It is only natural that every parent wants their children to have a better life than theirs, so parents strive to provide more & to create opportunities for a better life for their children. I suppose this has been the same across cultures all over the world, and generations from time immemorial!
Is that the same with regards “Generational Wealth”? Have parents always thought about this? I wonder because in recent times, I observe a lot of talk in the black community about creation of generational wealth. Has this always been a thing, but the buzz words (“generational wealth”) not there to describe it?
Apart from ones children being fed, clothe & have a roof over their heads, what exactly does children having a better life mean/look like? What does creating “Generational Wealth” mean? Is it the passing down of assets, money, knowledge, not letting them fail,?
Has this primal need for parents to afford their children a life better than theirs resulted over time, in the current generation of children who feel “entitled” & want instant gratification?
Have parents over time inadvertently done themselves (& perhaps the world) a great disservice, creating children who mostly no longer have the drive to go out & fend for themselves (because of their reliance on expected Generational Wealth or because they don’t know how as a result of being sheltered/not being given the chance to try things out, fail, & learn from their failure)?
I have had a couple of family emergencies in the last couple of months. This has meant I have not been able to post my blogs. For all my followers, I remain committed to posting about all-things financial literacy and independence, so please bear with me during this period. I plan to be back to weekly posts soon.
So today, I want to attest to the fact that having an emergency fund is powerful! It affords one the power to immediately respond when life comes knocking (like we all know it does, from time to time)
When the family emergency referenced above hit, funds were immediately available for me to access. As alluded to in my previous post it is important to maintain an emergency fund. The general concession is to build a pot worth six months of your living expenses, but I prefer to make it a year of one’s living expenses. I have never had a situation where it’s become necessary to utilise my emergency funds, but when the situation (life threatening it was as well) hit, I was totally ready (financially) for the unexpected! My emergency pot came in handy and I was was glad to have it; it was a no-brainer for me to turn to it. So as before, I once again advocate for maintaining an emergency fund; once you get to a stage where you’ve paid down/off your debts, start to build your pot.
Well, by the time the emergency referenced above hit, the value of my crypto investments had grown exponentially to the extent that I was able to draw down six times my original investment and still maintain an my original investment and a little bit more as investment. About a week after I drew the funds out, the crypto values all fell! I got lucky to have cashed in when I did, so for me, as said in my previous post, crypto is too volatile and because of its volatility, my investments in it will continue to be minimal – a very small percentage of my investment portfolio.
Message here is, emergency funds are absolutely necessary, and, in my view, it is worth holding small investments in crypto in spite of its volatility. The key is to not put all one’s investment in it.
Being able to realise the gain at the time I did, however helped cover the cost of the trip I had to make in relation to the referenced family emergency. But of course, that also means I have triggered a tax liability, so the gains will need to be included in my tax returns at the end of the year. I however think my capital gains allowance would mean I won’t actually have to pay any tax on the gains, when the time comes.
Also, it is important to make use of money when necessary; that’s what it’s there for (it is a tool), which is what I did both with my emergency funds & my crypto investments.
What’s your experience with emergency funds; do you agree that it is necessary? Share a time when having it came in really handy for you . Also, share a time when you actually realised the gains on your crypto investment and how that has impacted your crypto-investment decisions.
Thanks for continuing to read and like. Would be great to have your comments and views as well, so please leave them in the comments below.
Income tax (commonly known as PAYE – pay as you earn) is one tax you can’t do anything about; you work, you pay, no two ways about it! Your employer is legally obliged to deduct this from your gross salary (and national insurance contributions – NIC) before paying you what is known as net salary/pay.
The only way you can avoid this is if you limit the amount of work you do to be just enough to pay up to your annual tax allowance, but even then, it still tax still gets deducted during the year and at the end of the year you can reclaim tax paid during the year (or you get refunded as part of HMRCs annual checks).
Despite this taking away a lot of our earned income (and being the first payment that gets taken out of our hard-earned income), most people don’t have a clue how their tax is calculated which sometimes mean they might have underpaid or over-paid tax.
So, here is a quick crash course which I hope you find helpful.
Annual Personal Allowance: This is the amount we earn each year which isn’t taxable i.e. anything above this amount, is taxable. The commonest personal allowance in 2021/22 is £12,570 (2020/21: £12,500)
Tax code: We each have what is known as a tax code (four digits and a letter at the end); it is usually a depiction of your personal allowance e.g. most people will have a tax code of 1257L (2020/21: 1250L).
