Friday, 21 November 2014

Modest cork-popping is in order

I apologise for yet another post on getting cash out of the government, but today is most certainly a day to pop the corks and celebrate!

When I retired on 31 May 2005, today was over nine years ahead. Now it's come.

So, bracing myself for a possible big let-down, I fired up my bank's app over breakfast, to see whether the very first payment of my State Pension had actually reached my account. It was all right. It had. Relief and joy! Today will now go down in history as the day my gross income went up by £6,516 per annum. (It sounds more, expressed like that!)

Not only this. Amazingly, the monthly amount of Civil Service Pension had been correctly reduced. By £108.60. This meant that, after all, the Department of Work and Pensions had managed to co-operate smoothly with HM Revenue and Customs, so that the right tax deductions would henceforth be made to collect the tax on two pensions instead of just one - and no arrears would build up. A financial mess has been avoided.

I say the 'right deductions'. The extra tax taken seems approximately right to me. It's difficult to work out exactly what should be taken. The payment dates and payment frequency of my two pensions do not match up. The CS pension is paid religiously on the 22nd of each month, with twelve payments a year. But the State Pension is paid every four weeks, with thirteen payments a year, and its payment date is constantly creeping forward. In one month (I think it will be every May) I actually get two dollops of State Pension in the same month. Not that I will complain!

But this creeping-forward of the Sate Pension date will make my monthly budgeting tricky - I mean knowing, at any given moment, just how much is available at the bank to draw on, and whether that will cover my outgoings until the next pension payment replenishes the account. For of course, even with this new income boost, I will still have to watch my cash flow, and make absolutely certain that I never go accidentally overdrawn. Oh, to be so well-off that such things can be disregarded! But although in comfortable circumstances - I can't deny that - I still have to be a good money-manager like most other people. And that means endless ongoing planning and monitoring of income, expenditure and savings.

I take a positive view on this, and try to run my financial life as if I were a business with a steady revenue stream that I can't change, but with outgoings and capital requirements that I can influence by prudent spending and saving behaviour. It isn't exactly fun to keep an eye on all this, but at least I am using analytical skills I learned when working (it's good mental exercise, after all) and I'm getting satisfaction out of each completed year that went to plan.

So, as the sole director, shareholder and chair of 'Lucy Melford Ltd', I have said (in my latest financial bulletin) that the trading outlook for the medium term is most encouraging. Even so, I believe that a policy of selective refurbishment, upgrading and investment is a better course for the foreseeable future than extravagant spending on a new office HQ - or a series of fat bonus payments to myself! So only a modest amount of cork-popping then. Cheers.

1 comment:

  1. What did you do in that old life, remind me Lucy!?

    Surely you have already created a spread sheet which adds in a dollop of cash every four weeks and does an end of year adjustment calculation. My income is quite modest so I tend to be very careful and like a small extra balance above expected expenditure to remain as a comfort zone for peace of mind. Never have to wonder if I am close to empty, current farcically low interest rates on savings help and many current accounts will actually give a decent interest...

    I look forward to that wonderful bonus day when the government finally lets me warm up my house, if I ever live that long...


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