personal finance – Page 2 – The NEN

Over a quarter of women have no pension savings

Male pension pots are two thirds larger than women’s on average
Only 23% of women are confident they will be able to retire comfortably

Fewer women than men have pensions, and those who do are saving less than their male counterparts, reveals independent research conducted on behalf of Handelsbanken Wealth & Asset Management.

Handelsbanken Wealth & Asset Management’s report, Can we solve the gender wealth gap? highlights the disparity in retirement savings between men and women, revealing that over a fifth (26%) of women have no formal pension savings at all, compared to just 16% of men.

Women’s pension pots were found to be substantially smaller too. The average pension across amounts for all respondents stood at £103,037. However, male respondents’ pension pots were found to be significantly higher, averaging at £142,234, while women’s came in at just over a third of this, at an average of £51,384.

It is therefore unsurprising that only 23% of women surveyed stated they are confident that they will be able to retire comfortably, with over a third (35%) believing they won’t be able to.

However, there are signs that things could be turning around for the next generation. While women over the age of 40 are generally less likely to have a pension than men of a similar age (63% vs 80%), men and women in their 30s were found to be equally likely to have a pension (77%). For adults under 30, women were found to be more likely to have a pension than men (76% vs 59%).

The research also revealed that most people tend to leave the management of their pension to their workplace pension provider (45%). Men were slightly more likely than women (43% versus 37%) to manage their own pensions, such as via a self-invested personal pension scheme (SIPP).

However, more than half (56%) of those who self-manage their pensions admitted that they seldom check their retirement savings – of which 64% were female.

Christine Ross, Head of Private Office (North) & Client Director at Handelsbanken Wealth & Asset Management, said: “Women on average continue to remain a long way behind men in pension savings, with the problem at its most acute among older generations who are closer to retirement.

After decades of gender disparity, it’s encouraging to finally see clear evidence of change, with pension take up reaching parity among thirtysomethings, and women in their twenties ahead of their male counterparts.

The recent steps taken at a government level have the potential to further close the gender pensions gap, including the free childcare scheme expansion announced at the Spring Budget, which should allow more working mothers to return to the workplace and build their pension savings.

“But despite signs of progress, there is still considerable work to be done. Education around pensions needs to be improved, as does women’s confidence in financial products. We strongly encourage seeking advice on long-term financial planning where possible, to ensure that the plans you have in place are fit for purpose on an ongoing basis.

“Generally, it is important to review your pension regularly and to top up your workplace pensions where possible. If you’re unable to pay into a formal pension, there are plenty of other options to consider, including ISAs, which offer tax-free savings.”

Help available to boost family incomes

Edinburgh parents urged to seek help with employment

A new campaign will encourage families living on a low income to access local support with finances and work.

It encourages people to take the first step towards relieving these pressures with help from the Parent Club website. This can guide them towards tailored support to help them improve their situation by starting work after unemployment, returning to work or improving earnings.

The campaign which includes TV, radio and online advertising, highlights the pressures of everyday life and shows parents feeling the ‘walls closing in’ on them as they juggle family life with bills and other costs.

Cllr Joan Griffiths, Education, Children and Families Convener for the City of Edinburgh Council, said: “We know that many families in Edinburgh are finding it hard to make ends meet at the moment and are looking for advice on things like finding work and applying for benefits.

“Taking the first step at ParentClub.scot can help find services that offer free, confidential and tailored advice that can really make a difference for families across Scotland.

“For anyone that’s feeling worried, stressed and overwhelmed, but aren’t sure where to start, please know you’re not alone and that help is available.”

Social Justice Secretary Shona Robison said: “We understand the anxiety and stress, that low-income families could be living with and the impact of the cost-of-living crisis is likely to be making even worse.

“Parent Club can guide people to free and confidential tailored advice from local authority employment services, where they can access support relevant to their own work and family situation.

“It also offers information on how to get help from the Money Talk Team who can advise on areas such as maximising income and dealing with debt. Parent Club also provides sources of support with mental health and stress.

