As we are coming up to a new year, you might be thinking of making some changes to help improve your financial stability and happiness. Let’s have a look at some New Year’s Resolutions you can make to do so…
Prioritise my own Mental and Financial Wellbeing
Don’t stretch yourself too thin in order to please or impress other people. You are the main character in your own book of life!
Improve my Credit Score
A good credit score means you are more likely to be approved for loans and be offered lower interest rates on repayments. This resolution is particularly worth considering if you are thinking of getting something like a mortgage in the next few years. Some examples of steps you can take to improve your credit score are registering on the electoral roll and paying your credit card balance in full every month
Pay off More than the Minimum Payment each Month on my Credit Card
Even if you don’t pay the full balance, paying for than the minimum required payment is a good idea. This is because you reduce the amount of time you will be stuck making repayments and being charged interest. We talk more about credit cards on our sister company’s blog…
Increase my Pension Contributions
Pensions work on a system of compound interest so the earlier you start building your pension pot, the more it will be able to grow over time. If you are able to, increasing your pension contributions is definitely worth considering, especially if you are a woman… let’s close that gender pensions gap!
Build my Savings
Whether you’ve got something in mind you want to save up for or just want to create an emergency fund, savings are really important. LINK It sometimes seems impossible to save money because we think ‘too big’. For example, you might have a goal to save £1,000, but it seems unmanageable. However, when we break it down in terms of the amount we would need to save each week or month, it seems less daunting and more achievable. Maybe you could start by getting an un-openable tin money box, or enabling the round up transaction feature on your online banking if your bank offers this
Don’t open any New Credit Cards
Try not to increase your debt!
Tackle my Debt
Is 2023 the year of going debt free? One way of managing your debt is to pay off the ones with the highest interest rates first, in order to slow the rate of growth of the money you owe. It’s also worth checking out:
You are worthy and capable of achieving what you want in life. Keep working towards whatever that may be…
by Red Star Wealth
According to The Money and Pensions Service’s Financial Capability Survey, 11.5 million UK adults have less than £100 in savings and only 49% of people could last 3 months or more without borrowing money if they lost their main source of income.
Why Might You Struggle to Save?
It’s difficult to save money if you have any debts because you are tied into making repayments.
It’s also difficult to save when you don’t have a budget plan as it’s harder to keep track of your money. Budgeting can help you see where you might be able to reduce your spending and where (if possible) you can afford to put money into savings. Use our free budget calculator through our sister company’s website if you need some help making your budget!
It’s hard to save money if you have a habit of overspending. It can be easy to spend beyond our disposable income, especially at times like Christmas…
The Cost of Living Crisis
UK savings will likely only decrease in continuing months. This is because many people cannot afford to save money at the moment, giving the huge inflationary pressure on living expenses.
You can only afford to save money when your expenses are more than your income. Therefore, many people might see their savings slowly being depleted, the growth of their savings coming to a standstill, or their savings’ growth slowing down.
Why is Saving Money so Important?
It enables you to achieve your financial goals
You can form an emergency fund for any unexpected expenses. This in turn gives you security and peace of mind as the emergency fund acts as a safety net so that you can afford to cope with the unexpected
It can help you avoid taking out credit, protecting you from entering a cycle of debt. This point is particularly true when considering how many people turn to things like payday loans when they have unexpected bills
It means you can accumulate wealth, which is good if you want to do something like channel money into an investment
It helps protect your credit score as you can make payments on time
If saving for a house, it means you can put down a bigger deposit, meaning you will have a smaller mortgage with more competitive interest rates
We know that it can be really difficult to save money when the price of everything constantly seems to be on the increase. Sometimes saving is not a viable option, as you may simply not have any spare cash to put away. However, if you are able to, building your savings is certainly worth considering…
by Red Star Wealth
Cryptocurrency is a very high-risk investment due to its volatile nature. Some people make their millions and some lose every penny they have invested. The crypto market has just suffered another shock this month following the collapse of FTX…
What is cryptocurrency?
Cryptocurrency is any form of currency that exists virtually, using cryptography to secure its transactions. Cryptocurrency exists entirely within the digital sphere… it is not tangible.
In November 2021, the Bitcoin price was at an all-time high of $69,000 whilst just a year on, it has fallen to under $17,000.
Ether, the cryptocurrency of the Ethereum network, which is the second most popular cryptocurrency after Bitcoin, has followed a similar trend.
Ether also reached new heights in November last year, pricing at $4,800, whilst it has now fallen to under $1,200.
Why the Crash?
Crypto prices massively fluctuate and can drop in an instant in response to major crypto events like coins or exchanges crashing.
The crash in cryptocurrencies this month has been triggered by the latter, with the sudden collapse of FTX.
What is FTX?
FTX was a crypto-exchange company based in the Bahamas which allowed people and companies to trade currencies virtually.
The $32 billion company is now bankrupt.
Mismanagement
Sam Bankman-Fried resigned as CEO of the company on 11th November, being replaced with John Ray III who has previous experience at other companies of helping investors gain back losses.
