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Ten ways to save money during wedding season

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There comes a time in your life where people all around you are getting married and starting a family.

If you’re like me, and have three weddings and hen parties all very close to each other in the same year, you may start to panic about how you are going to afford it all!

Take a look at our top tips, and don’t say ‘yes’ to the stress of being a wedding guest . . .

  1. Book accommodation early – try and get a group deal or look for alternative options such as Airbnb. It can work out a lot cheaper than getting a hotel room. You’ll also beat others to it who leave it to the last minute.
  2. How are you getting there? – depending on the location of the wedding, it’s worth checking how you will get there. If you book trains early enough, you can usually get a good deal or you can car share and split the cost of petrol which can work out a lot cheaper than sets of train tickets.
  3. Buy the wedding gift early – if there is a gift list, take a look early and see if you can snap up something in your budget.
  4. Split the cost of a gift with friends – thinking of something more extravagant? Then club together with your friends.
  5. Can’t afford a gift? – offer to help with something on the day or make a gift yourself? Pinterest has some great ideas for crafty people.
  6. Upcycle an outfit – if you can’t get a new dress/suit for the big day, buy a new accessory or shoes to make you feel special instead.
  7. Borrow an outfit – it sounds simple but take a look in your friends’ wardrobes and you might be surprised! Just make sure you return the clothes nice and clean!
  8. Rent an outfit – easy peasy – you can pay to rent your dress or suit and then you can give it back after the wedding is over. Ladies can go to girlmeetsdress and the boys can go to mossbroshire. Job done!
  9. Set yourself a budget – if you can afford to attend all of the weddings, then great! But decide on a budget beforehand so you don’t overspend.
  10. Don’t be afraid to say no – if you are invited to several weddings but can’t afford to go to them all, then be realistic.

Part one: planning to make your dream retirement a reality?

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It’s often difficult to imagine what the future will look like – especially when you’re young! It’s even more challenging to plan effectively for a future you can’t imagine while the immediate issues and responsibilities you face on a daily basis take up most of your time.

For some, retirement might feel like the end of an era – a time to slow down and settle for a quieter way of life but with many of us living longer, healthier lives maintaining that full and busy lifestyle when we eventually stop working is fast becoming the norm. It’s worth remembering that you will still be the same you when you retire but with the added benefit of not having to go into work every day!

So let’s think for a moment about what you really want your retirement to look like, and some of the aspects of your daily life that you may currently take for granted. What plans do you need to put in place to make your dream retirement a reality . . ?

Maintaining your current lifestyle

Do you have an active social life, enjoy dining out, weekending with friends, have hobbies and organisations that you belong to? These are the things that make you, you and likely bring you a great deal of pleasure! Having more time to spend on them once you retire is truly something to look forward to, but it’s worth remembering that you will need to factor the associated costs in when you’re working out your later life budget.

Take a look at the cost of living example below. It will give you a good idea of just how much prices have risen for some essential living costs over the decades:

         

1978

 £14,054 17p £3.60

£2,760

1998

 £73,261 71p £10.03

£12,500

2008

 £211,119 £1.04 £1.04

£15,800

2018

 £255,325 £1.19 £13.60

£21,164

Prices taken from the ‘Back in the day’ website which uses data from ONS, the AA, Nationwide Building Society and the National Archive.

Whatever retirement looks like for you personally, you can never save or plan for it too early. 4me has a wealth of interactive tools, short videos and a comprehensive library to help you with planning for the future. Find out more about how 4me can help you here.

Take the guesswork out of your pension puzzle

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Do you have a clue what you’re likely to live on when you finally decide to call time on your working life? Have you got all the pieces in place now to help pay for your future? We take a look at four ways to help take the guesswork out of the pension puzzle.

Sorting out the pieces

It’s never too early to start budgeting so that you have a clear picture of the income you’ll need, and work towards achieving it.

You are likely to have a pension associated with each job you’ve had during your working life. It can be tricky to keep up to date with all of these separate ‘pension pots’ (especially if you left the job/s many years ago) but bringing all the pieces together so you have a more complete picture, can really help with planning effectively for your later life. Why not request up to date statements from all your pension providers so that you have a realistic idea of how much you can expect when you retire? You can also track down any ‘lost’ pensions with the Pension Tracing Service.

Make sure the corners and edges are in place before filling in the middle

When you are working out how much income you will need in retirement, consider your current outgoings, and decide which you think might go up, down or stop when you retire. You may have paid off your mortgage or downsized which will reduce your monthly bills, but on the other hand you may plan to go on holiday more often, socialise with friends or spend time travelling which could cost you more.  It’s never too early to start budgeting so that you have a clear picture of the income you’ll need, and work towards achieving it.

