Welcome to Money Matters: GLAMOUR’s new weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.

This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from daily budgets to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…

Aria is a 26-year-old civil servant who was supposed to be working abroad, but is now stuck in the UK because of Coronavirus. With property prices due to fall she’s wondering whether it is a good time to get on the housing ladder, or crack on with tackling her student debt. Here's her money month…*

With the novelty of five years renting wearing thin (crumbling ceilings are no longer such funny content for my Instagram), I’m thinking about buying a property in London. I could do this with my partner of two years as we are both lucky enough to have stable incomes. I was recently selected for promotion, which will see our salaries combine to over £100,000. We have separate Help To Buy ISAs and our families could contribute to a deposit, but he has more savings than me and no student debt.

We both want to work abroad over the next two to three years, but this won’t happen for at least a year now, giving us time to make a house feel more like home before moving away. I do worry that buying property with a relatively new boyfriend feels like a ‘big deal’, but I’m a renowned commitment-phobe (the classic divorced parents legacy) and I'm not used to making strategic financial decisions.

I’m also not sure whether paying my student loan off over the next few years would be a better investment in my future than property. It haemorrhages high interest (£1,200 a year), which galls me every time I log into my account. Martin Lewis (my only source of financial advice) preaches not doing this, but I will be in salaried employment for the foreseeable, meaning I am set to pay it all off plus about £12,000 in interest over the next 10 years, unless I significantly increase my repayments. I have considered a mid-way option of paying a chunk with my current savings, then taking out a lower-interest loan to pay the rest. But faced with a unique opportunity to buy a place, I’m tempted to just focus my efforts on saving for a house with extras for an emergency fund, furnishings etc. I'm in a dilemma and would love some expert advice.

MY ACCOUNTS

Current account: £2,000
Savings account: Lifetime ISA £10,000. Savings £8,000 (my partner Marcus)

MY INCOMINGS

Monthly wage: £2,300 (after tax). I do get additional windfalls – my salary temporarily increased to £4,200 a month during a recent overseas posting and sometimes I get bonuses of up to £750 – but these aren't regular.
Monthly wage post Covid-19: Unchanged.
Any other incoming payments: Currently nothing. I have previously done lots of tutoring for £35p/h, but I am not actively seeking out opportunities.

MY OUTGOINGS

Rent: £790
Bills: Roughly £60-80
Other: Phone bill £13, Spotify £10 (dancing to Whitney Houston advert-free is one of life's greatest pleasures). On a good month my food budget is around £200. My travel budget varies at around £100, but in lockdown this is £0 as I’m not using the Tube.
Splurges: I really learned the power of ‘no’ last year. I rarely make impulse online purchases and always meal plan. Pretty much all my hobbies are free (reading, running, studying languages etc) apart from drinking, but that has also been curtailed since lockdown.
Weekly budget: I never budget…
What I spent this month: Almost nothing. Lockdown silver-linings.

MY DEBTS

Student debt: £27,800. Despite being part of the first cohort on triple fees, my degree was partly sponsored by a bank on their graduate programme. So while my student loan is about half of what it should have been, it still accumulates about £1,200 a year in interest. This means my minimum £88 monthly repayments aren’t making a dent.

MY MONEY THOUGHTS

What I want to save for: To be able to stop renting and establish a permanent home to come back to when I do overseas postings with work.
How I want to plan my money for the future: I have a very generous defined pension scheme at work, so luckily that is not a concern.
My worst money habit: Never budgeting, ever.
My biggest money worry: Student loan interest. Also making the wrong financial decisions now and regretting it further down the line.
Current money mood: 🤔 🧘 🆘

Read more: We need to talk about pensions: why single women fall behind, and what to do about it

WHAT OUR EXPERT SAYS

Don’t let your student loan stop you getting on to the property ladder It can be daunting knowing how much your student loan is and the interest you’re paying per year. However, paying rent per month and not gaining financially is more impactful in the long-term. Also, remember that student loans get written off after 25-30 years depending on your plan – you can find out more on the government's student finance information site.

Yes, the student loan will decrease your disposable income. However, lenders are more likely to look at your total costs and deposit. Use that money instead to increase the deposit to get a better mortgage. Also, if you go down the property route, the property has potential to increase in value, giving you equity that you could use to pay off the student loan if you wanted to in the future.

Consider all scenarios upfront Have you thought about a cohabitation agreement? This is a bit like a ‘pre-nup’ but for unmarried couples living together, and it protects both of you in case you need to divide any assets if you split. It’s better to have one and not need it than to need it and not have one. They tend to cost approx £900 if you go through a solicitor.

Give every pound you earn a purpose The best remedy to never budgeting is to create a zero-based budget – this is one where you give every pound you earn a purpose. The best part is you only really need to set up the standing orders once and it is all automated thereafter.

Write down your monthly income and deduct all your monthly expenses (fixed and variable). For the remaining amount, allocate a portion between all your goals. Prioritise the goals that are most important to you and consider investing the rest (if the goal is over five years away). Finally, create a standing order to separate accounts where you can keep your different pots. Voila – you’ve now got an automated zero-based budget!

Pick between the Help To Buy and the Lifetime ISA It’s fantastic you hold both. However, you can only claim the bonus from one of these ISAs for the purpose of buying your first property. Therefore, you can choose to transfer all or just some of the money from your Help To Buy ISA to your Lifetime ISA (up to a maximum of £4,000 per tax year). Alternatively, you can consider using your Lifetime ISA as a top-up to your pension (you can access it at age 60) and use your Help To Buy ISA for buying your first property.

Build your emergency fund You’re clearly a great saver and have access to money in your account. However, the money in your LISA is not easy-access as you have to pay a penalty to access it. Therefore, it's worth growing your emergency fund for any emergencies. The trend is to save anywhere between 3-12 months of expenses depending on your circumstances and preference.

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*Name has been changed. The above recommendations are guidance only. Each person's personal circumstances may be different – always seek financial advice.*

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