John Ray III said that FTX had faced “unprecedented and complete failure of corporate controls”, with a lack of regulatory oversight and sufficient record keeping. The company failed to keep proper records or security controls for the digital assets it held on behalf of its customers and turned to software to hide their misuse of customer funds.
He also said that a “substantial portion” of assets held by FTX may be missing or stolen and that corporate funds had been used to buy homes in the Bahamas as well as other things for employees.
There are also reports that Bankman-Fried may have used FTX consumer deposits for trading on his crypto hedge fund, Alameda Research.
FTX is currently being investigated by the US Department of Justice, the Securities and Exchange Commission, and police in the Bahamas.
Binance’s Cold Feet about Acquiring FTX
FTX was originally set to be acquired by its rival, Binance. However, after looking at FTX’s books, Binance announced its withdrawal from the deal earlier this month.
I guess we will have to keep an eye out to see whether more information unravels about FTX’s conduct during these investigations…
by Red Star Wealth
In yesterday’s Autumn statement, Hunt announced £30 billion worth of spending cuts and £24 billion worth of tax rises over the next 5 years. This increased taxation and cuts to government spending is aimed at rebuilding the economy after instability from the Covid pandemic, Truss and Kwarteng’s failure of a mini-budget, and the ongoing war between Russia and Ukraine.
“Stealth Taxes”
Income tax’s personal allowance, the main national insurance thresholds and inheritance tax thresholds have been frozen for a further two years.
Some members of the opposition have branded these as “stealth taxes”. This is because the freezes effectively means that people will have to pay more tax as wage increases (due to inflation) will push them into higher tax brackets.
This payment of higher taxes alongside continuing inflation will mean the cost of living crisis will be hitting us all even harder.
Higher Rate Tax Payers
Currently, those earning between £50,271 and £150,000 a year fall into the higher rate income tax band of 40%. Those earning above £150,000 a year then pay the additional rate of income tax of 45%.
As of April 2023, this threshold will reduce from £150,000 to £125,140, meaning higher earners will be paying more tax.
Protecting the Vulnerable
Hunt has announced additional cost-of-living payments for the most vulnerable:
£900 for those claiming benefits
£300 for pensioners
£150 for those on disability benefits
He has also introduced a cap on the increase in social rents, at a maximum of 7% in the 2023/2024 tax year.
The triple lock on pensions has been maintained, meaning state pensions will increase in line with inflation. Working age and disability benefits are also to increase in line with inflation.
The national living wage is to increase by 9.7%, rising to £10.42 in April 2023, which will benefit the lowest-paid employees in the UK.
Funding the NHS, Schools and Social Care
Hunt has announced an extra £2.3 billion per year to be invested in schools over the next two years.
He has also announced an increase in the NHS budget by an additional £3.3 billion in each of the next two years.
Additionally, Hunt has allocated adult social care additional grant funding of £1 billion next year and £1.7 billion the year after. As well as this, the implementation of the Dilnot reforms has been delayed by two years. These reforms would cap the amount any one person in England would have to pay towards social care to £86,000. Delaying this means we will have more funding for the social care sector.
Energy and Electricity
In May 2022, Rishi Sunak introduced a tax as chancellor called the Energy Profits Levy. This was a 25% surcharge applied to companies profiting from extracting UK oil and gas, and was to run as a temporary levy until the end of 2025. In yesterday’s Autumn statement, Hunt announced that this windfall tax will increase to 35% from January 2023 and will also stay in place for longer, until March 2028.
A temporary new electricity generator levy will also be introduced. This will impose a 45% windfall tax on profits of selling electricity above £75MWh.
From 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty (often referred to as Road Tax), which will help further raise Government funds.
It was also confirmed that plans for £700 million of Government funding into the Sizewell C nuclear power plant in Suffolk are to go ahead. This new nuclear power plant is expected to create 10,000 jobs and generate enough power for 6 million homes. The aim is to get the UK on the road to energy independence, so that we are no longer so heavily affected by changes in global gas prices in the future. It also signals the first UK state backing for a nuclear project in over 30 years. However, over the plant’s expected 13-17 years of construction, the government has predicted it will add an average surcharge of around £1 a month to household bills. This means that, yet again, our finances are likely to be under even more strain.
by Red Star Wealth
The Cost of Living is taking its toll on almost all of us, but charities are not excluded from these pressures. Food banks are under huge strains at the moment, and here’s why.
Increased Demand
It can be really difficult for some people to eat properly when the cost of everything around them is rising. As a result, many are being forced to turn to food banks as they can’t afford to properly feed themselves and their families.
The Trussell Trust is the UK’s largest food bank network, supporting 1,300 food bank centres to provide food to those struggling to eat. Because of such high demand for food banks at the moment, they have had to set up an emergency fund appeal page on their website.
Their website reads:
“For the first time ever, food banks are giving out more food than is being donated. This is an emergency”
In fact, the Trussell Trust has distributed 46% more emergency food parcels to food banks in August and September this year compared to the same months in the previous year. This means that demand is starting to outstrip supply.
