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
Every investment contains an element of risk, but this shouldn’t put investors off. There are ways of managing this risk, through diversifying investment portfolios and looking at longer-term market trends
Risk Analysis
Investment is not just risk, it is also offers rewards. When looking at investment opportunities, investors should consider its potential risks and decide how much risk is right for them. Diversification can also be used as a technique to reduce risk. Here, investors spread out their investments across various industries and areas that would react differently to the same event
What kind of events does this encompass?
This includes a range of financial, economic and political factors- basically, anything that may cause investor confidence to fall. The recent COVID- 19 pandemic is a prime example of this, as it impacted almost every sector and caused high levels of uncertainty. This is shown by the fall in the FTSE 100 index, as illustrated below:
What is the FTSE 100 Index?
The Financial Times Stock Exchange (FTSE) 100 Index is the share index of the 100 companies with the highest market capitalisation on the London stock exchange. It can be used to draw comparisons with other countries, to see how a certain sector is performing in England compared to elsewhere. It is also a great indicator of investor confidence; if it falls heavily, confidence is down, and if it rises, there is less uncertainty amongst them
However…
some areas experienced growth during the pandemic, such as streaming services and anywhere with adequate online systems. This highlights the complexity of investment; there is no perfect choice, but this is why it is important to diversify in order to spread out the risk
Looking at the long term
The FTSE 100 Index still has a trend of long term growth despite these peaks and troughs in the market. This illustrates how important it is to look at the bigger picture when investing, rather than making decisions based entirely on short-term stock performance
Uncertainty in the stock market can lead to panicked decision-making, but it is important to try to keep a level head. Investors shouldn’t keep entering and exiting the stock market based on its short term performance. The market will always be subject to fluctuations, so if the price of a stock falls, it is more than possible that it will recover in the future. Holding onto your stocks in case the situation improves, rather than selling them at low prices when its value has fallen, is a great way of investing in the long-run
It’s that time of year again, the outcome of all the hard work, stress and worrying is sealed in one envelope for hundreds of thousands of youngsters. The start of university is approaching and the temptation to spend is EVERYWHERE. If you want to save money at University, take a look at these top 10 tips – you might be surprised by how much you really can save!
It’s almost too easy to go a little wild when we receive a large sum of money like a student loan, but so many make the mistake of forgetting that a student loan is supposed to last until the end of the term (or somewhere near).
‘Freshers Week‘ is approaching, the lack of budgeting experience and the need for six new outfits for each night out in the clubs a student loan doesn’t stretch too far and I can almost guarantee almost every parent will receive that ‘ muuuuum ‘ or ‘ daaaaad ‘ text before mid-term.
There are many ways to ensure your money go further, keep reading to find out our top tips for every student embarking on their university adventure this month!
1 – Refund on TV licence (a simple way to save money at university)
Although a TV licence doesn’t seem too much at £12.25 per month, you can get a refund on your TV licence for the months you’re not in your student accommodation.
So, if the licence is purchased in September and you move back home the following July, you can get a refund for the remaining two remaining months of the licence, worth £24.50.
2 – Apply for a Council Tax redemption
If you’re a full-time student living alone or with other students then you don’t need to pay council tax. You can apply for council tax exemption via the gov.uk website.
3 – Don’t buy contents insurance
.. Well check with your parents before you do as you may be covered under their house insurance through a ‘contents away from home‘ clause.
If not, they will probably be able to add this on at a small fee and a lot cheaper than securing your own insurance!
4 – Invest in travel cards
The 16-25 Railcard was designed for young people in full-time education (although full-time students who are over 25 may also be eligible). The card can be purchased for one year or three, and gives you a third off rail journeys across the UK.
The card also gives you access to partnership offers and competitions, including West-End theatre discounts and holiday offers.
5 – Don’t pay over the odds for your energy
Once you’re living away from your parents you will have to factor in bills. If you’re living in halls then you might not have a choice over who supplies your energy. If not, use a comparison site like MoneySupermarket.com or uSwitch to check prices, you can even earn cashback when you switch through some sites.
It’s illegal for your landlord to prevent you from switching to a cheaper energy supplier, although you may need to tell them if you do.
6 – Get the right bank account
Most banks offer dedicated student bank accounts with a range of perks and interest-free overdrafts. Avoid the temptation of signing up to a poor account just because of a freebie.
If you have a job and receive a regular income its worth looking around for a bank which offer interest on balances!
7 – Mobile phones
Most if not all students rely on our phones these days, but it’s a monthly cost which isn’t cheap!
If your contract is approaching its end make sure you shop around on comparison websites to avoid high monthly fees. Contact your current supplier and tell them you are a university student … they may give you a discount on price to avoid you leaving and taking your custom elsewhere.
8 – Get cashback on (nearly) everything you buy
Cashback websites pay you when you click through to them and make a purchase, so every time you shop online at selected retailers you can earn money back on your purchases.
Many popular online sites such as Quidco offer free membership for users and will offer cashback on utility bills, holidays, clothing, groceries and more. For instance, you can earn cashback of up to £70 on a Sky TV package, or up to 5pc on purchases at Currys PC World.
9 – Don’t pay too much tax
If you work during term time or over the summer to keep yourself afloat, make sure you’re paying the right amount of income tax. Students are taxed just like anyone else. If you earn less than £11,500 a year (as of 6 April 2017), you shouldn’t pay any tax no matter if your 18, 45 or 60.
Even if you only do summer or temp work, you’ll be taxed as if you’d earn that rate all year. Therefore, if you’re a student and your total earnings for the 2016/17 tax year came to less than £11,000 (the previous personal allowance), and you paid tax, see the HMRC website for how to apply for a refund.
10 – Don’t buy new books – rent, borrow or buy second hand instead
At the start of a new term, it’s likely you’ll be given an extensive list of books you’ll need over the year, depending on your course, some textbooks can really break the bank and leave you out of pocket.
In the first few weeks of term there’s usually a rush in the Uni library for the texts you may need, meaning you could be left waiting. So, instead of rushing out and buying them new, see if the local library has a copy. At the very least you can take time assessing how often you’ll need it.
Make sure you check on line as many Uni books will have an online version saving you up to 50% off!
University will be one of the best times of your life before you make the leap into the working world. Enjoy it and don’t let worrying about money ruin your experience. However keep in mind you still need to live for the rest of the term so budget and keep asking yourself the question before purchasing ‘do I need it ‘ and ‘ will I use it ‘ trust me, that will save more money than you know!
Red Star Wealth are an independent financial adviser based in Blackpool, Lancashire.