Welcome to My Life in Money, our series from Good Housekeeping where we ask our favourite financial gurus for their thoughts on everything from investing to their favourite money apps.
We're speaking to Claer Barrett, award-winning consumer editor and columnist for the Financial Times. She's also author of What They Don't Teach You About Money, an accessible guide covering everything from what 'credit' really means to the truth about 'get rich quick' schemes. Claer's work focusses on making money matters simple and understandable — her podcast, the Money Clinic, delivers news-you-can-use in an informative and entertaining format.
What did you learn from your parents about money?
Being thrifty! Also that planning ahead can save you huge amounts of money, and to equally share the responsibility of managing money with your partner even if one of you earns more than the other.
Are you a saver or a spender?
Both, but definitely more of a saver. I save 25% of my salary into my company pension. On the day I get paid, I have direct debits going out to my stocks and shares ISA, various savings accounts set up for different goals and Junior ISAs for my nieces and nephews. If I 'pay myself first' I know I won't ever get used to spending the rest, and avoid 'lifestyle creep'.
Have you ever struggled to make ends meet?
I had a very difficult period when I finished uni, and was trying to get a job in journalism, which I've written about in my book. But frankly, this was trivial compared to the hardship millions are enduring in the cost of living crisis.
What is the most expensive thing you’ve ever bought (besides property)?
Our car. It's second hand, and I paid cash up front as I didn't want to sign up to a costly PCP finance plan. I also have a tenor saxophone which is worth over £2,000. When I was 15, I was given it for next to nothing by a lovely old geezer called Brian who couldn't play any more due to ill health. It was incredibly generous of him, and I've played at gigs all over the world since then.
What is your favourite money app and why?
Instagram! You might not think of it as a money app, but it is bursting with brilliant content from financial educators. Myfavourite accounts are @GoFundYourself (I love the financial confessionals) and @StocksandSavings which has great lessons about investing. If you want to follow me, I'm @Claerb.
What do you splurge on and what do you save on?
My big splurging priorities are family holidays and special meals out. I love to spoil my mum and dad, and it feels great to be able to do so.
I save money on absolutely everything else that I possibly can: taking a packed lunch to work, using voucher codes for online shopping, bulk buying wine when it's on offer... well, actually that's often a false economy as we end up drinking more of it! I treat myself to a deep tissue massage every two weeks as I spend so much time hunched over a keyboard, but I pay for five upfront and save 10%.
What’s the best money decision you’ve ever made?
Getting a lifetime tracker mortgage on my flat in 2008. Interest rates soon dropped like a stone, and remained low for well over a decade. Nevertheless, I overpaid every month, and saved tens of thousands of pounds. As interest rates rise, I'm now in a very strong position.
What was your biggest money mistake?
Not signing up to the company pension in my first proper job. The rules were different in those days — there was no auto enrolment — and I didn't think it would be worth it as I'd probably move on and work somewhere else. I was there for seven years!
I was prioritising buying my first home, which I achieved, but I could have saved something towards the pension too and got the 'free money' of matched contributions from the company if I had been more disciplined.
Do you invest your money?
Yes, every month without fail, regardless of what stock markets are doing. As well as making up for lost time with my company pension, I also make an automated regular investment into a variety of index tracker funds in my stocks and shares ISA. I save £4,000 of my allowance per year into the Lifetime Isa. I opened one just before I turned 40, but I can pay up to £4,000 into it every year until I'm 50 and collect a 25% government bonus worth up to £1,000, which is also invested.
What’s your money mantra?
There are no stupid questions about money — the only stupid thing is never asking any! British people can find it very awkward to talk about money, which is why there's a whole chapter of my book dedicated to changing this.
What’s your number one piece of financial advice?
The single most important money habit to master is spending less than you earn. It's that simple! Generate a monthly surplus, however small, and you can build up an emergency fund, save towards bigger ticket items like a holiday or housing deposit and grow your long-term savings over time by investing in tax-efficient pensions and ISAs. We're not taught about how to do these things; as consumers, we're just trained to spend all of our money on stuff! But as my book will show you, it's much easier than you might think
Claer Barrett is the author of What They Don't Teach You About Money: Seven Habits to Unlock Financial Independence (Penguin Random House)
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