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Money Tips

Could switching these 5 financial products help grow your savings?

By | Money Tips

It is no secret that costs are rising in 2022. Inflation, at the time of writing, now stands at 6.2%, the highest CPI 12-month inflation rate since 1997, and is very much expected to rise further. Households are understandably seeking greater financial stability. Yet many people do not consider switching key financial products or utility costs, which could help save money. Below, our financial planning team at WMM shares 5 of these to consider in 2022. We hope you find these suggestions helpful.

 

#1 Broadband

Those who want an ultrafast broadband, phone and TV bundle are likely to pay an average of £79.40 per month in 2022. The average UK spending is £56.99. 

Of course, in today’s world of increasing home working, a fast internet connection is important. Yet many people are paying too much, or for more than they need. You may be able to find deals close to £15-20 per month.

 

#2 Mobile phone

According to Which?, 40% of customers have stuck with their mobile phone provider for more than 5 years. This has left many people paying more than they should. 

The average UK mobile phone bill is £439 per year (about £36 per month). Yet you could bring this down to nearly £10 with a SIM-only deal, after you have paid off your handset. This means staying with your device rather than upgrading, however.

 

#3 Mortgage provider

For most homeowners, their mortgage will be their highest monthly expense. With interest rates steadily rising in 2022 to help curb inflation, this is driving up the cost of many mortgages on a variable rate. Getting a fixed deal (e.g. 2-5 years) could help provide some stability.

It may also be possible to save by remortgaging with another lender, which offers a better rate. Those coming to the end of their current fixed deal, therefore, should consider shopping around. This could save you £100s each month.

Of course, remortgaging is a big, personal decision and it may not be right for you (e.g. if you are in negative equity). Bear in mind that you can remortgage at any time, but there may be a charge involved if you end your current fixed-deal early.

A financial planner can help you explore the options and come to an informed decision about the right deal, and timing, for remortgaging.

 

#4 Credit cards

Ideally, households should aim for no credit card debt at all. Interest rates are high in 2022 – standing at an average 21.46% APR. 

However, if you have ended up with debt, you may be able to move it to a credit card with a lower rate – e.g. 9.9%. There are even deals offering 0% interest for a limited time (e.g. 36 months), which can make it easier to repay the debt if you are disciplined.

 

#5 Bank accounts

Many people are unhappy with their bank, yet 50% of Britons have never switched providers for their current account. However, doing so could open up opportunities for better overdrafts, more competitive interest rates and higher quality service.

In fact, some banks even offer new customers a “golden handshake” (financial reward) for moving over to them. Switching may seem like a hassle, but it is usually quite easy under the Current Account Switch guarantee.

 

Invitation

Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

 

Watch out, scammers about!

By | Money Tips

Scams have always existed, however through the increased use of social media and online accounts scams have become far more common and, often times, harder to spot. 

We’re happy to report that none of our clients have been affected by any of the scams mentioned, however it’s important to remain vigilant. 

In this article, we offer some advice on how to spot a scam and ways to check if it is a genuine offer.

 

How do the scammers get my information?

Data is widely available for sale, with databases often sold on from all kinds of establishments from phone companies to insurance providers to holiday agents. These databases are available to pretty much anyone who is willing to pay for them. Ticking the “no contact” and “no third parties” options on any forms you complete is a good way of limiting the number of databases you appear on. Also, depending on the scale of the scam, experts are employed to hack into databases and steal the data. And sometimes, it’s just pot luck.

 

How to spot a scam and avoid it

  • You’re likely aware of the scam phone call where someone claims to be from your bank. If you don’t have an account with the quoted bank, then it’s more obvious to spot that it’s likely to be a scam. But eventually they will come across someone who does have that account, and may believe it’s a genuine call from their bank. Here, we would recommend ending the conversation, and ringing your bank directly on the usual customer contact number. Don’t use the number supplied by the caller. If it is a genuine call from your bank, the caller will not mind you ending the conversation
  • We have personally received similar calls from someone pertaining to be from our broadband supplier, stating there has been unusual activity reported via our router. They then direct you to a website, often a legitimate screen-sharing or file transfer site, the end result being that your activity and passwords can be recorded. The interesting thing about this particular attempt, is that broadband providers rarely, if ever, make such calls. Again, our advice here would be to end the call and ring your provider directly on the usual customer advice number if you are in any doubt.
  • Many scams are now sent via email invitations to click a link, which in turn downloads spyware to your computer, which records regular activity and passwords. These can often be harder to spot, as they mask email addresses to look very close to genuine. Here, especially if the email is unexpected, we would recommend closing the email, and logging in directly to your relevant account, without using any links in the email. If the email looks like it’s from a friend, but is only a photo or a link without your usual conversation, try calling them or email them directly in a new email to check. 