Tax Rate: each year, the government sets the tax payable on income bands at rates which are categorised as basic, higher and additional; current tax year’s (2021/22) is here. This is summarised in the table below.
Income bands for tax purposes
£1 – £37,000
£37,001 – £150,000
An illustration with numbers for someone who earns £175,000 per annum, is shown below, depicting total tax payable in the year as £58,053.50 and net salary (what is also referred to as ‘take home’) of £116,946.50 (note that this does not include NIC deductions, which will further reduce take home). Illustration is based on annual figures, to determine monthly figures, it would need to be divided by 12.
Less: Personal allowance
Taxable at basic rate – 20% (on basic rate band)
Taxable at higher rate – 40% (on difference between higher band and lower rate bands)
Taxable at additional rate – 45% (on total taxable salary less 150000)
Illustration of tax calculation for an annual salary of £175,000 in UK (based on 2021/22 Standard Personal Allowance)
I have recently come across text that says the best way to illustrate to a child what tax is, is for an adult to eat a quarter to a third of the child’s ice-cream before giving it back to them! It would be even more impactful if that child had saved the money to buy their own ice-cream and all you as the adult do, is take them to buy the ice-cream; so the tax they pay for you taking them to get the ice-cream is the portion you eat! Imagine how miffed the child would be! Well, that’s the reality of what happens with our hard earned income; we have no choice but to cough up to the tax man, and we have to do so even before the funds hit our account! Good illustration to let kids know what awaits them though!
For us adults, below is an illustration by one of the pages I follow on Instagram, using nandos 😊
A few other things for you to know
Your employer is obliged to provide you with a payslip – a statement (depending on how often you are paid) that breaks down the payment made to you – including your gross salary and any deductions (including tax) made to derive your net salary.
2. At the end the financial year (by 31 May), your employer also has to provide you with an annual statement (P60) which shows your total earnings and tax during the year. If you have multiple jobs, you’d get more than one P60, otherwise you would only get one.
3. When you leave an employment, your employer will provide you with a statement (P45) that shows the amount of salary, tax, NIC and other deductions that have been made during the financial year, in that job. This also provides your new employer with the tax code they would set you up with on their payroll.
4. At the end of the financial year, HMRC compares the tax paid in the year with what is actually due, to determine whether the correct tax has been paid (or not). If tax paid is found to be inaccurate, a P800 will be issued, notifying you of under or overpayment of tax/if you owe HMRC or are due a refund.
Hope you find this useful. Any questions, pop then in the comments below and I’d be glad to respond as best as I can.
What is a Scam: it is any fraudulent act that results in funds being deceptively taken from someone who ordinarily wouldn’t have parted with their money for the purpose it’s been taken.
It used to be the case that scams occurred via letters claiming you have won some money asking you to take some action which often required you sharing your personal bank details, or someone came to your door purportedly selling something which never gets delivered (after having been paid for it)!
Some of that still exits, but with the advent of electronic payments, more so with the pandemic and having been forced to transact business mostly electronically in response to the need for social distancing; the scams have increased and gotten more sophisticated with most of it now being carried out online.
Some of the common scams are:
Calls purporting to be from your bank, HMRC, Pension provider or National Insurance requesting your bank details, PIN, NI number etc. so you can reclaim bank charges, or claiming your NI contributions haven’t been made or your tax has not been paid and as such owe the HMRC, or that there’s been a fraud on your bank accounts, etc.
Email from what seems like one of your normal contacts (but is actually masked; and behind the mask is a fake email address) which contains a link you are required to click for a purpose which is meant to be beneficial to you or for verification of your account
Text messages about your supposed bank account (held with a bank you don’t have an account with) asking you to verify or report it as not you, by following a link or asking you to make payment for a parcel to be redelivered to you.
As you can see, the scammers are lurking in every corner and all our modes of communication are compromised! We therefore need to be vigilant and careful in order not to fall victim to the scams.
Some basic things that could reduce the risk of being caught out in a scam:
Do not give out your personal details, PIN number, passwords, or passcodes to anyone, even if claiming to be from the bank.
