi said, based on how much you earn or how much you’ve accumulated or not. Because you are a human being, not human sort of doing and a human consuming. And money is merely just a tool, as we said. Remember, it’s important but it’s not the be all and end all. And if you don’t have much money or you’re feeling a bit behind, focus on getting good people in your life and doing what you can to help support other people because that will make you the richest person in the world. Seriously. (Applause).

Claer Barrett
Absolutely.

Thanks again to all of our panellists at the FLIC “Young, Gifted and Broke” event. To follow more about our campaign and obtain free money-mastering resources, just search for FT FLIC online. That’s F-L-I-C. For more information about your rights as a tenant, do check out the Generation Rent website. Jason Butler is on Instagram and Twitter. He’s @jbthewealthman. Timi is @mrmoneyjar. And last but not least, you can check out the Your Juno app on @yourjuno, J-U-N-O, on Instagram.

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That’s it for Money Clinic this week. And we hope you like what you’ve heard. If you did, spread the word, leave us a review. And if you would like to chat with me on a future episode of the show, then get in touch. You can email me, our address is money@ft.com or DM me on Twitter, Instagram or TikTok. I’m @ClaireB. Money Clinic was produced by Persis Love. Our executive producer is Manuela Saragosa. Our sound engineer is Breen Turner, and the original music is by Metaphor Music. And finally, Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that you’ll need to find an independent financial adviser. That’s the small print over and done with. See you back here soon. Goodbye.

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