We’ve recently been made aware whereby a client of another financial advice company fell foul of an email scam. The client was contacted by email about a new high interest deposit account, suggesting it may be of interest. Of course, in these times, high interest would be very appealing. The ‘senders’ email address had been masked to look very similar to the genuine email address of the client’s actual adviser. This only became clear it was a scam some months later, when the client made a passing comment to their adviser about receiving no paperwork yet. The adviser confirmed not having made such a recommendation or issuing any emails about the account in question. Unfortunately, by this time the client had already ‘deposited’ several large sums into the account, none of which were protected against this type of fraud.

These scams can be harder to spot. We will never contact you about a new investment or account by email, without a prior meeting or phone call with your financial planner. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

 

In summary, we would always recommend:

  • End any unsolicited calls straight away and phone your bank or provider back on their usual customer service number, not a number supplied by the caller.
  • Don’t click on any links or files in emails that you’re not absolutely sure of. Log in to your bank or provider portal directly, using your usual app or web address. Do not use the link in the email.
  • We will never contact you by email to suggest an investment into a new company or account. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

 

You can call us on 01869 331469 if you have any concerns.

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

 

How to be a good “Bank of Mum and Dad”

By | Money Tips

Those of us with children may have already faced the difficult situation where your child asks for money. Should you give it to them? If so, how much and under what conditions? Should you ask for the money to be repaid? These are difficult questions. Not only do they potentially impact a financial plan, but they can also influence your child’s character regarding money as they grow up. In this guide, our financial planning team at WMM offers some thoughts on how to be a good “Bank of Mum and Dad” in 2021. We hope you find this content useful.

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5 coronavirus scams to watch for in June

By | Money Tips

The UK may be edging its way out of lockdown, yet sadly there is still no shortage of unsavoury people seeking to exploit the situation for financial gain. Here at WMM, we wanted to draw your attention to five types of scam which have become more prevalent during the 2020 coronavirus pandemic. Please get in touch for more information or if you are at all concerned about the security of your financial plan.

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Paying Off Student Debt with an Inheritance

By | Money Tips

It’s natural to think of debt as a terrible thing which should be eradicated as quickly as possible. So when young people are asked whether their student loan should be paid off early (perhaps using a lump sum from an inheritance), many automatically assume they should do so. Yet is this really the wisest use of your money?

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Credit vs Debit Cards – Which is More Secure?

By | Money Tips

As twinkly lights and festive carols start to take over the high street, it is very easy to give in to the temptation to spend. While it is always worth keeping an eye on the budget, it is equally important to ensure that your purchases are protected as far as possible.

 

Your Consumer Rights

When buying something, you have certain rights that the retailer is required to uphold. Goods must:

  • Be of satisfactory quality
  • Be as described
  • Be fit for purpose
  • Last a reasonable amount of time

If your purchase doesn’t meet these standards, you are entitled to a full refund within 30 days.

For online orders, you can return items for a full refund within 14 days in most cases, even if the item is not faulty and you have simply changed your mind.

Digital content is treated slightly differently, but you should still expect fair and reasonable treatment from the seller.

The rules for buying services are less clear cut, but the Consumer Rights Act dictates that services should be provided:

  • With reasonable skill
  • Within a reasonable time
  • At a reasonable price

Most reputable shops and service providers offer more generous policies. After all, they want their customers to keep coming back.

It is not always as simple as this. Companies fail on a daily basis, sometimes without warning. Sticking with known brands doesn’t always help, as customers of Thomas Cook and BHS will tell you.

And this is before we start to consider criminal activity, such as online scams and identity theft.

