How can I make £18,000 work for me?

sunshine79

Hi,
To set the scene - I am a single parent on a low wage, so I get tax credits to boost. Up until recently I was able to claim housing benefit (we live in private rented house). My grandfather passed away and I inherited £18,000. This means I can no longer claim any housing help. I know I can't , nor would I want to, spend this money just to get rid of it. I would love to remain off housing benefit, but I will have to use this inheritance money on a monthly basis to make up the shortfall of the benefits.

My question is: would you have any suggestions how I can make this money work for me so I can get the best out of it? At the moment I have put some in premium bonds, some in an ISA and the rest ready to use to top up my rent.

I would love to have used this money as a deposit on a house, but with my low wage I am not able to get a mortgage for anything - south east prices are ridiculous!

Thanks for you time in reading this.:D

Eco_Miser

If you're not a taxpayer, cash ISA's are pointless, especially at the moment. Even if you are, the best interest rates are available in certain current accounts, but only on relatively small amounts. A Santanter 123 would pay 3% AER on all your money (up to £20000), but you can get more by opening accounts with Nationwide, TSB (both 5%) and Lloyds (4%). Search this forum for full details of these accounts, and how to meet all their conditions.

ColdIron

Ignore the post by fiza200, it's a very bad suggestion

As a non taxpayer premium bonds are even worse than ISAs for you, current accounts are your best way forward

mdxyz

Spending the money to replace benefits, then going back on benefits when it is gone, is just subsidising the government. Unless you feel a moral imperative to do this, I don't see any advantage.

To maximise your enjoyment of the money, I suggest you spend it within the next few months on durable items that do not count as wealth for the purposes of benefits calculations.

It might also be worth considering leaving the South East, and using it as a deposit somewhere in the North. There's no particular reason to live in a high cost of living area if your income is mostly coming from low skilled part time work and benefits.

sunshine79

Thank you. Looks like I will need to move my money to a decent savings account. Yes I am subsidising the government for my housing, which I am sure my grandfather hadn't intended, but I have tried to put a positive spin on it that I am not relying on the council for the time being.....
As for moving north, I was brought up and have all my family here, so moving just me and my child a few hours drive away would be rather daunting!
Shame I can't buy to let up there either.

colsten

I don't understand this talk of subsidising the government, or the advantages of getting back to be dependent on housing benefits. But perhaps I don't have understand it.

If you can, get yourself some high interest paying current accounts (TSB Plus, Club Lloyds, Santander 123). Check whether you are eligible for gross interest (google R85).

sunshine79

Thanks just looking now. I don't want to be dependant on housing benefit- none of my family have ever claimed, its just the circumstances I have been left in and I was thankful it was there for me to be able to rent somewhere. When my child is older and more independent I plan a career change

SlightlySmart

It'd be a shame to spend it all on topping up living costs, then end up back on square one in some number of months when it's run out. Presumably you'd be back eligible for housing help before all of it ran out though.

How long until it would all run out topping up living costs?

Could you take (and pay for) some course at a local college that would lead to a qualification that could help you get a better paying job or into this new career sooner? Fees would only be a small dent in the £18k. Buy a nice suit so you look and feel as good as anyone when you eventually go for that interview.

Could you spend some of it in a way that would reduce ongoing costs, e.g. replacing an old uneconomical car (if you have/need one for work), or buying a washing machine (if you use a launderette), buying a season travel pass instead of weekly.

Perhaps spend a little bit of it on a modest holiday that you and your child will remember. And a modest "thing" that will last forever like a necklace or a watch.

The general approach is to save it in a way to get maximum return (as the other posters said), while drawing it down to spend on improving yourself and your situation for a better future.

sunshine79

Many thanks SlightlySmart for not being judgemental and for giving some great suggestions. Your final paragraph sums it up. I'm always trying to better myself and when courses come up at work, I go for them. I am going to look now at courses to be one step ahead. One day I will be financially comfortable..... (isn't that everyones dream!)

ceredigion

It has been a long time since I was in this situation and will stand corrected if things have changed . But seem to recall that the tax credit people arn't interested in any money you have in a ISA .It isn't inconceivable that the same would apply to the housing benefit ,you could check. ISA rates are particularly poor as we all know but the allowance go's up to £15000 on Tuesday and if it shields your money from the benefits agency`s it may be the best option.

pip895

ceredigion wrote: »

It has been a long time since I was in this situation and will stand corrected if things have changed . But seem to recall that the tax credit people arn't interested in any money you have in a ISA .It isn't inconceivable that the same would apply to the housing benefit ,you could check. ISA rates are particularly poor as we all know but the allowance go's up to £15000 on Tuesday and if it shields your money from the benefits agency`s it may be the best option.

Not 100% sure but I understand its only pensions that aren't considered.