Check the real email address a correspondence is from by clicking on the address in the ‘From’ pane – check that the email address is as it should be with no missing and/or additional letters or numbers. Note that is not a fool-proof check but is one check that might help decipher whether the email is genuine or not.
Drop the call if you receive suspicious calls purporting to be from your bank, HMRC, pension regulator, etc.
Do not click on links within an email, especially if it within a suspicious email.
Moneysaving expert website provides some tips on how to avoid being scammed.
The biggest problem in my opinion, is the scammers keep inventing different methodologies. This makes it difficult to recommend one solution or the other as the best one to keep one safe. My suggestion, therefore, is that the greatest protection is for one to be your personal securely and to be mindful of who you are giving/sharing such information with and more importantly, to treat every situation where your details or payment is required, as a potentially fraudulent one. This forces you to critically assess each situation or transaction before you decide to proceed. Better safe than sorry!
These are difficult times and losing one’s hard-earned cash could be a traumatic experience, so stay vigilant and aware and do not get caught out.
Have you had any experience with this or other suggestions on how not to get caught out? If so, share in the comments.
When you buy a house you take out building insurance and home and contents insurance.
When you buy a washing machine and other household equipment, you take out insurance on them
So why are you not protecting YOU. Are those assets more important than YOU?
Below is a list of insurance to consider taking out for YOU:
Critical Illness Cover – this pays you a lump sum if diagnosed with a serious illness or sustains a serious injury. Most will pay out lump sum for you to do whatever you want e.g. it could be used towards your medical care, to cover your expenses, a holiday (after recuperation), investment (got to get that one in there 😊) or whatever you want. This insurance doesn’t pay out in the event of death.
Income Protection Cover – this pays you a regular income if you can’t work because of partial or full disability or debilitating illness.
Medical Insurance – In the U.K. people are able to obtain free medical care via the National Health Service (NHS). Having medical insurance however gives you a choice in the level of care you get. One could argue that this is not a necessity, because the NHS does a good job, so the decision on this cover would be dependent on one’s preference for medical treatment e.g. would you want immediate treatment or be happy to wait till you can access treatment on the NHS, would you prefer a private ward if you had to stay in hospital, if necessary, would you to be able to obtain medication not covered on the NHS at no (or a minimal cost), etc. These considerations are all things that are accessible without medical insurance, but could be quite expensive without medical cover, but of course if you have a big saving pot or emergency fund, you could draw on that to cover the cost of these preferences.
Life Insurance – this is more for one’s dependents and loved ones than for you. It is paid out on death. It however provides you with a level of assurance that loved ones will have some financial security, when you are no longer here.
Until recently, like most people I haven’t prioritised ME. We tend to think we are strong and can keep going or perhaps adversities happen to others and not us; or maybe, just don’t think about these things while those who are religious, perhaps believe that God is the protector and will keep adversity away (as far as I know, all religious books talk about God testing us to the level we can bear – who knows which test it would be!). The truth is, irrespective of how healthy or careful one is, adversity can hit at any time. Without you being on your two feet well and able, all those assets we take insurance out on, will not be! So to ensure that if taken down by adversity, we can maintain some semblance of normality, it is my opinion that at the very least one should take out Income Protection and Critical Illness insurance.
A combination of these two will put a lump sum in your hand and afford you a regular income for a period (dependent on your cover), which could mean the difference between worry about health and wealth (how to feed, cover expenses, etc.) and planning for a new lifestyle or life after the adversity (depending on its severity).
The level of cover you take out will determine the benefits and the premium paid. As usual, if this strikes a chord with you and you decide YOU are worth protecting, then do your own due diligence; speak to a broker perhaps and clearly define what benefits you would want, to ensure the cover your take out is appropriate for YOU.
Is there any other cover you think is important one takes out? Share in the comment (including why) below.
Today’s blog talks about what you can do to ensure you remain in control of decisions that are made about you, even if you lose the capacity to make those decisions.
To do this, while you are fit and well, you appoint a trusted person (friend, relative, etc.) who will be able to act on your behalf or make decisions for you, if you were no able to or you no longer want to. You might wonder why you would want someone else to make decisions for you, some such reasons might be:
Temporary Situation: hospitalisation means you need someone to pay your bills, collect your pension, old age might mean one isn’t able to get about easily anymore, etc.