 

Credit Cards

Credit card purchases are covered by Section 75 laws, which means that your credit card company is jointly liable with the retailer.

The following situations would be fully covered under Section 75:

  • Most purchases of between £100 and £30,000, for reasons of fault, non-delivery, fraud or company failure.
  • Deposits on larger purchases, even if under £100. For example, you could pay a £50 deposit on a £500 sofa, and you would be fully covered even if you used another payment method for the £450 balance.
  • In some cases multiple purchases totalling £100 or more are covered, e.g. items purchased as a set.
  • Costs arising from the initial problem. If an event is cancelled, you may be able to claim for travel and accommodation costs.
  • Store card purchases, where the card is provided by a third party company and not the retailer directly.
  • Purchases made at an earlier date with a card that is now expired or cancelled.

 

Section 75 rules would not cover you in the following circumstances:

  • Where the purchase is under £100 or over £30,000. Higher value purchases are covered by different rules which can be relatively complex, and outside the scope of this guide.
  • When buying a basket of goods totalling £100 or more. The protection applies to individual items, not the total purchase value. Exceptions may be made where items are purchased as a set.
  • Credit agreements that are held directly with the retailer, for example, catalogue accounts.
  • Where a third party payment processor is used. PayPal transactions are not covered by Section 75, even if the payment is ultimately made by credit card. PayPal does offer some protection but are not bound by law to do so. Proceed with caution when using other, lesser-known payment processors.

It is usually worth approaching the retailer first, as this can result in a quicker, and more satisfactory resolution. However, you do not have to do this under Section 75 rules, as the credit card company is equally liable.

If your credit card provider won’t help, and you believe you should be covered, you can contact the Financial Ombudsman Service to make a complaint.

 

Debit Cards

While debit cards do not benefit from Section 75 protections, all is not lost. Visa, Mastercard and American Express are all part of the Chargeback scheme. This not only protects debit card purchases, but also credit card purchases of under £100.

This is a useful failsafe for smaller purchases, but it is not enshrined in law. It is offered by the card issuers at their own discretion.

The circumstances in which Chargeback may be used are similar to the Section 75 rules, and include fault, non-delivery, fraud or company failure.

The key differences between Section 75 rules and Chargeback are:

  • Chargeback claims are not protected under the law.
  • In most cases, claims must be made within 120 days of purchase or expected delivery. Some exceptions are made. For example, where the claim is for a flight, the 120 days starts on the planned day of departure, rather than the date of booking.
  • While Mastercard imposes a minimum claim level of £10, no minimum applies to the other card issuers. Purchases of under £100 are covered.
  • Only the value of the actual transaction is covered, not the full purchase if additional payments were made by other means.

To start the claims process, contact your bank and tell them you would like to dispute a transaction under the Chargeback scheme. This may or may not be straightforward, as branch or contact centre staff are not always aware of their own rules. Placing the request in writing, while a little slower, can be more effective at reaching the right person.

There is no statutory timescale by which the refund needs to be processed. Large scale company failures (such as Thomas Cook) can increase the demand on the service and lead to much longer waiting times.

If your bank is unwilling to help, or takes more than 8 weeks to reach a conclusion, you can complain to the Financial Ombudsman Service.

 

Conclusion

While both credit and debit card purchases are protected to an extent, only credit cards are covered by law. You may also be able to claim for consequential costs arising from the initial problem, and for the whole cost of the item, even if you only used a credit card to pay the deposit.

So if your Christmas shopping involves games consoles, bikes or the complete Harry Potter Lego set, reach for your credit card first.

Debit cards still offer some protection, so are the ideal payment method for stocking fillers, wine and turkey.

If you are still using cash, this might help with your budget, but sadly does not qualify for any level of protection other than the retailer’s usual responsibilities.

Please do not hesitate to contact a member of the team if you would like to find out more.

The Pros & Cons of Joining Your Finances

By | Money Tips

If you are reading this article about joint finances and have just gotten married, then first of all – congratulations! Money is a hugely important topic in any relationship, and this article aims to help you approach this subject more clearly to find a solution which works for you.

