Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance. We’re chatting all things personal finance, from contracting rights in the workplace to expert mortgage advice and saving for your first home, to ISAs and dealing with debt, to help empower you to make better choices. Now more than ever it's important to understand our money, but so many of us feel as if we don't have a handle on it – or worse, feel anxious and scared about money.
So 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, take a seat, and let’s talk about money…
Let’s talk about money…
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I’m 34 and working as an administrator in a surveyor’s office in the North East – I've been in the job since 2015. My husband and I own our own house and share the mortgage. We’ve lived there for three years and are very slowly doing it up as we go – renovations are expensive!
A couple of weeks ago I got offered a new job, and handed in my notice in my current role. I’d been keen for a change, and even though the new role is only a 12-month fixed term contract, it means a pay rise and they’ve said there’s a good chance they’ll keep me on if things work out, so I was so happy when I got the offer. I’m due to start next month.
But since I accepted it I’ve got cold feet. I’ve always been in a permanent job before and didn’t really think about how being on a contract could affect us. But our mortgage is up for renewal next summer, so now I’m worried in case not being a permanent employee will affect our ability to get a good rate.
Also thinking about pensions – I am entitled to a pension in my new contract, but does having two pensions impact how much they’ll end up being worth when I retire? Should I try to consolidate my old and new pensions, or look into setting up a private one?
And my husband and I have been talking for a while about trying to start a family, and waiting a whole year until I’m made permanent in the new role seems like a long time. Will I be eligible for maternity leave on a 12-month contract or would I have to rely on statutory maternity pay?
I’m worried I’ve been too hasty! I’d been planning on using my pay rise to pay for house renovations but maybe I should be putting it all into savings or a private pension instead. Would love some advice.
All you need to make an informed decision.
MY ACCOUNTS
Current account: £149
Savings account: £3,500
MY INCOMINGS
Annual salary: £26,300 gross; £21,548 post deductions
Monthly wage: £2,192 gross; £1,796 post deductions
Any other incoming payments: £0
MY OUTGOINGS
Mortgage: £450
Bills: £290 across shared household bills, and personal bills including my phone bill, petrol, subscriptions etc
Other: I try to put £200 a month into savings
Splurges: Lately it’s been house stuff – we’ve just bought some new tiles for the bathroom.
Weekly budget: I need to start budgeting!
MY DEBTS
Just my student loan
MY MONEY THOUGHTS
My worst money habit: I try to be careful with money, but I feel like I always underestimate what I’ve spent so I get a shock when I check my account balance.
My biggest money worry: Our financial security.
My financial hopes for the future: That we’ll be able to afford to start a family. And one day have a fully renovated house!
Current money mood: 😢 🤯 🙏
It's time to finesse those finances.
WHAT MONEY EXPERT ALICE TAPPER SAYS:
The mortgage question
Before we get into your questions, I’m going to preface everything with ‘check your contract’ – this is vital to understanding where you stand with your new employer #KnowYourRights. With that said, let’s look at the mortgage question first. In the eyes of a lender, you’re what they’d call a type of ‘contractor’, which is similarly to a form of self-employment. It is the case that lenders can be a bit particular when it comes to contractor mortgages because your future is less certain in their eyes. They ideally want a track record of renewed contracts. Your best bet is to get some advice by speaking to a mortgage broker. They’ll be able to find the best deal for you and walk you through the requirements for remortgaging.
Your maternity pay rights
Even though you’re on a contract, you will still qualify for Statutory Maternity Pay so long as you have been working for this same employer for 26 weeks leading up to the 15th week before the baby is due. In short, you can’t start a job pregnant and receive maternity pay. If your employer offers an enhanced maternity package – you should be eligible for that too but you must check your new contract ASAP to double check.
Your maternity leave rights
You also have the same right to statutory maternity leave as a permanent employee. Of course, one of the big worries is that upon announcing a pregnancy, your employer wouldn’t renew your contract. This is unlawful if the reason for the non-renewal is related to pregnancy, childbirth or maternity leave but there is no obligation to keep you on so long as they have a ‘fair reason’. The reality is, unlawful doesn’t mean it won’t happen *eyeroll*. Being on a fixed term contract does leave you with less certainty so it’s even more important that you know your rights and have a clear plan (and back-up). I’d also suggest getting some advice from ACAS.
Take the pension
You should make the most of your new employer’s pension. By opting out you would miss out on their contributions and tax relief (read: free money!). Having multiple pensions isn’t a problem but you might want to combine your old pensions down the line. By putting them all into one pot you’ve got less to keep track of and you might save money by paying fewer management fees. It’s important to double-check that combining doesn’t mean you’ll miss out on any benefits such as guaranteed annuity rates. For more on that, see this article.
There’s no right answer
You haven’t necessarily made the wrong move but there are new things to consider here. You’ll need to be a bit more strategic about planning to start a family. If you do decide that you’d like to stay at your current workplace you’ll need to speak to your line manager and get their permission to stay – there’s zero shame in admitting that you made the wrong choice. On the other hand, if staying isn’t an option all is not lost. You will make this work and it might be exactly the change you need.
Alice Tapper is the author and founder of Go Fund Yourself. For more money guidance and tips, follow her @gofundyourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor. *Name has been changed.
For many, it's not a matter of not wanting to, but not being able to.