Longer term situation: diagnosis with a long term illness that would mean loss of mental capacity, old age and loss of memory, etc.
We all think that won’t be me, I’m fit or some think, those things happen to others and not me, but the reality is no one knows how the wind will blow and what adversity will hit or when/what we will be or feel like as the years pile on. With Power of Attorneys, we are able to deal with these situations by appointing a trusted person (with whom we might have discussed what we want to happen in different scenarios) to act on one’s behalf if the need arose.
Below are the types of Power of Attorneys that can be set up:
Ordinary Power of Authority (OPA) – This gives someone you appoint as your Attorney, the right to make financial decisions on your behalf. It is only valid if you have the mental capacity to make decisions. This could be limited to specific aspects of your finances e.g. a specific bank account only, paying your bills, etc. This is handy for temporary situations e.g. when you are away on extended holiday or are in hospital.
Lasting Power of Attorney (LPA) – made up of what I call the ‘Power of Wealth’ and ‘Power of Health’, gives someone you trust and appoint, the legal authority to make decisions on your behalf if you lose the mental capacity to do so in the future, or if you no longer want to make decisions for yourself.
LPA for financial decisions (Power of Wealth): this can be used when you have mental capacity (as with an OPA) or its use can be restricted to if one loses of mental capacity. It can be restricted to specific financial affairs or cover all one’s financial affairs. The Attorney must keep their finances separate from yours and as a measure of control, one coudl request that details of what has been spent and how much you one has, be sent to a solicitor or family member periodically, for oversight.
LPA for health and care decisions (Power of Health) – this covers decisions about your health and care decisions e.g. moving into a care home, life-sustaining treatment, your medical care, who you should have contact with, etc. It can only be used if one loses mental capacity.
An LPA must be registered with Office of the Public Guardian before it can be used.
Without and LPA in place, if a person loses the ability to make decision for themselves, they will need to apply to the Court of Protection, who will decide whether you are fit to make the decision, can make decisions about your health and care and finances or appoint a deputy to make decisions on the persons behalf.
IMPORTANT: Married couples and those in a civil partnership should note that decision making does not automatically transfer to your spouse or partner, so best to look into putting an LPA in place if you would prefer for decisions about you be made by them or other trusted person.
I want to pick up the thread of preparing for that inevitable and inescapable day! The first post about this was to do with writing a Will and today’s post will focus on what we can do to prepare for the inevitable and in a way, continue to demonstrate our love for those who will be our survivors, and ensure a graceful exit for oneself.
So we’ve attained all the top qualifications and certifications, bought houses in all the best locations, own the most expensive cars, worn the best clothes and accessories, travelled to the most exotic destinations, attended the best parties and ate the most delicious delicacies and meals. Gratitude for the grace to have been afforded all of it! But what happens when the end comes?
Have you thought about how you would like to be buried – the how and the cost?
Sadly, the pandemic saw a wave of sudden and unexpected deaths, with lots of people and families unprepared for this, families had to mourn the loss of their loved ones while at the same time having to figure out how to fund burying them; with a lot of families having to take to go fund me to raise burial funds. The first time I received an appeal to contribute to a burial, I thought to myself I don’t want that to happen when I die/don’t want my family to be in a position where they would have to do that (I am not in any way berating those who were forced to resort to this, as we all always think, there’s still time when in reality we never know when the time would come, as the pandemic has unfortunately shown us all), yet I knew I didn’t have any funds put aside for my burial or didn’t even know how to do so, except that I had over the years come across several leaflets talking about funeral insurance (which I had discounted of course)!
That therefore got me thinking I am going to get funding sorted for my own funeral, but of course a year on, nothing had been done! As we usually do, I had prioritised other things above this thinking, I’d do it tomorrow and tomorrow had dragged on into a year. I am however grateful that I am afforded the time to finally get to work on this and the next step will be for me to take action, now that I have the information to hand. I however thought I’ll share some of the information I have found.
I found that the most common burial alternatives are the traditional burial in the ground or cremation. Other alternatives I have discovered are mummification, space burial, tree burial, etc. – check out this link which contains details of some mind-boggling and some, intriguing burial alternatives. If any of these are of interest, you need to make sure it is permitted in your country of residence.