As professional financial advisers here at WMM, we see many clients with a range of financial arrangements and ways of managing money with their spouse or partner. Here is just a brief snapshot of this diversity:

● In one couple, one person (i.e. the breadwinner) might hold the majority of the couple’s bank accounts (in their own name). There might not even be a shared bank account between the two people. The other person (i.e. the home-maker) might not even have their own account, but simply keep money in a purse/wallet, which they can spend and top up from the other person when they need to. This is arguably a more “traditional” model of managing a couple’s finances, and it works for some people.
● On the other side of the spectrum, there are couples where there is no joint bank account at all. Rather, each person has their own account (or set of accounts) in their own name. If this couple lives together, then quite often the bills will be “split” between them. Perhaps one person pays for the mortgage, for instance, whilst the other covers the food and other household bills. This is often labelled a more “millennial” or “modern” approach to couple’s finances, and again, it works for certain couples.

Other couples adopt a “hybrid” approach. Some choose to set up a joint account when they move in together and then shut down their individual accounts when all of their money is merged. Others open a joint account but keep separate bank accounts. In this case, the former could be used to cover the couple’s household bills, whilst the latter can be used for each person’s leisure spending.

So, which model is best? There isn’t a universal answer to this question, but there are certain advantages and disadvantages to merging your finances which you should be aware of. We’ll be covering some of those below. Please note that this content is for information and inspiration purposes only, and should not be taken as financial advice.

Pros of Merging Finances

● A sense of “togetherness”. Bringing yours and your spouse’s/partner’s money together into one account is arguably a good way to show commitment and trust towards one another. It also can create a stronger sense of “being a team” in life together, using your combined resources to solve joint financial problems.
Even playing field. If there is a wide income disparity between both of you, then bringing your money together can allow both of you to live more comfortably – rather than one of you struggling to keep up with the other.
Joint liability management. If you live together, then you will share various expenses to do with household costs (e.g. bills, utilities and mortgage). You might also be jointly responsible for children, which brings other expenses. Managing these costs from a joint bank account can simplify paying for these things.
Easy access during a tragedy. It isn’t nice to think about, but if one person in the couple were to die then having money in a shared account makes it easier for the surviving partner/spouse to access funds which they might urgently need (e.g. to help cover funeral costs).

Cons of Merging Finances

Separation. Again, this isn’t a nice scenario to think about – but it’s important. Should you and your partner/spouse one day split up, then having all of your money in one joint account can make things difficult. If you do not have your own bank account, then you will need to open one to eventually move money across into it. In some sad cases, one person has withdrawn all of the money out of spite – leaving the other person in a perilous financial position. These dangers can be mitigated somewhat if both people keep an individual bank account with some backup savings in them. In this case, however, it’s important to consider how you want to approach this topic with your spouse/partner due to its sensitivity.
Financial vulnerability. If you share money with your spouse/partner, then their financial decisions can sometimes have a greater impact on you. For instance, if one person is a big “spender” and the other a “saver”, then this can create tension or arguments as both people watch the other person’s spending behaviour on the joint account.
Lost independence. When you share an account, then both of you can see every purchase and withdrawal that each person makes. This can create a sense of “losing control” of your personal spending decisions since you might feel that you have to justify your spending more often to the other person.

Final thoughts

On balance, we would argue that for many people it is a good idea to consider opening a joint account once your relationship has reached a high degree of trust and commitment.

It can particularly make sense for lots of couples when they move in together and have to manage shared expenses regularly. In many cases, it can be a good idea for such couples to have a joint account for these purposes, but keep individual accounts for personal and leisure spending.

However, each couple is different in their financial goals and circumstances and it’s important, therefore, to not be too prescriptive. There are indeed cases where it makes little sense for a joint account to be opened, and that’s fine (e.g. certain couples which do not live together).

Save £1000’s: Our money renovation guide

By | Money Tips

Did you know that setting aside just one morning could result in thousands of pounds more in your pocket over the next 12 months?

With Brexit dominating the news at the moment and living costs potentially set to rise, it certainly wouldn’t hurt to look at ways to reduce your expenses and build up a savings buffer.

As a financial planning business, we wanted to share some of our thoughts in this article on:

● How you can start setting a spending plan.
● Ways you can reduce some of your outgoings.
● Suggestions for clearing costs incurred by debts.
● Ideas on how this money could be put to better use, both short and long-term.