Demand will surely only increase further coming into winter, as many are forced to choose between heat and food in the cold weather.
Decreased Supply
Food banks are reliant on donations and because of the squeeze on everyone’s personal finances, many can’t really afford to find the spare cash needed for donating food. Therefore, we are currently in a situation of restricted supply and soaring demand.
Increased Costs
If this wasn’t bad enough, these food banks are also becoming more expensive to run due to rocketing energy and fuel costs.
Their warehouses, vehicles, and distribution centres are all affected by these rising running costs.
Rising Food Costs
According to the Office for National Statistics, food and drink prices are rising at the quickest rate since April 1980. This is because food imports are becoming increasingly expensive due to rising transport and packaging costs.
The UK is very dependent on food imports which is precisely why its cost increases are hitting us so hard. The graph below shows just how much more reliant we are on these imports than other countries are.
Source: FAO via Sky News
Reducing the Cost of your Weekly Shop
If you’re struggling with these rising food prices, there are some tips you can follow to help you cut costs
Stick to a list… avoid shopping when you’re hungry or when you don’t know exactly what you need or you will find yourself making unnecessary purchases
Meal plan… make meals in bulk and freeze extra portions so that you can buy ingredients in bigger packages (as these tend to be better value for money)
Bulk buy… if you have enough cupboard space, try to buy in bulk. Bigger bags of things tend to be far cheaper in terms of the price per kilogram. It’s good to do this with things that will last and which you will definitely use, such as pasta or rice
Find alternatives… avoid name brands and find cheaper options where possible
Shop around… see which supermarket has the best deals. If you’re struggling to compare the prices of each item, you can try doing your normal shop one week at a different shop than you normally use and then compare the overall price
Go meat free… meat is expensive, so reducing the meat in your diet can help you reduce the price of your shopping. Maybe try to pick one day a week where you go meat free!
Grow your own food… if you have the garden space, you can grow certain things, like potatoes. Even if you don’t have this space, you can grow herbs on a windowsill inside your house or flat so that you don’t have to keep buying them
Avoid pre-prepared fruit and vegetables… these tend to be priced much higher, so it’s worth spending less money and taking the time to do the chopping and peeling yourself
Use the yellow stickers… even if a yellow sticker item is not on your shopping list, consider buying it anyway if it’s something you would use. If so, you can always freeze it and use it at a later date
by Red Star Wealth
Scammers have various ways of getting you to depart with your pension, and once you make that transfer, your retirement money is gone. Scammers can be very hard to spot; they know exactly what they’re doing. Let’s explore how you can protect your pension and reduce your risk of falling victim to these scams…
Warning Signs
Cold calling- since January 2019, there has been a ban on cold calling about pensions. Unless you’ve asked a company to contact you about your pension, they are not allowed to. So, if someone tries to get into contact with you out of nowhere regarding your pension, steer clear!
Claiming to know ways of avoiding tax or saving on tax- yes, tax can be frustrating, but it is there for a reason. We are sorry to say that there’s no loopholes here!
Promising limited time offers or one-off investments- if it sounds too good to be true, it probably is
Offering a loan or cash back from your pension- don’t be tempted by the promise of cold hard cash. It’s false
Rushing you to make decisions- take a step back and question why you are being rushed. If they are legitimate, why would you need to make a decision so quickly about money you’ve been putting away for decades?
Getting you to download software or apps- scammers may do this to gain remote access to your devices in order to access things like your bank details
Free pension reviews- as one of the most popular pension scams, this sounds harmless but it won’t end up being just a review at all
Claiming to help you access your pension before age 55- you cannot do this without ending up with a very high tax bill from HMRC
Offering complicated investment schemes- a good rule to follow is that if you don’t understand it, don’t do it
Putting your money into a long-term investment- scammers may use this tactic as you wouldn’t necessarily notice for years that there is something not right
Suggesting you funnel all of your pension pot into a singular investment- the investments most scammers persuade you to buy into are incredibly high-risk, meaning you risk losing all of your retirement savings. Most regulated financial advisers will suggest diversifying your investments to reduce risk
Protecting your Pension
Many pension scammers have convincing websites and online presences to make them seem like they’re legitimate. This is why it’s so important to take extra precautions with your pension.
Check the FCA register to check if they’re legitimate
Check the FCA Warning List to see the risks associated with a potential investment
Talk to a regulated financial adviser before transferring your pension
Check it isn’t a clone firm. Some scammers pose as legitimate firms by using their name but different contact details. Make sure you use the contact details which are on the FCA website to ensure you don’t fall into this trap
If you think you’ve been scammed, contact your pension provider to see if they can stop the transfer if it hasn’t taken place yet
Your pension pot is made up of your hard-earned money, so why risk losing it all? Take these precautions and watch out for scammers! If you have been a victim of a pension scam, contact Action Fraud to report it.
Click here to learn more from our sister company about protecting yourself from financial scams.