“Tackling child poverty is our national mission. We want to make sure parents know what help is out there and claim any support they should be getting.”

Citizens Advice Scotland CEO Derek Mitchell said: “When times are difficult it can be easy to feel overwhelmed by bills mounting up – but our advice is free, confidential, and impartial.

“The Citizens Advice network is working with the Scottish Government to deliver the Money Talk Team service. We can check to see what payments you might be missing out on or any cheaper deals are available to you. If you are struggling with debt we can help with that too.

“Don’t delay, you could be missing out on money that could make a huge difference to you and your family’s finances.”

UK gambling with £5.5trn inheritance as more than half don’t have a will

73% of UK adults with financial concern for others say ensuring the right people receive money is important when gifting money
Yet 57% of adults surveyed do not have a will in place
Nearly half (45%) have never spoken or will not speak about pension death benefit nomination, lasting power of attorney or a trust with family

More than half of the UK with financial concerns for others (57%) do not have a will in place, according to new research from Quilter, leaving their family finances open to challenge when they pass away.

Of those that do have a will, the majority (53%) have not updated it within the last five years, with a further 14% never having updated it at all. Worryingly, 16% of over 55s have never updated their wishes.

Meanwhile, one in four of those with financial concern for others (25%) said they would be willing to contest someone else’s will if they felt the estate hadn’t been divided fairly, highlighting the need to have an inheritance plan well established and communicated with family.

According to the Kings Court Trust, £5.5 trillion will be passed between generations in the next 30 years. Quilter is warning those who do not have a will or have not updated it in the last 10 years to put one in place to ensure inheritance is passed on in accordance with their wishes.

This comes as the research also showed that when gifting money, an important aspect was ensuring the right people in the family receive the money, with three quarters (73%) citing this as important. Ensuring recipients save tax was another key aspect, with just over half of respondents (55%) stating this is important.

The research also found that45% of people have never or won’t speak about pension death benefit nomination, lasting power of attorney or a trust with their family, again leaving their wishes undetermined.

Rachael Griffin, tax and financial planning expert at Quilter, said: “Inheritance is a highly emotive topic for family to discuss, but many are simply hoping for the best and ignoring what is clearly an important subject.

“Everyone has desires for what happens to their money and their possessions when they pass away, so it is vital these are recorded and regularly updated. Not doing so leaves an estate up for challenge, and this will only delay the grieving process for your family members after you die.

“Encouraging conversations about money and inheritance between family members is the major theme that has emerged from this research. The vast majority see the right family members receiving the money as an important aspect of gifting. However, failing to talk about your estate and your wishes with those family members is just adding a layer of risk on to your inheritance.

“It is also important to remember that while a will is a fantastic way of recording your wishes, you must not forget things like pension death benefit nominations and lasting power of attorney. These are also crucial elements in ensuring your affairs are managed in the way that you want them to be following loss of any capabilities or death.

“Having these discussions with family and ensuring documents are kept up to date will ensure that vast sums of money that are due to flow through the generations will do so in the intended way.”

Greater control for taxpayers using repayment agents

HM Revenue and Customs (HMRC) is changing the way taxpayers who use a repayment agent can receive overpaid tax to protect them and raise standards among repayment agents.

HMRC will introduce legislation to change the way repayment agents are paid for their services and better protect customers from the unscrupulous tactics used by some operators. This means stopping the use of legally binding ‘assignments’ as part of claiming an Income Tax repayment, which could only be cancelled if the agent and taxpayer both agreed to do so. This can be challenging for customers who become dissatisfied with their agent, or who simply wish to take over managing their own claim.

Under new arrangements, if a taxpayer chooses to use a repayment agent to reclaim overpaid tax and wants it sent to the agent, they will need to make a nomination, which they can cancel at any time. The new process will make it easier for taxpayers to stay in control of their repayments.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Taxpayers deserve better – we want to make sure they are better protected before choosing to enter into an agreement with a repayment agent. HMRC’s updated standards for agents will level the playing field and provide the benchmark we expect all repayment agents to meet.”