Before we get started, please note that this article is for information purposes only. It does not constitute financial advice and should not be taken as such.

For financial planning and advice about your own personal goals and situation, please get in touch to speak with us.

 

Setting a spending plan

An important first step to improve your savings and spending efficiency is to take stock of what you earn, how much you spend and what you spend it on.

The best way to do this would be to record your spending in a notebook or smartphone app, to determine your average monthly spending. Most of us are not that organised, however, so you might need to look at your bank statement for the past thirty days and go from there.

You will not know how drastically you need to rein in your spending until this picture is clear in your mind. Here are some obvious expenses to look at:

● Mortgage payments & household bills (e.g. gas, electricity).
● Mobile phone bills and broadband.
● Food bills.
● School fees & childcare costs.
● Car & transport costs.
● Subscriptions
● Debts & finance payments

It can be helpful to divide your expenses into different categories in a similar way to the above, as this can really help make your estimates more accurate.

 

Suggestions for reducing costs

There are literally hundreds of ways you could potentially reduce your outgoings. Here are just a few suggestions for you to consider:

● Check your Council Tax band. Many people are in the wrong one without knowing it. Since this tax goes up about 4.5% each year, it’s worth making sure you are not paying more than you should be.
● Check your broadband. Some people pay over £600 a year by just staying with their current provider, rather than taking advantage of promotional deals which can bring your bill down to as little as £12 a month.
● Take a hard look at childcare. The equivalent of one parent’s wage can be entirely devoted towards childcare costs, so it’s always a good idea to look at whether potential savings can be made here. For instance, are there any free summer holiday activities you can take advantage of? Does your employer offer any help with childcare costs which you are not using?
● Direct debits. This is another huge area where people’s money disappears without their noticing. Whether it’s a £40-per-month unused gym membership, or unused subscriptions to online services such as Audible and Spotify, you could save over £1,000 over the course of a year just by making some sensible cutting decisions here!

 

Debt-cutting ideas

Clearing a high-interest debt quickly can be one of the best ways to save money over the longer term. Leaving credit cards unpaid and building up interest, for instance, can easily amount to hundreds of pounds per year.

However, cutting your outgoings isn’t just about addressing the obvious debts such as credit cards and personal loans. It’s also worth taking a look at your mortgage, which is likely the biggest debt you will have as a homeowner.

Remortgaging your home, for instance, can sometimes open the door to a lower interest rate and reduced monthly mortgage payments. This frees up some extra cash in the short term, and also potentially save you tens of thousands more in the form of reduced interest down the line.

 

Putting money to better use

Hopefully, by this point, you will have already identified some areas where you could save hundreds or even thousands of pounds per year through careful financial restructuring.

What, then, should you do with the extra cash now sitting in your account as a result? It completely depends on your unique circumstances and goals, but here are some ideas that everyone should consider:

● Think about building up an emergency fund. Ideally, this should amount to between 3-6 months of your living costs. Not only will this help keep you afloat in the event of an expensive, unexpected expense which could otherwise plunge you into financial trouble (e.g. covering the costs of a sudden broken boiler).
● Take a look at your pension. Would it be worth contributing more of that extra cash towards your long-term future? Many people are just putting as little as 3-5% of their salary towards their workplace pension scheme, which is unlikely to cover your lifestyle in later life on its own (even when combined with the state pension). Putting even just £50 a month more towards your pension could result in thousands more to support you in later life, when you retire.
● Consider investing. It’s easy to spend extra money on things which cost you money – such as a new car, or a motorbike. There’s nothing wrong with treating yourself from time to time, but what if you spent some of that instead on things which could actually make you money (i.e. an asset)? For instance, perhaps you have a goal to save up for a deposit on a property within the next 10 years. One option would be to build up some saving towards this goal within a Cash ISA account, but another option might be to invest your money in a diverse set of investments in order to try and get a better investment return at the end of the 10-year period.

Tax breaks for widows to help in rough times

By | Money Tips

Spousal bereavement is an unimaginably difficult time. Not only are you having to process your grief, but there is the whirlwind of sorting through the estate and finances.

In this midst of the complexities, many people end up needlessly paying tax on assets and money inherited from their lost loved one – particularly when it comes to ISA savings.