I also found that the most basic of cost of a funeral are:
Extras which are dependent on the scale in which you want it to happen are:
Hosting your guests after the burial
The average cost of a funeral in the U.K. in 2021 according to Sunlife (who have been tracking the cost of funerals since 2007) is £4,184 this being a 1.7% increase from 2020 and a 128% increase from 2004, so clearly the cost are rising from year to year.
Possible preparations that could be made while one is still alive, to cover one’s own funeral cost include:
Arrange for the cost to be paid out of one’s estate on death – with this option, you have to wait for the probate process to be complete before funds are accessible.
A prepayment plan (or any of the other options) may not be required if you have sufficient funds to pay into a joint account held with the survivors who would be responsible for your funeral arrangements, and even if you don’t, you might decide that periodically paying into a joint account is the best option for you. The rationale behind a joint bank account is that, as at the time I am writing this, in the U.K. when one of the joint account holders die, ownership of the funds automatically becomes that of the surviving account holder, which then means your survivors would be able to immediately access funds to pay for your funeral.
Islam requires that Muslims be buried as soon as possible, ideally within 24 hours (with few exceptions to this requirement) so Muslims who want to be buried according to Islam should bear the need for immediate access of funds in mind, when making the decision about what preparation to make for their funeral cost.
Also, it is important to bear in mind the increasing cost of funerals, when deciding on the amount to put aside.
Historically, African kids have mostly been responsible for burying their parents. Some of that tradition still exists in Africa, but for those of us in diaspora, a key message I want to leave is don’t assume your kids will foot the bill (like we did or plan to do for our parents). Our kids are of a different generation and culture and in the Western world, nobody is going to offer them the financial support that is often afforded bereaved relatives back home, so do prepare! Consider options that are available and put something in place, so your children don’t have to, in addition to dealing with the loss, also have the burden of trying to raise funds to cover the cost of your burial.
There are possibly other options worth exploring, so do your own research, but don’t do nothing. Continue to show your love for your children and other survivors, even when you exit. I wish and pray a graceful exit for all.
 Under Islamic law cremation isn’t allowed for Muslims
 There are varying views on whether Muslim are allowed to be buried in a coffin or not.
 If the deceased left a will, grant of probate shouldn’t take too long, but if not it could take several months to obtain administration rights
Happy New (financial) Year! 6th of April marks the start of U.K.’s financial year; the point of reset.
I call it “point of reset” because it is the point at which allowances used up is reset ‘NIL’ and you start the countdown again. I therefore thought it would be useful to remind you of the allowance available (in U.K.) to be utilised during the 2021/22 financial year
Personal Savings Allowance: Interest of up to £1,000 tax free
ISA (Cash, Innovative Finance ISAs and Stocks and Shares) – £20,000
Junior ISA: £9000
Lifetime ISA: £4000
Standard Personal Allowance = £12,570
Dividend: £2000 tax free (unless within an ISA account).
Capital Gains Tax: on profits from sale of assets like shares, paintings and antiques worth more than £6,000, property (second home or buy-to-let): up to £12,300 is tax free (fixed until 2026)
The personal tax allowance is automatically applied through PAYE or you allow for it when completing your annual self-assessment. All the other allowances are however things you need to consciously consider in order to be tax efficient e.g. better to save/invest in an ISA and have up to £20,000 worth of dividend income, gains on shares sold, interest, etc. tax free, than to save in a standard savings account and have £1,000 interest tax free or a general investment account and have £12,300 capital gains tax allowance
Along with the reset of allowance comes Accountability! Statutory filing requirements and their deadlines are per below.
File first accounts with companies’ house: 21 months after registering your business
File subsequent accounts with Companies House: Nine months after the end of your financial year
Pay Corporation Tax or tell HMRC your company isn’t liable: Nine months and one day after your corporation tax period ends
File Company Tax Returns: 12 months after your corporation tax period ends
File annual returns with Charity Commission: 10 months after your financial year end
Personal Tax Returns (self – assessment): Paper filing by 31 October and online by 31 January of the following year
Important not to get caught out by missing any of these deadlines; late filings are usually accompanied by a fine (and interest on tax payable, in some cases). Let’s use our money for us and our goals and not for paying fines!
Wishing you new challenges, new opportunities, new prosperities and a thriving new financial year.