The changes follow HMRC’s consultation last summer on ‘Raising standards in tax advice: Protecting customers claiming tax repayments’. Responses to the consultation highlighted the need to improve agent transparency and standards with the overall aim of better protection for taxpayers.

As a result, HMRC is today also setting out the following measures:

updated standards for agents – applicable to all tax agents and include greater transparency requirements
a new HMRC registration process for repayment agents – to make the agent sector more transparent so customers better understand what they are signing up to

Victoria Atkins, Financial Secretary to the Treasury, said: “For too long taxpayers have been left in the dark as a result of misleading and opaque agreements with repayment agents.

“These new measures will ensure those who are entitled to claim a tax repayment or relief can do so freely and easily – whether they choose to do this themselves or by using an agent.

“This Government is making it easier to navigate the system for all taxpayers using an agent to claim money that’s owed to them.”

Victoria Todd, Head of the Low Incomes Tax Reform Group, said: “We welcome these additional steps, which show HMRC recognises the important role they play in consumer protection.

“Refund companies have a legitimate role in the tax system, but the practices of some of these companies in recent years have been unacceptable. The proposed changes will hopefully address problems around the use of assignments, increase transparency for taxpayers and set clearer standards for these companies’ behaviour.

“Alongside this, it is important that more effort goes into raising awareness of refunds and ensuring it is as simple as possible for taxpayers to access them. We look forward to working with HMRC on the detail of the proposals.”

These changes form part of the government’s commitment to tackle problems in the repayment agent market, which is currently an unregulated sector.

Responses to HMRC’s recent consultation overwhelmingly supported the need for improving standards in the repayment agent sector.

The updated HMRC standard for agents includes:

greater evidence of customer consent. This aims to ensure that taxpayers better understand the agreement they’re entering into
stricter transparency rules, including introducing a 14-day ‘cooling off’ period for customers after entering into an arrangement with an agent, and an obligation on agents to ensure all communications and advertising material are fair, clear, accurate and do not mislead or conceal material facts

Further details on the approach to registration for repayment agents will be set out in due course.

If taxpayers think they are owed a tax rebate, they can claim directly from HMRC via the free and secure service on GOV.UK and will receive 100% of the money owed.

An expert guide to surviving December to January paydays

Cash strapped Scots are being advised on how to survive the tough gap between December and January’s payday

Penny-pinching pros at NetVoucherCodes.co.uk have put together ways to help ease the pressure on your finances during this stretch.

Many workers receive an early payday in the run up to Christmas and although this is helpful during the festive season, the next payday can often seem far away.

Brits are being advised to cook in bulk and check their monthly subscriptions as ways to keep an eye on their spending.

Consumer expert, John Stirzaker from NetVoucherCodes said: “A lot of people get paid early in December to help fund their Christmas which is great at the time but it can often leave us feeling like the next payday is miles away which can be difficult, especially in today’s climate.

“January tends to feel like a bit of a tough month for most people but there are a few things you can do to help ease the financial pressure like cancelling unwanted and unused subscriptions.

“Other ways to help lighten the load in January include cooking in bulk and avoiding January sales.”

How to survive the wait until January payday:

Shop smarter

An obvious solution is to refrain from doing any unnecessary shopping on clothes and luxury items that you can go without.

However, it’s not always that simple and if you do find yourself having to buy something try using price comparison websites or look for discount codes.

Cook in bulk

Instead of cooking a separate meal each night why not try meal prepping and cooking in bulk. This way you can freeze your food and take it out when you need it.

This is cheaper than buying ingredients for a different meal each night and not only does it save you money, but it saves you time as well in the week whilst you’re busy working.

Avoid unnecessary spending

It can be very tempting to grab that coffee on the way to work or pop out and buy lunch while on your break. Try making a coffee before you leave and consider meal prepping for the week ahead. That way you won’t be tempted to buy lunch knowing you have plenty to last you for the week.

Dry January

If there’s ever a time to do it, you may as well stop drinking with the rest of the nation. As well as being good for your health, you’ll also find it’s good for your bank account.You’d be surprised how much money you save in a few weeks when you aren’t spending it on alcohol.