Most people need all the emotional, relational and financial support they can get during their bereavement. So make sure you don’t miss out on these important tax breaks below.

 

Keep your tax-free wrapper

In 2015, the UK government introduced the Additional Permitted Subscription allowance (APS). This means that if your spouse or civil partner dies, then you can claim extra ISA allowances.

Normally, in 2018-19 you can put up to £20,000 per year into an ISA (or set of ISAs) without the amount being liable to tax. Under the APS scheme, however, you can inherit your deceased spouse’s/civil partner’s ISA savings without the amount being taxed.

The APS scheme is not widely known, unfortunately, so it is estimated that as many as 15% of widows are missing out on these benefits. With the average APS claim currently standing at around £55,000, clearly more needs to be done to inform grieving people about this important source of financial provision and support.

Here are some important things to know about the APS scheme:

● You can apply for the additional ISA allowance if your spouse or civil partner died on or after 3 December 2014.
● You must have been living together at the time of the death. You must not have been separated or estranged from your spouse or civil partner.
● Subscriptions cannot be made to or from a Junior ISA.
● Non-UK residents can make subscriptions.
● You can make the subscription to a wide range of different ISA types including stocks and shares, innovative and cash ISAs.

 

How APS subscriptions are processed

As the surviving spouse or civil partner, you will need to speak to the deceased’s ISA manager to begin the APS process. This means providing them with sufficient evidence that they are satisfied you are their client’s surviving spouse/civil partner.

Important information you should consider submitting to the ISA manager therefore include:

● Your name and physical address.
● National insurance numbers.
● Dates of birth, marriage/civil partnership and the date of the death.

You will likely need to submit this information and other important details to the ISA manager via a formal application form.

In some cases, someone else might make an APS subscription on your behalf – for instance, if they hold Legal Power of Attorney (LPA). In this instance, the ISA manager will need to see a copy of the LPA and check the relevant provisions.

 

Valuing the deceased’s ISA(s)

It isn’t always clear how much your spouse/civil partner has in their ISA(s), and it’s important to establish this early on.

For instance, stocks and shares ISAs need to be properly valued so the ISA manager knows how much to put into your account. This can get complicated, as it involves referring to obscure laws and regulations such as section 272 Taxation of Chargeable Gains Act 1992.

Essentially, the ISA manager should carry out this valuation legwork for you. It’s a good idea to get the advice of a professional financial adviser particularly at this stage, who can look over the ISA manager’s valuation and ensure you are getting a fair deal.

Things can become even more complicated, unfortunately, depending on the date your loved one died and the number of ISAs they held.

If they died before 6 April 2018 and held numerous ISAs, then the ISA manager needs to take into account a single additional permitted subscription limit. This will need to account for the total value of all of the deceased’s ISAs at the time of their death.

If your spouse or civil partner died after the 6 April 2018, however, then the rules are slightly different. Here, the single additional permitted subscription limit is instead determined by the total values of each ISA at the time it ceased to be a “continuing account”.

Confused yet? Don’t worry if you are. This is a big reason why many bereaved people miss out on important tax benefits during this difficult time. Yet with the help of a professional financial adviser, you can make sure your interests are protected and get the help you need to navigate this complex tax landscape without it feeling overwhelming.

 

Time limits

One important detail to bear in mind is the time restrictions on APS. If the APS is made as stock, for instance, then your subscription must be completed within 180 days of your spouse’s / civil partner’s assets distribution date.

If, however, the APS is being made in cash then you have three years from the date of death to complete the subscription. Or, you have up to 180 days following completion of the administration of your spouse’s / civil partner’s estate. Whichever happens first.

Bear in mind that if you do not act within the relevant timeframes, then you might need to gradually funnel your spouse’s / civil partner’s ISA savings into your own in order to minimise the tax involved.

For instance, if they had £60,000 in ISA savings and you contribute nothing to your own ISA(s) during a given tax year, then in 2018-19 you could put £20,000 of your spouse’s / civil partner’s ISA savings into your own ISA(s) without attracting tax. You would need to do this each financial year, however, over three years in order to move this money without facing tax.

Can Money Buy You Happiness?

