Author: richard

New year, new you for your finances…

January 9, 2019

With the new year comes new possibilities, and most of us like to put a resolution in place. While you might not stick to your January gym membership or finally get that novel written, committing yourself to a financial resolution is an excellent way to start 2019.

Improving a financial situation has proven to be a high priority for the British public as we turn the first page on a new calendar. In fact, the average adult will commit £4,600 on financial resolutions; this includes goals like paying off a debt or moving house. For those under the age of 25, 11% of people aim to clear their debts in the new year, and for the over 55s that figure increases to 15%.

Even with the best intentions, however, it can be tough to see resolutions bear fruit. Luckily, there are a few steps you can take to give yourself the best chance.

1. Look before you leap!

It can be tempting to jump into the new year with big plans for the future, but if you’re not looking at where you’re coming from, you may not be giving those plans the preparation they need to flourish. Review your spending for 2018, collect your bank statements, bills and receipts and look out for areas of excessive or unnecessary expenditure. Once you’ve identified any pitfalls, they’ll be much easier to avoid in the year ahead.

2. Find your feet

Once you’ve got a good grasp of how the past year has been for your finances, you’ll have an understanding of where you are currently. There may be actions you can take immediately to better your situation. For example, review any subscriptions or direct debits that you now deem unnecessary. Sell any unnecessary items to create an income without any serious lifestyle changes. Consolidate debts with balance transfer cards, to make payments more manageable and to potentially lower your interest rate. Simplifying and strengthening your financial situation at the start of the year will give you greater control over the coming months.

3. Set goals and be reasonable!

There’s no point in setting a goal that is unachievable, only to disappoint yourself when you inevitably fail to meet it. With a solid understanding of your recent financial habits and your current position, set yourself an achievable plan for the year ahead. Be specific and make it measurable! Rather than pledging to eradicate all of your debt, identify a portion that you’re confident you can clear, and set yourself benchmarks to help track your progress.

4. Draw up a budget

It’s all well and good having a plan but you’ve got to stick to it. A well constructed budget can be just the thing to keep you on the straight and narrow. Gather information about your income and outgoings and regulate your spending. For example, it can be very tempting to treat yourself when you receive some unexpected income but don’t ignore the opportunity to bump up your savings. Perhaps consider splitting that extra money between debt repayments and future savings, and if there’s any left over then go for that posh meal. The key is to keep up to date, and revise your savings goals and budget plans as you go so that you’re prepared for whatever the year may bring!

With the right preparation and planning, 2019 can be a great step forward for your finances – take on the challenge and have a happy new year!

How can millennials get on the property ladder ?

December 10, 2018

There’s been a lot of talk in the press recently about generational inequality, which has mostly been with good reason. Those currently in their twenties and thirties are earning far less than people the same age did 10 to 15 years ago.

The 2008 recession has put the millennial cohort far behind in terms of earnings and wages. Wages have never fully recovered since the recession and are still behind their pre-financial crisis peak. Many may be unable to ever afford to get on the property ladder, meaning they will have a lifetime of rent payments to fund.

Planning ahead for Christmas…

December 10, 2018

Seasonal fare in the guise of Brussels sprouts, mince pies and chocolate Santas greets you in every high street shop and supermarket, providing a daily reminder that Christmas is just around the corner. If you feel you have still got stacks to do before the Big Day is here, our top tips may help you get your festive finances in order.

The longevity challenge and how to tackle it…

December 5, 2018

In the UK, we are faced with the challenge of an ageing population. Many of us will live longer than we might have expected. Already, 2.4% of the population is aged over 85. Because of improvements in healthcare and nutrition, this figure only looks set to rise.

4 ways to save at Christmas without being a Scrooge…

November 19, 2018

With your Christmas preparations, starting soon is the key to saving money. If you leave your shopping to the last minute, not only do you have to face the 23rd December high street chaos, you’ll miss out on the excellent deals that many retailers offer early in the festive shopping season.

It’s incredibly easy to overspend at Christmas – doing your utmost to make savings where you can is the best way to avoid a festive hangover that lasts until that January paycheck finally arrives.

Here are our top four festive money saving tips:

Join a no-present pact

Do you ever find that your friends and relatives buy you Christmas gifts you don’t want? The sort that are used once on Christmas Day before being relegated to a dusty top shelf for a few years and then eventually given away to a charity shop?

We’re sure that most of us have been in this scenario at some point.