Sell unwanted items

Social plans tend to die down in January with everyone in similar financial situations so this should give you some free time to go through and clear out any unwanted items.

And perhaps you’ve been given things at Christmas that could replace other items you have. Selling these online is a great way to get a bit of extra money in January.

Check monthly subscriptions

Collectively, Brits have been known to spend around £1.8 billion on unwanted subscriptions a year.

Now is a good time to go through your subscriptions and cancel any that you do not use or need or maybe even put some on hold until the next payday.

Think about gym memberships, streaming services and delivery subscriptions.

Don’t be tempted by January sales

January sales can be very tempting and you may be thinking if there’s any time to grab a bargain it’s now. But the truth is if you didn’t need it in time for Black Friday or Christmas, then you probably don’t need it now.

Avoid racking up unnecessary debt

A lot of retailers now offer a buy now pay later scheme and whilst these might seem like a good idea now, they’ll be an unnecessary worry come January.

One in five Scots have NO savings

· Overall, nearly a third of adults in Scotland have less than £100 put away.

· Almost half of people who use credit are anxious about how much they owe.

· Over a third are anxious about the number of credit products they have.

· Free help is available, but six in seven people still struggle to talk about money.

Almost a million people across Scotland have no savings and another 450,000 have less than £100, according to new research from the Money and Pensions Service (MaPS).

The survey of 301 adults, carried out for Talk Money Week (November 7-11), shows that one in five (20%) have nothing put away and another one in ten (10%) have £100 or less.

This leaves almost a third of adults living without a financial safety net to cope with the rising cost of living or unexpected bills, meaning some may have to use credit.

MaPS says although credit is an important tool when used and managed well, it’s crucial that people understand what they can afford and have a plan to pay it off.

However, the figures also reveal that many people are already finding this difficult. Among the 82% of Scotland residents who use credit, two in five (43%) are now anxious about how much they owe. Two in five (40%) are worried about the number of different products they have.

As cost of living pressures start to hit home, MaPS says it’s more important than ever to talk about money before problems set in. However, the survey also reveals that 85% of people still avoid discussing their finances.

Asked why, the most common responses were ‘not wanting to be judged’ (24%), ‘shame or embarrassment’ (20%) and ‘fear of burdening others’ (17%).

During Talk Money Week, MaPS is encouraging everyone to open up about money, plan for their financial future and take free debt advice as soon as they need it.

The organisation says its MoneyHelper service can be people’s first port of call, offering free guidance on topics like everyday money, savings and where to find free debt advice.

It also provides a range of information on dealing with money issues, including step-by-step guides on how to talk to your creditors or discuss money with family and friends.

Allison Barnes, Scotland Manager at the Money and Pensions Service, said: “Over a million people across Scotland find it a challenge to save and this leaves them vulnerable when sudden expenditure items arise. When you add in the anxiety that they feel with their credit commitments, the weight of that worry can quickly become overwhelming.

“This Talk Money Week, we want everyone to start the conversation with family or friends and share the burden of any money worries. By dealing with the problem head on, people can discover just how helpful free debt advice can be and see the importance of talking to their creditors early. They can also begin to find a way forward, no matter how difficult their situation might feel.

“Free help and guidance on how to do all of this is available via our MoneyHelper service and I’d urge everyone who needs it to get in touch today.”

TMW-2022-ParticipationPack-final Download

About Talk Money Week

The week is an opportunity for everyone to get involved with events and activities across the UK which help people have more open conversations about their money – from pocket money to pensions – and continue these conversations year-round.

This year’s Talk Money Week will focus on the theme of ‘credit’ – to help demystify some of the jargon, build people’s understanding of credit products, and what their options are, including other forms of support that might be suitable. However, we encourage people to use the week as an opportunity to talk about any aspect of money.

More information is available at https://maps.org.uk/talk-money-week/.

New appointments at Castle Community Bank

Castle Community Bank (Castle) the credit union based in Leith, Edinburgh, has boosted its growth plans and financial inclusion ambitions by making key appointments to its Board and Executive team.

