- Portafina shares tips on how to organise finances for the year ahead
If your list of New Year’s resolutions is similar to many others, it probably includes saving more money. But, like vowing to get fit, this one is easy to fail at, especially if the plan of action is a little vague.
Success is much easier if you have a plan to follow. So, to help you get on the right track, here are seven ways to change your financial situation in 2018.
Split your income and outgoings into percentages
It sounds simple, but going back to basics and actually sitting down and working out what income you have coming in, and what is going out, will give you a clear picture of what is left over to enjoy or save.
Consider all your bills, including rent or a mortgage and utilities; this may eat up around 50% of your income. Then there is your mobile phone, petrol, broadband, food and other subscriptions to think about, which for a lot of us comes to around another 20%. That would leave you with close to a third left over. If you chose to save a half of this remaining income, you could build a very useful rainy day or emergency fund. For example, for someone earning the UK average annual salary of £27,6001 this would add up to over £3,000 per year.
Tackle any debt
This one always tops the list, and for good reason. Loans and credit cards often have high-interest rates, making them incredibly expensive. Reducing or even clearing monthly repayments can feel like a huge weight lifted. Plus, it means you have extra money at your disposable and the really savvy thing to do is to put some or all of this cash into savings and investments.
Quick and effective ways to help you clear debts faster include consolidating multiple debts, reducing your interest rate by switching to a different provider, and avoiding making the minimum payments only.
Put money away straight after you have been paid
If you earn £10 an hour, every £10 you spend is one more hour that you have to work before you can retire. That’s a pretty big incentive to save!
Many people try and save at the end of the month, hoping there is enough left after bills and spending. The problem is there usually isn’t money left – when we consider it available, it will be spent!
To overcome this, pay yourself first. You can put the money into an easy-access account so you can use some of it is absolutely necessary, until you adjust to having less to spend
To really make the most of savings you will want to get the highest interest rate possible and not lose the growth to tax, so high-interest accounts and ISAs should be considered.
Don’t forget about your pension
Pensions are one of the most efficient savings vehicles at your disposal, offering tax-free growth, and tax relief on all your personal contributions. Plus, if you have a workplace scheme then most of the time your employer will also make contributions, which is effectively free money.
For example, from April 2018 a person on the UK average annual salary will be required to contribute £55.20 per month to their workplace pension. If they are a basic rate taxpayer then this contribution rises to £115 once tax relief and the employer’s contribution have been taken into account2.
This supercharges your saving efforts and can make a huge difference to the eventual size of your fund. Better yet, thanks to the new pension rules the money can be accessed in full from the age of 55.
Considering switching service providers
In this age of digital banking and direct debits, much of our spending is automated and it is easy to overlook where money is going. Looking into switching utility, mobile phone contract and broadband providers could save you considerable sums across the year.
There are often good deals in the new year but do check renewal dates as some providers charge an exit fee.
Plan ahead for bigger expenses
Some expenses in life are unexpected, but there are others that we know are coming. Christmas happens at the same time every year, as do birthdays, anniversaries and even renewal dates for car tax and insurance. Yet, even with a full 12 months’ notice on these, it’s easy to leave it until the last minute to plan for these events and then panic about the expenditure.
To break the cycle, spread the cost over the year.
Decide how much everything may cost you across the year, and divide that number by 12 to see how much you need to set aside each month. This way you will always have the money ready, removing one of the main temptations to spend on a credit card. It’s far better to set aside £50 a month for everything than have to raid the savings for several hundreds of pounds when times are tight!
Jamie Smith-Thompson, managing director at Portafina, concludes: “Sorting out the finances is on so many new year lists for a very good reason, it’s massively important! And to make it work, the best bit of advice to follow is: set realistic targets.
“If you aim sky high and fall at the first hurdle it can be thoroughly demoralising. And that’s when it’s easy to slip into ‘I’ll put it off again until next year’ mode. If you are realistic about what you can do with your finances you will generally meet your goals. This means a double-whammy of feeling good about yourself now and setting up a more secure future for you and your family.”
Sunak to use budget to expand apprenticeships in England
LONDON (Reuters) – British finance minister Rishi Sunak will announce more funding for apprenticeships in England when he unveils his budget next week, the government said on Friday.
Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive 3,000 pounds ($4,179) for each apprentice hired, regardless of age – an increase on current grants of between 1,500 and 2,000 pounds depending on age.
The scheme will extended by six months until the end of September, the finance ministry said.
Sunak will also announce an extra 126 million pounds for traineeships for up to 43,000 placements.
Sunak’s March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.
Sunak is also expected to announce a “flexi-job” apprenticeship scheme, whereby apprentices can join an agency and work for multiple employers in one sector, the finance ministry said.
“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike,” Sunak said in a statement.
(Reporting by Andy Bruce, editing by David Milliken)
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
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