Joining a present pact is a great way of avoiding giving and receiving more than you need.

Not only will this save you money, it will also go a long way to reducing your environmental impact at a time where we buy and receive plenty that just ends up going to landfill. It can be a liberating revelation to admit to ourselves that others don’t really need ‘gimmicky’ Christmas gifts and neither do we.

Keep a Christmas present list

For people who don’t enter into your no-present pact, writing a list will give you a clear idea of what you need to buy. As well as avoiding traipsing through various shops by giving you a precise idea about exactly what you need, it means you won’t overspend by ‘panic-buying’ gifts at the last minute.

Brave Black Friday (and Cyber Monday)

Black Friday is a massive shopping event which this year falls on 23rd November. First implemented in the US, it became established in the UK in 2014. Despite its relatively recent history, you can find some truly incredible deals if you can brave the in-store queues and general bargain mania that this event famously provokes.

Cyber Monday follows on 26th November, when online retailers heavily discount their goods.

Some items sell out in seconds so it’s worth creating online accounts with your favourite shops in advance to save precious time.

Send your cards second class

Even small savings add up to make a difference. As the saying goes, ‘look after the pennies and the pounds will look after themselves’.

A standard first-class stamp now costs 67p, whereas a second class stamp costs 9p less at 58p. If you send 50 cards out at Christmas, this will add up to a £4.50 saving. This might not sound much, but trimming your Christmas spendings down in plenty of places will add up to a substantial amount.

Whatever you’re buying this Christmas, being thrifty never hurts. Thinking carefully about your choices and starting early are the easiest ways to make savings.

5 key budget takeaways…

November 19, 2018

This year Chancellor Philip Hammond delivered his autumn budget a few weeks earlier than usual. Normally the budget is released in mid-November, but this year he gave the budget on 29 October.

In the run up to Brexit, Hammond didn’t release any huge announcements. Perhaps he wants to leave plenty of room to accommodate for any Brexit inconveniences. However, there were some important takeaways.

UK growth projections altered
The independent Office for Budget Responsibility increased its projections for UK GDP growth. They raised next year’s forecast from the figure of 1.3% they gave in March to 1.6%. Because of bad spring weather, however, the 2018 growth forecast was downgraded to 1.3% from 1.5%.

Changes to income tax thresholds
This was arguably the announcement from the budget that will have the most tangible effect on people’s lives. In his speech Hammond himself referred to it as his ‘rabbit in the hat.’ The personal tax-free allowance will rise from £11,850 to £12,500 and the higher rate threshold from £46,350 to £50,000. These income tax thresholds were part of the Tories’ manifesto in the last election, a pledge they have fulfilled a year earlier than they originally said. (Scottish rates will be decided in the Scottish budget in December).

IR35 Changes
Changes to the tax rules for self-employed workers in larger private companies who are effectively working as full time staff are in fact the biggest new revenue raiser from the autumn Budget.
The Chancellor announced that companies with more than 250 employees will be responsible for checking that they are not disguising employment by contracting to so-called personal service firms.

Changes to Entrepreneurs’ Relief
Before the budget, many expected Hammond to abolish Entrepreneurs’ Relief. It has remained but the qualification period has been extended from one year to two.

Changes also mean that shareholders must be entitled to at least 5 percent of the distributable profits and net assets, as well as 5 percent of the business and voting rights before sale.

Rejuvenation of Britain’s high streets
2018 has been a testing year for the high streets. Thousands of stores have shut, costing tens of thousands of jobs.

Smaller shops, with a rateable value of below £51,000 have had a third knocked off their business rates.

On top of this, Hammond announced a £675m ‘future high streets fund’ that councils can access to redevelop their high streets.

4 ways to live a happy retirement…

November 19, 2018

Retirement should be the time of your life. No more early alarm calls, no more commuting and no more carefully counting your holiday allocation. Instead, you have the freedom to do exactly as you please. Yet retirement might not always work out as the idyllic move to a cottage by the sea it’s billed to be. Some people, in fact, dread retirement and feel they’re being put out to grass. They fear they’ll miss the structure and companionship that work gives.

