Finance Category

Is it time to talk about money?

Burying your head in the sandMoney is an uncomfortable subject at the best of times, but there are some simple steps to makes sure that you are making grown-up moves with your money in 2018, rather than fighting fire!

Savings

Experts recommend that we have 3-6 months money in savings equivalent to our salary. This is rainy-day money to cover emergency things like something going wrong with your boiler or car, or at the worst end of the scale ill-health or being made redundant.

If you have money in savings, then now is the time to look around at better rates. Interest rates on savings have stayed stubbornly low, but with The Bank of England having just raised interest rates, some financial institutions have raised their saving product rates – make sure you get the best rates you have for whatever money you have. (more…)

Have you got a Money Plan?

Piggy BankMost people in life have some sort of plan… whether they want to start their own business, how many children they would like, the age they would like to retire or the foreign holiday home the would like to own. But the reality is that most people do not have a ‘Money Plan’, probably worse than that a lot of people do not have any idea how much money they need to be saving in order to achieve their goals and dreams, in fact I would go so far as to say that quite a few people only have a vague idea of their budget on a month to month basis.

Money is fraught with anxiety for many people, now more than ever in the aftermath of the credit crunch and it is the cause of many arguments and relationship issues in couples and families. So hopefully we can look at some of the issues and get us all thinking about small steps we can make to make this topic easier to manage.

In order to begin looking at your financial health it is helpful to understand your ‘Money Personality’, broadly speaking there are several categories that people normally fall into:

The eternal optimist: those that believe ‘something will turn up’. A contract will be won; a promotion with a big rise is just around a corner or perhaps a lottery win!

Those that bury their head in the sand: these people never open a bank statement, dread any phone calls from financial institutions, and possibly rely on the ‘bank of Mum & Dad’.

Life’s too short: these people are generally big spenders, you will often hear them saying ‘you can’t take it with you,’ the problem is a large proportion of big spenders are spending on credit…

The dodgy dealer: everyone knows someone who always has a deal on the go, ranging from constantly switching credit card deals to dodging the tax man.

The problem with all of the above is that sooner or later the spending and/or lack of saving catches up with you. We probably all recognise someone from the list and perhaps you are a mix of these categories?

As boring as it may sound in reality we should all be aiming for a more balanced approach to money and our personal finances. Firstly we need to understand what comes in and what goes out.

Then we need to plan for the short term – emergencies like the car needing a repair or the washing machine coming to the end of its life. The medium term – being made redundant or falling ill and the long term – that holiday home you’ve been dreaming of!

Wishing you good financial health!

The New Pension Rules

shutterstock_103079882There is no way to dress up pensions, let’s face it – it’s not a sexy topic! But none the less we all need to get to grips with the new pension rules and what they mean for our financial future. So we try to sort some of the facts from fiction that have been reported so far.

• Many people believe that everyone reaching retirement age from 2016 will automatically get the £155 pension. In fact you will need to have 35 qualifying years (up from 30), and people that have contracted out during their lifetime by saving in to final salary schemes will get less. The good news is that as I write this the Government is putting the final touches on an intelligent calculator that will be able to forecast your future pension : https://www.gov.uk/state-pension-statement

• Annuities have garnered a bad reputation of late, not least because of poor performance during the recession, with low interest rates playing a huge role. But for some people they will still be the right choice to provide a guaranteed income throughout retirement – so do your homework. Rules that come in to play during April 2015 will mean we have more choice, especially regarding small pots of money. If your various pensions add up to less that £30k (previously £18,000), then you will be able to take it all as a lump sum and invest as you please. This still needs serious thought as only the first 25% will be tax free.

• There has been a lot of talk about free financial advice from April 2015, but remember there is a lot of difference between guidance and advice. Many companies will begin to offer online tools for financial planning. In reality you can rarely beat face to face advice. It may pay to budget for around £450 for advice – this would pay for a good 3 hour appointment with a specialist who could truly advise on what’s best for you. Try a website like www.unbiased.co.uk to find an Independent Financial Advisor.

• Auto-enrolment will not solve all of our pension’s woes. Employers have been working on enrolling staff in to company pension schemes. But there are people that slip through the net – those earning less that £10,000, self-employed, or those that work for small companies that have not yet had to start a scheme. Contributions will rise by 2018 – employees will pay 4%, employers will pay 3%, 1% will be tax relief (at 20%), but even this might not be enough to secure your future – depending on your age and any other long-term saving plans you have in place. Wherever possible – top up your scheme.

• If you are married – make sure you both pension plan. Many people have got caught out when the husband has bought a single life annuity – because it provides a higher income, only to find out the pension plan dies with them, often leaving the widow in financial dire straits.

• If you are in position of not needing your pension straight away, then you can defer payments. From April 2016 deferment will not be as generous – 1% for every 10 weeks (currently 1% for every 5 weeks). Whilst not as generous if you are still employed and especially if you are a 40% tax payer – then this may be a good option.

Many of us have dreams of what our retirement might look like, to put things in to perspective. To retire on an income of £1,000 a month – you would need to have a pot of £231,500 at current annuity rates!

Harnessing the Law of Attraction, by Robbie (PIN: 3443)

Harnessing the Law of AttractionThoughts are things and they are very potent. Your thoughts are what have created your life circumstances and when you learn to harness that power and deliberately create your life, you will open your eyes to a whole new world of possibilities.
The first thing you must do to take control is to realise where you are and why you are there. Your filter system of thought was largely created in the first three cycles of your life (a cycle is seven years). (more…)

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