Experienced non-executive director Stephen Pearson has been appointed as Chair of the Board. Following a career in law and financial services, Stephen has also recently been appointed Chair of the newly formed Financial Inclusion For Scotland.

As Chair of Castle, Stephen will be responsible for leadership of the board, ensuring that it effectively oversees Castle as it continues to grow and support its members through the cost-of-living crisis.

Last year Castle appointed a new chief executive, Adrian Sargent, who, alongside the previous chair, Ian Irvin, has overseen a period of substantial growth to ensure its sustainability in a difficult financial climate.

In addition, on 1 October 2022 Suzanne Gush was appointed as Chief Financial Officer. Suzanne has significant financial services experience and will support the board and management team in this next phase of Castle’s growth.

Stephen Pearson said: “The current cost-of-living-crisis and challenging UK financial climate, illustrate how important it is that all communities have access to fair savings and loan products as well as financial education.

“I’m looking forward to helping Castle and its partners make a positive difference in north Edinburgh and beyond, at such a key time for the organisation.”

Adrian Sargent said: “Stephen will be a great asset for Castle as we continue growing. Being fintech enabled, Castle is now well placed to help its members from a position of increasing strength. With Stephen’s fresh perspective and ethical fintech-savvy, Castle can find new ways of supporting our members.

“At Castle we are about sustainability for both the organisation and the community, and we are passionate about working hard for our communities. I’m excited about the next chapter for Castle, working with Stephen, Suzanne and the rest of the team.”

Castle offers savings and loans like any high street bank, but instead of making a profit for shareholders, Castle can invest surplus revenue into projects supporting its community.

As a credit union, Castle is regulated by both the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) who are part of the Bank of England.

The Castle team sees the community bank as a force for good for its members who can access fair products that would otherwise be unavailable to them from mainstream banks. Castle also seeks to encourage thrift and financial well-being – essential tools for surviving the cost-of-living crisis.

Housing market experts advise: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed

How the new interest rates affect house prices and rent

Housing market: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed, finance experts advise
Landlords will likely increase rent prices or sell to cope with increased mortgage repayments
Inflation and interest rates will keep rising, but house prices are already slowing down

The Office for National Statistics announced last month that UK inflation rose to 10.1%, from 9.4% two months earlier. The Bank of England expects it to further increase, peaking at 13.3% in October. The accompanying higher interest rates, currently at 1.75%, and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.

Top market analysts at CMC Markets expect interest rates to further rise to 2.25% in September. This directly impacts mortgages on variable rates – around 1 in 5 households in the UK – and another 3.1 million whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.

Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3% and 4%, up from 1.75% and 2.75% only five months earlier. This will inevitably spill into rent prices.

CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17^th, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.

Michael Hewson, Chief Market Analyst at CMC Markets comments: “Houses sold in June 2022 only increased in price by 1% compared to May, whereas, last year, this constituted a much more generous 5.7% surge.

“This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised. Remember, house prices may be slowing down, but they are not decreasing. Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.

“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt. Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price.

“Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”

What did the Bank of England do earlier in August?

The Bank of England explained that the rise in interest rates was necessary due to external pressures which are expected to persist. This means that British firms and residents will continue to feel this weight reflected on rising domestic prices, wages outpaced by soaring inflation, and even higher mortgage repayments, despite the Bank’s attempt to widen the borrowing pool through less restrictive mortgage rules.

Although historic, the Bank’s decision was not a surprise for trading analysts at CMC Markets, a London-headquartered financial services company, who believe the Bank was expected to raise interest rates higher than 1.25% during the June meeting, as a means to keep import inflation in check.

This is on the backdrop of a 10% year-to-date depreciation of the British pound sterling against the US dollar and an indication from the Federal Reserve, the US central bank, of a further interest rate increase by 0.5% or 0.75% in September.

Michael Hewson comments: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”

What’s next and when will things calm down?

Other than adjusting the interest rates to the accurate level to keep abreast of import inflation, the economic projections for the UK paint a bleak outlook for the next two years.

