Unemployed - what do to with savings?

fatbunneh

Hello (and apologies for the long post!),

I've been reading various sections of the MSE website but I'm still pretty confused as to what to do.

I've come into about £14,000 from my grandparents who have told me to do something with it as it's currently sitting in an account gaining 0.01% interest. I also have about £3000 pounds in my current account.

I'm 24, unemployed, and currently looking for a job. I've been told, unequivocally, that I can't claim JSA because I'm over the £16,000 threshold and that transferring some of the money to my parents would be illegal. I'm paying nearly £450/month in rent but living pretty frugally otherwise (as much as I can in London). I live with my boyfriend who has a steady job and is more than happy to pay for things like food and bills.

My question is, given the current state of the job market (and the near-impossibility of finding an entry-level job in my desired industry any time soon - I wish I was exaggerating), would it be better to transfer the whole lot into my current account and wait until I go under the JSA threshold and start claiming, or put some money into a savings account, or put some into an ISA? Also, is it true that you can put £5100 into an ISA before the end of the tax year, and then put £5100 more in the same ISA after the start of the new tax year? Is this advisable?

Thanks so much for any help/advice you can give me. Sorry again for the length of the post! I'm trying really hard to understand all this banking stuff but it's mostly going over my head...please ask me for any other relevant information that I may have forgotten.

Arthurian

You can put £5100 into a cash isa this tax year, then add another £5100 from April 6th, if you want. You can, in addtion, put another £5100 into a stocks and shares isa this tax year and also in the next tax year (£10,200 put away per tax year). But just because the money is in tax-free savings doesn't mean it isn't counted when looking at your JSA eligibility.

Perhaps you could use the money to repay student debt?

fatbunneh

Thanks for the clarification on ISAs, and JSA. That's really helpful.

I should've said, also, I don't have any student debt, or any other debt for that matter. I also don't have any credit cards.

My current account has also never been upgraded from a 'student' account...does this matter? Most people I've asked said it's fine.

Arthurian

I don't think it matters too much not having your student account "upgraded" - in fact it may be to your advantage if the student account has any freebies attached to it. The bank will eventually get in touch with you to change it. Meanwhile, you're only around a thousand pounds above the JSA threshold, and rent is £450 a month, so as soon as you go below £14,000 get straight back to the JSA office. Keep your savings below £14,000 in accessible accounts (no notice) in case you need them, and look for any job that will have you. Good luck.

EDIT: Maybe you should load up an Oystercard and buy yourself a couple of very smart interview suits with the rest of the thousand pounds.

Voyager2002

Rather than simply saving the money, look at ways of using it to get what you want out of life. You mention that you are unemployed and actively seeking work, yet it is impossible to get an entry-level job in your chosen industry. Would any kind of training help? You have enough money for quite a bit of training. Come to that, any chance of doing unpaid work to get some experience? Again, your money would cover the costs of getting to and from work for quite a while, and that experience could be invaluable. Or maybe you could go travelling?

opinions4u

If you start paying all the bills, and your other half saves the same amount of money up in his name (to give back to you when times improve), could this help bring you back in to scope for benefit payments?

Other than that, get the money in the best paying easy access account (you should be able to get 2% or more with very little effort) while you decide what to do.

Voyager2002

opinions4u wrote: »

If you start paying all the bills, and your other half saves the same amount of money up in his name (to give back to you when times improve), could this help bring you back in to scope for benefit payments?

Unfortunately not, since a couple are assessed on their joint income. So long as she lives with an employed partner, she will not be eligible for most means-tested benefits.

fatbunneh

Hey all,

Thanks so much for all your great suggestions.

I'm actually starting some unpaid work experience next week but using some of the money for extra training sounds like it'll be a good investment. I'm also thinking of using some of the money to boost my language skills.

Otherwise, an accessible savings account might be the way forward. I feel that spending enough to then be eligible for JSA is a bit illogical, especially considering that they will take my boyfriend's income into account.

One last thing - seeing as I'm not earning money, does that mean the interest I gain from a savings account won't be taxed? Again, I'm not quite sure how this works. I wish they taught you this at school...

psychic_teabag

Arthurian wrote: »

You can put £5100 into a cash isa this tax year, then add another £5100 from April 6th, if you want.

Just to qualify that slightly... that's true if you choose an instant-access ISA, but if you chose a fixed-term ISA this tax year, the T&C on the account would probably prevent you adding more to it next year - you'd have to open a new ISA instead.

psychic_teabag

fatbunneh wrote: »

My current account has also never been upgraded from a 'student' account...does this matter? Most people I've asked said it's fine.

Who is the current account with ? There might be advantages in upgrading. E.g. if it's with Lloyds, converting to a classic account and then adding the vantage option will give 4% interest on balances on £5k to £7k (with some messing about transferring £1000 in and out each month). Well, you could apply for a new account with Lloyds anyway, but they might not be interested if you're unemployed, whereas if you're already with them, they're less likely to turn you down.

Because you don't pay tax, you can register to receive the interest gross.

N1AK

fatbunneh wrote: »

I've been reading various sections of the MSE website but I'm still pretty confused as to what to do.

Firstly, as long as you have the cash you're basically stuck without the income assessed benefits.

As others have said one of your best options is to spend the money on things you will need or use.

You could pay some rent in advance, buy yourself a decades worth of xbox live cards (£300), buy new clothes, buy long life food or alcohol, buy some new furniture, go on holiday, buy gift vouchers etc.

If you're only a couple of £,000s over the limit you should be able to find ways to spend the money that give you virtually full value while not being abusive.