Death is not something we like to think about or discuss, but it is an inevitable occurrence that will come to us all at some point! In reality therefore, once we have a bit of net worth, children or spouses, then we should be thinking about death and what we want to happen after our passing (by writing a Will).
I have struggled with this over the years! I say to myself I don’t have much, and then say when I finish the purchase of this or that asset, but then never get round to making my will! More recently, it’s been about how to structure my estate, that’s held me back! So I recently spoke to a friend (shout out Friend, you know who you are) and in that discussion I realised I was over-complicating things! First things first, put something in place and bearing in mind that as long as I am alive, I could change it.
The worst thing though, would be to die without a “valid” will i.e. die ‘Intestate’ as it is described. The reason for this is that the decision of what happens with your belongings (your money, property, assets, etc. – known as your Estate) would then be dependent on the laws of intestacy! Someone other than you, decides how your belongings should be distributed – the law! What the law decides however may not necessarily be how you would have shared your belongings, if you had just taken the time to make a will while alive.
Below is the order in which your belongings will be distributed if you die intestate in U.K. and Wales:
The spouse or civil partners – will inherit everything if the person who died had no children; or will inherit the first £270,000 if they had children.
Children, if there is a surviving spouse or civil partner – will inherit what remains after the first £270,000 has been passed to the living spouse or civil partner. If the estate is not worth up to £270,000, the children get nothing!
Children, if there is no surviving spouse or civil partner – the entire estate is split equally amongst the children
Grandchildren and great grandchildren – will inherit equal shares of what their parent or grandparent would have inherited from the estate of someone who dies intestate if,
their parent or grandparent dies before the person who died intestate or;
their parent was alive when the person who died intestate died, but died before they attained the age of 18.
Other Close Relatives: Parents, brothers, sisters, nieces and nephews would then be next in line, if person who died intestate has none of the aforementioned relations alive
Others who may be able to claim (if there are no living relations from the list above) are grandparents, aunties and uncles, cousins, etc.
Guess who gets it all if a person who dies intestate has no surviving relations – The Crown! It passes to the Crown as ownerless property – The TAXMAN, always waiting in line 😊
More importantly though, beyond distribution of your belongings, can you imagine how much easier it would be for your survivors to get on with implementing whatever your wishes are with regards being buried, if you have it spelled out in your will! They wouldn’t while grieving the loss also have to try and figure out whether what they are doing is what you would have wanted!
So over the last couple of weeks, I have been researching what I need to do to get my will written and found that;
One could get a solicitor to write it, or
Write it on your own
The disadvantage of writing it oneself though, is that you could potentially write it in an unclear manner that leaves room for the will being disputed (or being deemed invalid – a will that isn’t valid means you die intestate!), which is unlikely to be the case if you paid a solicitor to write it for you. On the other hand, a solicitor is able to advice on any Inheritance Tax implications.
I also found that Will writing is not a regulated market, so you need to be careful who you get to write your will. As solicitors are however regulated by the Solicitors Regulation Authority (SRA) getting one’s will written by one will afford some confidence, especially as a will is a legal document and they are legally trained.
In my research, I also found that there’s a free will service during the month of March and October in U.K. where solicitors will write or review a ‘simple’ will for free, for those aged 55 or above, in return for making a bequest to a charity in your will.
Things to note: you don’t have to wait for specific events or activities to happen or be completed (like I’ve been doing) before preparing your will, rather if there a significant change, just have a new will that supersedes any previous ones.
I know that for Muslims, the Quran spells out how a person’s possession should be shared on their demise. As a Muslim living in U.K., if you want your estate shared as indicated in the Quran, it is important to check with your Imam whether it is necessary that you also write a will that clearly spells your wish out (I believe that might be the case, otherwise you might be deemed to have died intestate).
If you are young, single and broke then you don’t need a will (yet), other than that you should make a will NOW.
No one is promised tomorrow and it is best to put one’s affairs in order, to ensure that your possessions are dispersed in the manner you want it and your beneficiaries have clarity over what you want done/they don’t end up squabbling and in court over what they think should be done (more so for us African’s where some uncle or aunty or other relative may decide that it is best to take the body to Africa to be buried – not at their cost though, but they’d try to make the decision)!
I am on the case with mine as I suddenly realise I have been lucky so far and need to get my house in order before my time comes! I suggest the same for all.