How long is the puzzle going to take?

In general, we are all living longer, healthier lives. For some of us that might mean working for longer, either out of choice or because we need to, and for others it might mean a phased move into retirement working part-time or reduced hours. However you imagine what stopping work will look like, you should bear in mind the impact that a reduced salary or working for longer could have on your income.

Have you got enough pieces to complete it?

It’s all very well planning ahead, but what if you can already see a shortfall in your retirement expectations? There are a number of options which can help, including:

  • delaying your retirement date and continuing to pay into your pension savings for longer
  • increasing your payments by a small amount each year as soon as you can to reduce any deficit
  • lowering your expectations – accept you might have less than you’d hoped for and think about more careful budgeting
  • reviewing any other savings you have (ISAs for example) to make sure they are the best place for your long term savings

Whatever your age, and wherever you are on your savings journey, 4me has interactive tools and short informational videos to help you put the pension puzzle together. Find out more about how 4me can help you here.

 

Automatic saving for the people

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It’s been the law since 2012 that all employers must offer a workplace pension scheme and for all eligible workers to be automatically enrolled into one – you might have heard it called auto-enrolment or you may have seen the workplace pension adverts.

In the past the decision to be in a pension scheme was left entirely up to the individual, but for those choosing not to save for their futures, the problem of poverty in retirement became a serious issue. Auto-enrolment was introduced as a solution to help working people to save for retirement.

Auto-enrolment was introduced as a solution to help working people to save for retirement.

As a reminder to be auto-enrolled you need to:

  • work in the UK
  • not already be in a workplace pension scheme
  • be at least 22 years old, but under State Pension Age
  • earn more than £10,000 a year (tax year 2017/18)

Is this you? Yes? If so, then you’ll be in your workplace pension and should have had some information about it. If not, contact your Human Resources (HR) department for further guidance.

Important information! If you are lucky enough to have been auto-enrolled by your employer contributions are set to increase from 2018 – be aware that there will be a 2% increase between 2018-19.

Here’s what will happen from 6 April 2018:

When? Employer You Total
6 April 2018 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

 

 

 

 

 

 

It’s worth remembering that these are the minimum contribution levels. You might be lucky enough to have a generous employer who will pay in more, or you could think about increasing your own contributions. Even a small increase could make all the difference.

Raising a family in 2018: can you afford it?

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With the birth of Will and Kate’s third baby hitting the headlines, what better time to take a look at what raising children means to an average UK family in 2018. How many children do we have on average, at what age and importantly, how much is it going to cost us?

One, two or three?

It might not surprise you to know that The Duke and Duchess of Cambridge are going against the trends of the day by having their third child. Whilst it’s by no means uncommon, stats from the ONS last year highlighted that the average number of children for a British family is now 1.9, down from the 2.2 their mother’s generation had.

Estimates suggest that costs for raising a family will have risen by 12% between 2012 and 2019.

Career or baby first?

The reasons for this dramatic drop in birth rate are perhaps not so surprising either. Women are choosing to have children later on, often because they are focusing on their career first. Ideas about having large families to ensure the survival of at least some children, or to look after the elderly (which were still prevalent even in the years following the Second World War) are now out-dated, and there continues to be a general downward trend in teenage motherhood.

Affording a family

But, perhaps the most telling reason of all is the cost. The Cost of a Child in 2017 report by CPAG highlights the rising costs of childcare, the impact of inflation and reduced child support from the Government, all contributing to a shortfall in affordability.

Expensive for two parents . . .

The report states that the cost of bringing up a child to the age of 18 for a two-parent family, is £75,436 but this figure doesn’t include housing, childcare and council tax which would see that price increase further if factored in. It’s also interesting to note that calculations on Moneysupermarket suggest raising a girl is more expensive than raising a boy.

. . . but lone parents are even worse off!

The costs are even higher for single parent families who are often at the mercy of paying for the additional childcare another parent could provide, with basic costs amounting to £102,627.

There is help for working families in the form of childcare vouchers (changing to the new ‘Tax-free childcare’ system in the next six months or so). You can read more about it in our recent blog.

Although a third child for the royals is not likely to present any additional financial pressure, estimates suggest that costs for raising a family will have risen by 12% between 2012 and 2019 so the future for the average UK family looks increasingly expensive! There is lots of online financial planning support available, but www.moneysupermarket.com has some of the best tips around to help your money go further.

Long live the Queen!

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The Queen will turn 92 this year and although living longer is a good news story, it does raise the question of how the cost of us living longer will be funded.