By | Money Tips

As financial planners, it might be tempting for you to believe that we think so.

After all, why would we spend all day advising clients on pensions, tax and investments if we did not think to have more money would make you happier?

At Weston Murray & Moore our slogan is: “You have one life, let us help you live it.” So clearly, we believe money has an important role to play in making our clients happier.

However, we also believe that things are more nuanced than the simple equation:

Having more money = a happier person.

Really, we think that sensible money management is an important means to an end. That is, it helps you to achieve the goals in life that are truly important to you.

Let’s unpack the relationship between money and happiness a bit more…

 

Does having no money equal no happiness?

We all hear stories of terrible poverty in the world. Many people still live on under a dollar a day, for example, and struggle to feed their families. If a medical emergency comes their way, moreover, it can completely wipe them out financially.

Clearly, a base level of money is needed for humans to at least tolerate their existence – paying for essential food, shelter and other vital goods. Few people, we think, would dispute that.

Yet when you look at people on the lower income scales in society, there is usually a mixture of happiness levels across the picture.

For instance, some families have very little in the way of material goods but at the same time, they experience a lot of joy. Perhaps they have lots of children living in a small house, and they struggle to afford food and clothing. Yet in the midst of this, there is lots of fun and laughter. They do not seem too upset that they cannot afford a more lavish lifestyle.

Yet for other lower-income people, their existence is miserable and full of unhappiness. Perhaps they are saddled with crippling debt which they feel unable to escape from, creating a deep sense of entrapment. Maybe a family would like to move out of a high-crime area into a safer one, for instance, but they cannot afford to do so.

 

Does having more money mean more happiness?

On the other side of the coin (i.e. the wealthiest members of society) the situation seems to be similarly reflected. There are many wealthy people who are perfectly content. They enjoy the finer foods and also the most incredible holiday experiences. They live comfortably in large homes.

With such immense financial resources, how could these people not be happy?

Yet we all know of wealthy people who are deeply miserable! Perhaps they have multiple homes and expensive cars, yet their debts are hanging over them like a dark cloud, threatening to derail them at any moment. Maybe they worry about their precarious financial position due to market threats to their business, which ultimately supports their lifestyle.

 

Where financial planning fits into the picture

We deal with a wide range of financial matters and clients, and know all too well how complicated the relationship is between money and happiness.

If you are looking for the definitive answer on how people can address all of their inner angst about money, we, unfortunately, cannot provide it here.

Yet we can offer an important piece to start fixing the puzzle – and that’s through meaningful, effective financial planning.

Really, a financial plan starts with asking yourself what is ultimately important to you:

Is your deep desire to one day sell your business and retire early to enjoy a long-time hobby?

Is it to travel the world with your wife of thirty years?

Is it to leave a meaningful inheritance to your grandchildren, giving them the better start in life you wish you could have had?

Once you know the answers to these questions (what really matters to you and will make you happy), then you can then start planning towards making these goals a reality.

Simply having a financial plan can go a long way towards making you happier. Speaking from experience with our own clients, knowing that you are steadily moving towards your goals usually brings a huge sense of satisfaction, purpose and peace of mind.

Sitting down with an experienced financial planner can be immensely valuable when thinking about putting your plan together.

It might be, for instance, that some of your goals are not actually possible in light of your current financial situation. This can be difficult to come to terms with, but it is better to deal with that now and revise your expectations rather than hitting a shocking dead end in years down the road.

In many other cases, however, it is often the case that you can achieve much more than you thought previously was possible. Perhaps we could show you a planning opportunity which means you could actually retire earlier than you thought, for instance.

Or, maybe you find out (through estate planning) that you could leave much more to your grandchildren as an inheritance (tax-free) than you previously believed would be possible.

 

Summary

How could we round up everything we have talked about above?

In short, we believe that a key part to a happy life is having a clear set of meaningful goals in front of you, and putting a financial plan in place to move towards them.

Quite often, the key to happiness when it comes to money isn’t about having more or less of it. It’s about managing it well and committing it towards the things that matter.

If you would like to start talking to us about how to start putting a financial plan like this together, then we invite you to get in touch. We’d love to talk more with you through a free, no-commitment financial consultation.

Get in touch today!