The UK is projected to enter a recession in the final quarter of this year, the Bank of England announced. The country’s economy will contract by 1.25% in 2023 and 0.25% in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2% much before 2024.

The current political race for the Conservative Party leadership and the consequent fiscal policies promoted by the new British government is a major factor to take into account for any inflation, GDP, and unemployment projections and investment decisions.

As it stands with the current measures, inflation is expected to peak at 13.3% in October – a sharper increase than the Bank anticipated in June, originally estimated at 11%. It will continue to rise throughout 2023 only to decline in 2024.

Meanwhile, forecasts for the Consumer Price Index (CPI) are less optimistic now, expected to decrease only to 9.5% in the third quarter of 2023, although the Bank anticipates a sharp fall in prices immediately thereafter.

Selling prices are set to increase to reflect rising costs while real household post-tax income is expected to plunge in 2022 and 2023. The Bank predicted that core prices will peak at 6.5% this year, meaning that, in the following six months, food and energy will constitute more than half of the headline CPI.

The next meeting for the Monetary Policy Committee, where the Bank of England will decide what the new base interest rates might be, is set for September 15^th.

Pensions are safer than houses for retirement saving

Twice as many workers think pensions are a better bet than property for retirement saving
Nearly one in three who don’t save into pensions say other financial priorities mean they can’t afford to

Twice as many workers see occupational or personal pensions as a safer way of saving for retirement than property investment, new analysis* from Handelsbanken Wealth & Asset Management shows.

More than half (57%) of retirement savers who are still working believe pensions are the most secure retirement saving method, compared with 25% who chose property and one in seven (14%) who opted for ISAs, stocks and shares and saving accounts, according to Handelsbanken Wealth Management & Asset Management’s analysis of the latest Government data.

Those relying on property as their biggest source of income in retirement are even fewer – just 11% of those who are not retired expect it to be their most important source of income when they stop working. That compares with 46%, who think their main income will be from their occupational or private pension.

Some 23% believe their State Pension, benefits, or tax credits will be their largest source of income, while 12% think it will be their savings, investments, earnings, income from a business or sale of a business.

The data shows the number of people saving into pensions has risen to a new record high of 21.8 million after an increase of 40% – or 6.1 million – in the past decade, with most of this growth coming from new savers into defined contribution pensions.

Auto enrolment, which was launched in 2012 and made enrolment into workplace pensions automatic, has boosted the number of defined contribution pension holders to 9.9 million from 2.8 million, while the number of savers with defined benefit – or final salary – schemes has grown by 1.5 million to 8.8 million.

That has cut the number of people below State Pension Age who do not have a workplace or private pensions by 14% or 2.6 million in a decade, but there are still major issues for those who do not contribute. Nearly a third (29%) say they have too many other expenses, bills and debts or simply cannot afford a pension, while more than half (54%) say their income is too low, they are not working, or are still in education.

Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth & Asset Management said: “It’s great to see confidence in pensions growing, with people rating them as the best way to save for retirement. More importantly, the number of people who are saving into pensions is increasing.

“It’s vital to use all of the tax-efficient options available to create a flexible retirement plan, as well as trying to start saving as early as possible, with the earliest savings having the longest period of time to grow.

“Employers are now obliged to make contributions for their staff, which helps many savers get on the retirement planning ladder. Some company pension schemes even offer additional ‘matching’ contributions if the employee pays more than the minimum. That can be as good as a pay rise and the money will grow, tax free, in the pension scheme for many years.”

Company pension schemes of course do not apply to the self-employed – and Handelsbanken Wealth Management & Asset Management’s analysis shows there is a greater reliance on property for retirement among those who work for themselves.

More than two-thirds (69%) of over-55s below State Pension age own a property, but that rises to 81% among the self-employed in that age group. And 25% of those that are self-employed in this age bracket own other properties in addition to their home compared to just 15% of those who are employed.

What is ‘cash stuffing’?

Financial expert explains the money-saving trend taking TikTok by storm

‘Cash stuffing’ is a money-saving technique currently blowing up on social media.