When you take into account that due to advances in modern medicine, the life expectancy of a British baby born today could be 104 years old, it is clear there is a real need to address this now.

65 year old men are currently predicted to live for another 21 years, with women a further 24 years.

Many people actually want to live longer and this presents a financial challenge, but who will be responsible for providing the money required to look after our ageing population? The employer? The State? Or the individual? It is important to consider now that you may live longer than you expect, and plan your long-term saving so that you are prepared.

Getting an estimate of your life expectancy using an online calculator might feel like a strange thing to do at this stage in your life, but it will give you an idea of how long you can expect to live on average. The Office for National Statistics (ONS) research shows that older people in England are living longer than ever before. 65-year-old men are currently predicted to live for another 21 years, with women a further 24 years, so you can see that preparing to fund your later life savings to last for 20+ years in retirement when you no longer have a salary is a realistic target. What’s more, life expectancy may increase further.

As a result of us all living longer, the Government has also introduced a gradual increase in the State Pension Age (SPA) which will begin from 2018. A recent study shows that funds to pay for the State Pension could run out by the early 2030s.

The State Pension Age is increasing gradually from 2018 as follows:

Funding the cost of an aging population is by no means clear-cut at this point, but if you foster good saving habits from an early age, you will hopefully benefit in the long run!

Get ahead of the game: start thinking about your common wealth

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The next couple of weeks will see the media awash with inspirational athletes all striving for the chance to win gold, silver or bronze medals in the Commonwealth Games – a truly worthy way for those individuals to add their names to the history books and some precious metal to their medal cabinets.

But the idea of all that expensive hardware started me thinking . . . about wealth, the future and more specifically about saving and how we should be starting to think about our ‘common wealth’ in a much more holistic way.

If you start planning effectively now you could be looking forward to the ‘golden years’ in your retirement.

Life goals

We all aspire to reach certain milestones in our lives, and many (if not most) of these are intrinsically wrapped up in our finances. It may be aiming to buy your own home, get married or put your children through university – you may have big plans for when you eventually stop working, and all of these have a significant cost attached to them.

It’s worth taking some time to really think about your aspirations first, before you even consider how you’re going to afford them! Consider your timescales – these may be really vague and often dependent on reaching certain stages in your life before they are likely to become reality – but it’s a good idea to know what you’re aiming for.

Future plans

Once you’ve got some idea of what your goals are, look at your finances from a much broader and longer term perspective than you might ordinarily – particularly when considering your retirement goals.

Make sure you build a holistic picture of your retirement income – and if you are married or have a partner, it’s really important to factor in their retirement income too. Things to consider that might be a part of your ‘common wealth’ are:

  • your current workplace pension
  • pensions from previous employers
  • what State Pension you might be entitled to (take a look at the State Pension calculator for an estimate)
  • other sources of income
  • your house and any other property you own (rental)
  • inheritance
  • shares/dividends/premium bonds

Going for gold

The trick is to really see the bigger money picture when you are thinking about your finances and to put plans in place early to save for and afford those long-term goals.  You may not be aiming to add medals to your common wealth, but if you start planning effectively now you could be looking forward to the ‘golden years’ in your retirement.

Happy new tax year!

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Tax can be confusing at the best of times and people are often baffled by how it all works. Put simply, income tax is a tax you pay on your earnings – but you do not have to pay tax on all types of income.

You do need to pay income tax on things like:

  • money you earn from working
  • profits you make if you’re self-employed
  • some State Benefits (e.g. Jobseekers Allowance, Carer’s Allowance)
  • most pensions (e.g. State Pension, employer and personal pensions)
  • rental income (i.e. if you own a house and rent it out)

As of 6 April 2018, the Personal Allowance will increase to £11,850.

On the plus side, you do not have to pay income tax on things like:

  • National Lottery or premium bond wins
  • interest on savings within your savings allowance
  • Individual Savings Accounts (ISAs) and National Savings Certificates
  • some State Benefits (e.g. housing benefit, child tax credit)

Most people in the UK have a ‘Personal Allowance’, which entitles them to a certain amount of tax-free income. This is the amount of money you will receive before you have to pay tax. Currently, the standard Personal Allowance is £11,500 (for the 2017/18 tax year) but as of 6 April 2018, this will increase to £11,850. This allowance is then translated into a tax code, but did you know that your personal tax code changes each year?

You can check your Income Tax online to see what your tax code is, how it is worked out and how much you are likely to pay. Your tax code will usually start with a number and end with a letter. For example,

  • 1150L is the current tax code used for most people who have one job or a pension;
  • 1185L is the code that will be used for 2018/19 tax year.

