Money Matters: Top tips to keep you solvent

Paul Lewis on why it could be a prudent idea to learn your 336 times table.

Money is simple. That’s going to be my theme in these columns. It’s just basic arithmetic. Hard work by insurance companies, accountants, politicians, financial advisers and actuaries has succeeded in making it almost unintelligible. My job is to decomplexify it. Sorry, I’ve caught the bug too! I mean make it simple.

How much does that morning cappuccino on the way to work cost you, for example? If you even know, you’re probably thinking about £1.89.

Wrong.

It costs you a pay cut of more than £630 a year. Here’s how. Most of us are at work for 225 days a year after weekends, holidays, sickness and so on. So the cash you hand over for the frothy stimulant comes to £425.25 a year.

But, before that money gets to your wallet, the long arm of the state has helped itself. You have paid tax and national insurance on your pay which swipes one-third of it before you even see it. To have £1.89 to spend each workday you have to earn an extra £634.70. So giving up your morning cappuccino would be like a pay rise of more than £630. And not giving it up is like turning one down.

“No thanks, boss. I’m OK. I don’t want another six hundred quid a year.”

“And thirty four. Six hundred and thirty four. And 70p.”

“Nah. I’ll still turn it down. Thanks.”

Every pound you spend each working day is a pay cut of almost £336. So, this week’s homework is to learn your 336 times table. Which, for some reason, no one does at school.

So chant after me…One pound spent is a pay cut of three hundred and thirty six. Two pounds (a cappuccino and a newspaper) is a pay cut of six hundred and seventy two. Three pounds (a cappuccino and a croissant) is one thousand and seven. Four pounds (a cappuccino, a croissant, a paper and a bus fare) is one thousand, three hundred and forty three. Five pounds (what do you do on the way to work?) is one thousand, six hundred and seventy nine

Paul Lewis is a freelance writer who presents Money Box on Radio 4 and is the author of Live Long and Prosper – the guide to pensions without the boring bits