With the cost of living crisis impacting the majority of the UK, Gen-Z and Millenials are looking for new ways to save. Within the past year, Google searches for the term ‘cash stuffing’ have increased by 274% (Source: Google Trends/Glimpse) and the TikTok hashtag has generated over 498 MILLION views to date.

Dan Whittaker, Personal Finance Expert at CashLady.com, has released comments explaining the trending method of saving at home, how it works, along with the downsides:

What is ‘cash stuffing’?

“Cash stuffing is a method of saving money by physically withdrawing money from your bank account and organising it in a folder system.”

“Using a personalised folder containing several labelled envelopes, savvy savers divide their monthly outgoings into categories, label each envelope with a category, then select a budget for each category and put the allocated amount of cash into the envelope.

“For example, if your monthly take home pay was £1,000, you would make your essential payments as normal, such as rent, mortgage and bills. Then, you split the remaining money into several categories within your folder.

This could be for things like ‘the weekly shop,’ ‘birthday funds,’ ‘socialising,’ ‘holiday savings’ or ‘pocket money for kids.’ Each category and its envelope would contain the exact amount allocated in your budget.”

“The technique is also sometimes referred to as the ‘cash envelope system’.”

“At the end of the month, you can see clearly how much money you have spent in each area and track it on a spreadsheet. You can then readjust your budgets for the next month to stay on track. If you’re lucky enough to have funds left over, these should be moved into a separate folder which acts as bonus savings for whatever your ultimate saving goal is.”

Why does it work for some people?

“This method of saving can be a great way to keep you motivated to achieve your savings goals. Breaking down larger savings goals into smaller monthly targets makes the task of saving less overwhelming, and being able to literally see the money saved each month can lead to a greater sense of achievement.”

“Also, seeing your money physically dwindle can make you more aware of the current state of your finances. Using Apple Pay, Paypal or even online banking can sometimes feel as though you aren’t actually spending money as there is no physical cash exchanged. With cash stuffing, you have a visual representation of your earnings and outgoings which can lead to a greater sense of awareness of your finances; when you see what you’re spending, you think more about what you’re spending.”

“This is perhaps why the method is particularly popular amongst young people, who have been brought up using online banking and are seeking a new way to view and manage their money.”

“Another bonus with this method is that you’re avoiding the risks that can come with credit cards or overdraft fees. Avoiding credit cards altogether stops those prone to overspending from racking up debts, as once your monthly budget is gone, it’s gone.”

What are the downsides?

“Security is the biggest downside. When your money is locked away in your bank it is protected by the banks security systems and protected by schemes such as the Financial Services Compensation Scheme.”

“However, with your money living outside of your bank in cash form, it may be more vulnerable to theft, loss or damage (for instance from fire). If this were to happen then you would essentially have no recourse to recover that money. If you are interested in this technique, investing in a safe or something similar would be advisable.”

“You also aren’t earning any interest on your money while it is not deposited in a bank, building society or other savings scheme.”

How can I do it?

“If you want to give Cash Stuffing a try then firstly, you need to think about what you typically spend money on. Dividing your usual spending into categories will help you to start your envelope system. Spends such as shopping, dining out, entertainment, petrol, gifts and groceries might be the most consistent monthly costs to begin with.”

“Then, think of your longer-term savings goals. Assign an envelope for this, where you can start to deposit any spare change at the end of each month. This could be for a car deposit or saving for a renovation or holiday for example, but having a specific goal is a great way to keep you motivated. Having these additional folders means you’re always allocating some money to long-term goals.”

“Next, you need to work out how much money to assign to each category. If you know you spend too much on socialising, then lower your budget in that category, and so on. After you’ve budgeted, it’s worth creating a spreadsheet to track your spending, simply writing down how much you allocated and then spent that month. This creates an awareness of your spending habits and helps see where you went right and where you could cut back. Any leftovers can be added to your long-term envelopes to encourage you to keep going.”

“The important thing is to only spend what is in that envelope. Restrict your spending to only using the allocated amount on each category and you should have savings in no time.”