For the UK, each tax year starts on 6 April and ends on the 5 April the following year. Anyone who is required to file a tax return will receive a notice letting them know they need to do this for the year that has ended.

For further information on money and tax in general, visit www.gov.uk/browse/tax. There is also lots of useful information on other topics such as how to deal with HM Revenue & Customs, Inheritance Tax and National Insurance.

Women and pensions: WASPIs and wives

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It’s not an exaggeration to say that women seem to get a bit of a rough deal when it comes to pensions.

As a woman I could be accused of bias here, but really, the stats don’t lie and the truth is that there is a huge percentage of women heading towards poverty in later life.

Of course, there are thousands of men inadequately prepared for their retirement too, but there are factors specific to women that make them more likely to be facing meagre pensions when they come to retire.

WASPIs

There are factors specific to women that make them more likely to be facing meagre pensions when they come to retire.

For women born in the 1950s, the outlook is overshadowed by the dramatic increase in State Pension Age (SPA) to ‘equalise’ the historic gender gap. This is something that the Women Against State Pension Inequality (WASPI) have been tirelessly campaigning against – not that they disagree with equalisation, but in the way it has been communicated and how quickly, leaving these women little opportunity to make alternative plans for their retirement.

Wives

To add further hardship, those women who took advantage of paying reduced National Insurance contributions (NICs) between 1948 and 1977 can no longer claim a State Pension based on their husband’s NI record, since the introduction of the new State Pension last year. This is sometimes referred to as the ‘Married woman’s stamp’ which ensured that a married woman could rely on their husband’s NI record if she had taken time out of employment to raise a family and hadn’t built up enough NI contributions of her own.

Mothers

Historically the role of looking after the children has fallen to women, but even with a shift from the more traditional ideas of women staying home to raise the family, the impact on women’s finances and their ability to adequately provide for their own long-term financial security, is clear.

Even though Mums will still get their NI credits for the time they are at home (as long as they are registered for Child Benefit and their youngest child is under 12), women often struggle to accrue enough NICs and are prone to gaps in their NI record which can have an impact on the amount of State Pension they will receive. They may also often start saving into an employer provided pension much later in their lives, coming back to a career after their children leave home, or work part-time during those years with little or no available money to save into a pension for themselves.

Couple this with the fact that on average, women live longer than men resulting in spending longer in retirement and in receiving the state pension, and the picture is worryingly austere.

The gender debate

Our Generation WHY? research looks at how engaged everyday people are with their long-term savings and highlights that there is still a distinct disparity in retirement income expectations between men and women. Only 7% of the women surveyed expected to have a pot of between £500,000 and £1 million when they come to retire in comparison to 17% of men, and it’s possible that the gender pay gap has a part to play in forming these expectations.

The questions of equality and poverty are not new ones. But there does need to be wider debate, education and action sooner rather than later to avoid whole swathes of women falling into needless poverty in their old age.

“Redress the unfairness, for so called equality in retirement age pension. Women have been paid far less than men for years, so it’s hardly ‘equal’ to increase the State Pension Age for women to the same as men, when they’ve often earned more over their lifetime than women.”

Damian Stancombe, Partner and Head of Workplace Health and Wealth

Women and pensions: the State Pension

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Until I started working in the pensions industry, I had assumed (rather arrogantly it turns out) that I will be entitled to a full State Pension when I reach the grand old age of 60.

Of course, I now realise I can’t assume I will be entitled to anything at all!  A combination of the government increasing the State Pension Age (SPA), tinkering with legislation and my own need to juggle working with raising my family means I will only be able to receive my State Pension if:

  1. I have actually worked for more than ten years and made my National Insurance Contributions (NICs)
  2. Worked for 35 years and made my NICs to be entitled to the full State Pension
  3. Within current estimates, I make it to the age of 68, due to predicted increases in the SPA

Predicting the future

I was auto-enrolled into my company pension when I started working full-time and this has, at the very least, ensured I’m saving for my future.

I thought it would be a good idea to find out just exactly what I will be entitled to, so I recently tried the State Pension Calculator.  It’s a useful way of finding out if you are on track to receive the full State Pension when you reach retirement age (whatever that may turn out to be!), and it also provides you with a breakdown of your NICs during your working lifetime.

It was interesting to see that for me, a 47 year old single mum who has worked alongside bringing my children up, there were only two years out of 32 I hadn’t managed to make my full quota of NICs. This is partly due to NI credits continuing to be made even when you have your children as long as you are registered for Child Benefit and your youngest child is under 12. So as long as I continue working for the next five years I’ll be eligible to receive the full State Pension (£159.55 per week).  I’d like to say that knowing that gave me some sense of relief . . .

