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Destination vacation – keep it covered!

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Jetting off to Dubai this winter for some sun? Or perhaps you’re planning to hit the slopes in the Alps?

Wherever you are travelling, it’s important to make sure you’ve got the correct travel insurance in place. We know (yawn) but it’s got to be done. Failing to take out adequate travel insurance can turn out to be a costly mistake. In some parts of the world, even minor surgery can cost from £7,500 and this can be increased by up to three times this price if you are traveling to the US.(¹)

We’ve put together some top tips for travelling smart, wherever in the world you’re heading . . .

  • It’s not all about the getting the cheapest deal – you wouldn’t skimp on your car or home insurance knowing that you may face difficulties if you ever need to claim and your travel insurance is no different. Give yourself piece of mind so you are safe in the knowledge that you have the correct policy for you and if anything happens, you are covered. Look at the policy features and shop around to get the policy that suits you best.
  • What type of policy? – do you just need a single-trip policy? Or are you going away again shortly, and so an annual policy might prove to be more cost effective? An annual policy runs for 12 months and typically costs around £25 (dependent on individual circumstances), so weigh it up and see what’s right for you. Remember, if you decide on an annual policy, make sure it covers the extremities of both trips i.e. you may be going to Dubai for a sunbathing holiday, but to the Alps for a skiing trip and will therefore need to ensure that you are covered for adventure sports!
  • Holiday destination – world-wide cover will be more expensive than European and it may be more cost effective to purchase a single trip policy for world-wide cover each time you travel outside of Europe. It’s vital that you check which countries are covered under your policy before you travel as this will vary for each insurer.
  • Baggage – some bank accounts offer benefits such as baggage insurance – check before you travel so you don’t pay for something you’re already covered for.
  • Cancellation – try to buy as far ahead as you can, as you should benefit from cancellation cover. It’s worth reading through your policy to make sure that your cancellation cover makes sense. If the holiday costs you £4,000 there is not much point in paying to be covered for £300 cancellation . . .
  • Airline failure – always check the small print for this one. If you bought your flight with a credit card you should have more protection, however it is always best to check with your credit card provider.

It might look like a lot of things to consider before you even depart for destination vacation, but it really is worth doing your research so that you can relax on your holiday whether you are sliding down the slopes or soaking up the sun.

¹: www.moneywise.co.uk/insurance/travel-insurance/10-tips-when-buying-travel-insurance

People like you: 18-29

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Do you sometimes feel like getting your head around financial planning and saving for the future is a bit of a challenge? Well, you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 21 year old Daniel…

Tell us about yourself Daniel

After the first year of University, I realised it wasn’t right for me so I left. I am now in my last year as an apprentice engineer, with a large company, learning on the job and enjoying the workplace environment. Luckily, I am still able to live at home so my monthly expenses are low.

Do you know if you’ve been enrolled into a company pension scheme yet?

My income is below the salary threshold, I haven’t been auto-enrolled in the company pension scheme just yet. But I recently attended a benefits’ seminar and now understand more about making contributions to a pension, the gain in tax relief and how much the company will pay in on my behalf. So, when I finish my training and with an increase in my pay, I can start making contributions to my pension.

Did you find it useful?

If I change jobs in the future, my pension contributions can be moved to a future employer’s pension or I can leave them where they are; either way, they will be a good start for saving towards my retirement.

What do you think you will do next?

Even though I have to wait to earn more in order to be auto-enrolled, I think I will start a general savings account with my bank anyway to help me with those rainy days I expect I will have in the future!

To find out more about auto-enrolment, visit: www.gov.uk/workplace-pensions

People like you: 18-29

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Do you sometimes feel like getting your head around financial planning and saving for the future is a bit of a challenge? Well, you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 23 year old Polly…

What do you do for work Polly?

I work in fashion retail. Going forward I hope to join the management training scheme to improve my career prospects within the Group.

What has been your experience so far with money and finances?

Growing up, money was tight, but my parents always worked and paid into pension schemes, so I understood from an early age the need to have money for the future.

I want to save up for my own flat, but don’t want to waste money on renting, so plan to stay home for the time being. I’ve heard about the Government introducing the LISA (Lifetime ISA) next year, so I am going to look into this as it could help me save for a deposit.

Did you know that a Lifetime ISA or LISA can also help you with your retirement saving as well?

Yes, I have but I would rather use the money being a first-time buyer. It also means I can keep this account open for when I eventually come to save for retirement.

Do you know anything about retirement?

I know that there is a pension awareness day soon at our Head Office where you can drop in and find out about auto-enrolment and the benefits of saving in a pension scheme – so I am planning to go.

For further information about the LISA visit: www.gov.uk/lifetime-isa.

Saving money on your childcare

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If you are a parent, did you know that you could save over £1,000 a year on childcare for your little ones aged up to 15 (or 16 if disabled)?¹

That is because the cost is taken you out of your gross pay meaning you save money, as you do not pay any tax or National Insurance on it.

In order to get the vouchers, you just need to ask your employer and join their childcare voucher scheme.  You can use the vouchers to pay for childcare including, nurseries, childminders, holiday and after-school clubs.

There is a time limit though to join as these schemes are going to close to new members in the next six months. The vouchers are being replaced by a new system called ‘Tax-free Childcare’, which will give eligible parents an extra 20% towards childcare costs, up to a maximum of £2,000 per child, per year.

In the meantime, it’s worth knowing the difference between the two:

Tax-free childcare

 Childcare vouchers
Anyone can apply Only available if your company offers them
£120 per week minimum (if in a couple, both parents must work) One parent needs to work (no minimum earnings)
Child’s maximum age 11 (16 if disabled) Child’s maximum age -15 (16 if disabled)
Maximum income limit – less than £100,000 per parent No income limit
Buy up to £243 per month Tax and NI free (based on tax band)

To help you make a decision about your options, visit www.gov.uk/childcare-vouchers-better-off-calculator for more information.

¹ www.moneyadviceservice.org.uk/en/articles/help-with-childcare-costs – based on basic rate tax payer with £243 of vouchers each month

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.