Issue #52: How I Spend My Paycheque

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Let’s face it. January is a long long LONG month.

The December paycheque is a distant memory, but payday is juuuust around the corner (kinda).

In fact, I’m so excited for it that I’m already planning how to spend it, so here’s exactly what I’m doing with my January salary, and what you should do with yours…

1️⃣Emergency Buffer:
First, I set aside a small amount for unexpected expenses. Whether it’s a car repair or an emergency plumber, this pot saves me when I most need it.

2️⃣Pay Off High Interest Debt:
If I’ve got any debt with interest over 8%, that’s the next thing I tackle. It’s a smart move to pay off anything costly before focusing on other goals.

3️⃣Contribute Towards My Pension:
I’ll then put money into my pension pot. As I’m self-employed this is a little different for me, but when I had an employer this was done automatically through a pension scheme.

Don’t sleep on this - your contribitions are topped up by your employer which is free money for your future.

4️⃣A Full Emergency Fund:
I’m working towards building 3–6 months’ worth of living expenses. This is for the worst case scenario, like redundancies or being unable to work.

5️⃣Short Term Saving Goals:
For my bigger goals within the next 5 years, like buying a house, I break it down monthly and stash it in a high-interest savings account to get the most out of it.

6️⃣Investing:
For long-term goals (think 10+ years), I invest through a Stocks & Shares ISA. If you know me by now, you’ll know the platform I use as it’s the BEST in the game.

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7️⃣Low interest debt:
While it’s not one of my top priorities, I’ll still try get rid of some of my low interest debt because less debt = more peace of mind!

And that’s it! 
After this, I’ll have enough to pay my bills, and spend the rest on living a little 😆.

What’s Happening Right Now In Finance?

So there are big changes coming to Stamp Duty - the one-time tax paid by property buyers in England and Northern Ireland. The amount depends on the property price and buyer type (e.g., first-time buyer or purchasing an additional property).

From 1st April 2025, Stamp Duty thresholds are reverting back to pre-2022 levels, potentially increasing costs for homebuyers (ughhh).

This will affect first-time buyers the most, as their tax-free threshold will drop from £425,000 to £300,000. The general 0% threshold for all buyers will also halve from £250,000 to £125,000.

These changes could add a lot of money to buying costs, so if you’re in the process of buying a property (especialy first-time buyers), pleaseee consider buying before April to save you your hard earned cash!

Reader Spotlight

Welcome to a brand-new section of the newsletter, where I tackle one of your questions sent in via email! This week Harry asks:

‘How do I build an emergency fund without it affecting my day-to-day life?’

As I mentioned earlier, typically an emergency fund is 3-6 months worth of living expenses. This can seem quite intimidating and cause a lot of people to never end up building.

The simplest way to get over this hurdle is to ignore the end result and start small instead, try saving £10/20/50 a month, with the objective of reaching 1 month’s worth of living expenses.

Once you achieve that you can move onto trying to get 2 months and so on. Remember, the end goal of the emergency fund size you are aiming for is totally dependant to your circumstances.

You might only want a 2 month emergency fund if you are 21, live at home and have zero responsibilities. However, if you are someone who is in their early 40’s, self-employed and has 3 children and a mortgage, you might look at growing a 12 month pot.

You’ve got this!

Got a question for next week’s newsletter? Just hit reply! Let me know your question and whether you’d like to stay anonymous. 😊 

^{DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.}