Affordability

Now I’m not planning on a luxury holiday when I retire, but even I can see that trying to manage on this amount is going to be challenging. Unfortunately, due to the reasons already stated, my other pension saving has also been rather sporadic over the years – it’s tough to think of your own future with the immediate financial needs of your family so painfully pressing.

For me, starting out late on the career ladder and with significantly less time to pay into my pension, the future looks frighteningly close and not particularly comfortable.  I was auto-enrolled into my company pension when I started working full-time and this has, at the very least, ensured I’m saving for my future. I’m benefitting from contributions from my employer, tax relief from the government and I now have a strong sense that I’m making a practical effort to avoid poverty in my later life.

Stay in, pay in and pay in some more

All doom and gloom aside, I know that my aim right now is to pay in, manage my pension savings and try to find some extra money to contribute when I can.  Increasing my contributions by just one percent every year, perhaps when I get my annual pay increase when I won’t notice it quite so much, could have a positive impact on my long-term prospects.

With 4me you can try modelling the effect that paying in just one percent more will have on your predicted savings – you might be pleasantly surprised!

Women and pensions: annual pension statement

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Can you honestly say you’ve ever felt a rush of excitement at receiving your annual pension statement?

I haven’t, which occurs to me, is rather a shame. After all, it’s information about the single largest savings effort I make during the year and seeing how much I’ve managed to squirrel away into my DC pension pot for my future self should be cause for celebration, right?

Helping people to understand their long-term savings plans and options at retirement is not just a ‘nice to have’, it’s essential.

Lost in translation

Yes.  It should.  But if you’re anything like me, you look at that envelope from your pension provider with a sigh, knowing full well that the technical complexity, jargon and long-winded detail mean spending a couple of hours trying to decipher what it actually means.

It’s irritating. Surely communicating this type of information shouldn’t be this difficult? Especially as helping people to understand their long-term savings plans and options at retirement is not just a ‘nice to have’, it’s essential.

Access all areas

You might be lucky enough to have an employer sponsored education platform like 4me to help you keep track of your pension, or you could be making the most of the online account that your pension provider has made available. But, if you’re relying on your annual statement as the only communication about the status of your pension, then read on for some help on how to make to most of it:

1) Take a look at how much you have in your pension account.  There will be a starting figure at the beginning of the period and the final amount for that year – give yourself a pat on the back for contributing towards the happiness of your future self!

2) It might surprise you how little of the total contribution you actually make!  Take a closer look at what you’ve paid in over the year alongside how much your employer and the Government (in the form of tax relief) contribute.

3) Review your ‘selected retirement age’ and make sure it’s still relevant.  People’s circumstances change for all sorts of reasons, so it’s worth considering whether you are still on track to achieve the retirement you envisage at the age you’ve chosen.

4) Take a look at the estimate of how much you might get when you come to start taking your pension.  This figure is a good benchmark so you can start thinking about how you might take that money and importantly, it will help with working out your budget.  If you can already see that the amount you have isn’t going to provide the lifestyle you’re imagining you should consider trying to pay in a bit more now.

5) There are charges, we can’t avoid them, but you should be able to see what you are paying for in your statement.

6) Review the fund your money is invested in . . . or don’t!  You might feel really comfortable with choosing how your pension fund is invested, but you may also want to leave it in the default if that suits you.

Shake it up – save a bit more

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It can be tricky to find that little bit extra to save, especially with so many things competing for a share of your finances.

The Power of One: how a contribution increase of just 1% per year can impact your pension savings.

However, it’s worth noting that a small increase now to the amount you pay into your pension account could have a real impact on the amount you will receive when you don’t work anymore.

Let’s call it ‘The Power of One’; how a contribution increase of just 1% a year can impact your pension savings. Sometimes you just need a little nudge to pay a bit more.

Automatically increasing contributions by a small amount every year is called ‘auto-escalation’. It applies to your contributions only and can be timed with salary increases so you don’t really notice a difference in the amount you take home each month.

Want to know how it works in real numbers?

Take a look at Jack and John, they’re both 22, each paying 3%, but Jack doesn’t increase his payments, whereas John adds a 1% increase each year from age 30 to age 37. You’ll notice there is a difference between the large numbers in the pictures below which shows the total pot value for each person.

This 1% increase could be the difference between a football season ticket in the standard seats and a season ticket in the hospitality area.

Jack pays:

John pays: