Rebuilding

Over the past year I haven’t paid much attention to my finances. Money comes in, money goes out. Whatever. I haven’t been mentally healthy enough to care beyond that. It was one of many things that just went.

I’ve had the fortunate combination of earning a decent amount of money most of my adult life, being completely unmaterialistic so I didn’t spend much of it unnecessarily, and having a dad who showed me how to do something more sensible than just leave it in a current account before I was mature enough to be self-motivated on the matter. I always valued returns over convenience and putting a small block of money I have easily available right now into an account which only allows the initial contribution has always seemed like the right thing to do, but that means I end up with a tonne of accounts and funds I need to keep track of.

I’m kind of a nerd and I used to keep a spreadsheet of all this. Piecing it back together was fairly easy because I had all the information, it just needed updating. Updating it was a big job and unsurprisingly I found that quite a few things were sitting around past their maturation not doing a lot.

I expanded the spreadsheet so now I have a breakdown of things like how much of it is liquid, how much is in fixed term investments, how much my employer contributed to my pension last year, how much tax relief I got on it, how much of what I’m earning is taxable etc.

So I feel pretty good about that and I feel like back I’m in control now.

I discovered two things.

The first is that I’m paying more tax than I need to and I need to address that by making more efficient use of the different allowances. I never used to be big on avoiding tax because I used to feel that I have spare income and contributing to society was a good thing, but when you become the subject of a long and stressful police investigation which ultimately concludes they made a mistake, you do start to resent the fact your tax funds that kind of thing. Anyway, it’s what the allowances are for, I shouldn’t feel bad for using them.

The second thing, which I didn’t realise until today, is that I’m actually taking home less money from my job than I was this time last year. Even though I’ve had a pay rise (in theory), the fact I’m being taxed on interest from savings (the tax is deducted via my salary), and the fact that the government mandated employee pension contributions rose quite steeply this year, have left me with less money going into my bank account every month. This is… frustrating, but it’s also kind of liberating. I’ve had so much trouble at work and this makes me stop and check in with myself about how much emotional energy I should really be investing into it.

I worked out that so far this tax year I have actually made more money from savings and investments than I have from going to work (it’s about a 60/40 split), which is also good to keep in mind and will hopefully keep me a bit more grounded. The 60/40 split is probably a slightly misleading stat that won’t sustain itself for the whole year (it was 40/60 the other way last year), but maybe 50/50 is realistic.