Think of it more as ‘change’ not ‘old age’

Retirement is automatically associated with old age in people’s minds. The very word conjures up images of people sitting around in retirement homes in their slippers, watching daytime T.V. But this is far from the truth. Old age, today, encompasses a vast span of years, from 65 to 100. There are many active retirees living life to the full. And if you think how much the average person’s life changes between 25 and 60, just think how many possibilities could lie ahead in the same timeframe. Going from work to retirement is a huge transition – yet people cope with many other major transitions during the course of their lives; having a baby, changing jobs, going through a divorce, moving house. The key is to use your resilience and strength from previous times of change to help as you move into retirement. Don’t see it as entering old age, see it more as a time of embracing life’s opportunities.

Don’t just be concerned about the money side of things

That may sound a curious thing to read in a financial newsletter. And pensions will form a key part of any more retirement planning. There’s also no denying that pensions can be complex so it’s important to find the right solution for your situation whether it’s taking an income or accessing a lump sum. But the financial side of things is much wider than just your pension. So take time to think about what your ideal lifestyle would look like. Think about some proper financial planning. What are your goals and ambitions for retirement? Are your current finances on track to help you reach them? The money is just an ends to enable you to live a happy retirement and find a new purpose.

Be clear in your mind what you really want to do

In today’s world, where such value is placed on career status, retirement can be seen as an end rather than a new beginning. But you don’t have to be in paid employment to be happy and fulfilled. You may, in fact, find you achieve far more satisfaction in life after work. Why not do something you’ve always wanted to but never had time to? Learn to play a musical instrument, take up a sport, sign up for some volunteering, enrol on a course, get involved in a conservation project, travel the world… This is your time to do as you please. Remember, you don’t have to be constantly busy – sit back and reflect on your true values.

Adopt a proactive mindset

You often hear stories of people becoming ill, or even dying, within months of stopping work – a cruel twist of fate after they’ve laboured hard for years, looking forward to their retirement. According to the Office for National Statistics, though, health and wellbeing do actually increase in retirement while depression and anxiety often fall. This is as people have more time to adopt a healthy lifestyle and find new sources of fulfilment and exercise. The key seems to be to make a determined effort to stay sharp, be proactive and keep stretching your boundaries. It may sound surprising but workaholics often love retirement as much as they loved their careers.

Autumn Budget 2018…

October 30, 2018

Chancellor Philip Hammond was able to draw on a windfall from better-than-expected tax receipts to underpin his message that austerity was “finally coming to an end” in his Budget. Upgraded forecasts for government borrowing and growth enabled the chancellor to lift public spending, which included extra funds for the NHS. He also brought forward increases to income tax thresholds, while announcing a reduction in public debt as a proportion of national income….

Funding care home costs with a care home ISA…

October 9, 2018

If you’re under 60, funding your future care might not be top of your agenda. Garden improvements, good restaurants and holidays probably rank slightly higher, as well as saving for your pension if you’ve not yet retired.

However, the government could be proposing a new ISA in order to encourage people to start saving for their later life care. Recent leaked government documents suggest that the government is considering a Care ISA as part of its forthcoming green paper on social care.

The Care ISA would have a tax free allowance of its own that reflects the cost of care. Any leftover savings from this ring-fenced amount would be safe from inheritance tax when you die.

The high cost of later life care is something that looms for many of us.

Currently, those in England and Northern Ireland who have assets of more than £23,250 will be expected to self-fund their care completely. This can mean selling the family home and spending a chunk of your savings on funding care.

Councils are becoming increasingly ruthless in cracking down on people who deliberately deprive themselves of assets by giving them away. There is no time limit on how far a council can go back when claiming deliberate deprivation.

A Care ISA would mean that, if a saver comes to need later life care, more of their assets would be protected.

However, the Care ISA has been widely criticised by both providers and financial commentators.

At the moment, people can leave £325,000 and, from April 2020, couples with children and property will be able to leave £1 million jointly. Much of the population dies with less assets than these. So, for many people, an inheritance tax break isn’t relevant, which could limit the Care ISA’s uptake, making it unattractive for providers to offer it. They may prefer to take advantage of other products, such as a pension, because they offer immediate tax relief.

Additionally, financial services firm Hargreaves Lansdown suggest that only one in four people ends up paying for long term care costs, making the Care ISA even more unattractive.

This means that providers are unlikely to see the Care ISA as a significant business opportunity. The upfront costs of implementing the niche ISA could make it unprofitable.

What’s more, it is unclear how the government would clamp down on the tax loophole that will emerge if savers pay for their care from funds outside of the Care ISA and use the ISA as an inheritance tax exempt savings fund.

The abundance of negative feedback means that the Care ISA may well remain the stuff of fantasy for the treasury.