Savings Advice

Will our kids get into more debt?

Jan 062011

A third of parents believe their children will be less equipped in the future to deal with their finances than they are.

Despite the credit crunch and the focus on finances, the nation’s parents admit they are worried about whether the next generation will be able to manage their own money, research from M&S Money has revealed.

It shows that a quarter of parents are fearful, despite the more cautious financial environment we’re now in and that it will still be easier for their kids to get into debt than it was for them.

A third think their children will be less able to manage their money than they are.

Almost one in five say their children will be ill equipped to understand and deal with their own finances, as there is simply too much jargon to wade through and not enough practical guidance in schools.

Despite this, almost a third of parents believe that imparting their own experiences can help children learn and improve future financial challenges.

They are confident that by being more open than their own parents were with them and integrating finance into the school syllabus, their children are more likely to be able to cope with future personal finance challenges.

A fifth of today’s parents said their mothers or fathers had the most influence over how they manage their own personal finances.

Colin Kersley, chief executive of M&S Money, said: ‘Having been through one of the most complicated couple of years for family finances the importance of getting things right for the future has never been more important.

‘Too many of today’s parents are not yet confident about the nation’s efforts to improve financial awareness and ability for the next generation.

‘Providing practical guidance in schools as well as offering simple and transparent products is really important.

‘The goal that our children will be more able to handle their own finances is worthwhile and one that industry, consumers and Government must work on together.’
You can read the full article here: http://www.fmwf.com/taxonomy/students/2010/11/parents-fear-their-kids-will-get-into-debt/

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Bank of England advises “spend not Save”

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Oct 032010

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Is this the worst piece of financial advice ever? Charles Bean, no less a figure than the Deputy Governor of the Bank of England, has told British consumers that they should be spending rather than saving to help the economy recover.
To add insult to injury, he added that savers shouldn’t expect to be able to live off their interest in the current climate, but should be looking to “eat into their capital” to help make ends meet, and, where necessary, use the equity they have in their homes.
Such advice may sound like madness at a time when thousands of workers fear job cuts, there are record numbers of insolvencies, concerns about a housing market slump and a double-dip recession, and the pensions gap is wider than ever.
Prudent savers have been hit hard by the financial crisis and subsequent recession.

The measures taken to stabilise the banks and kick-start the economy have resulted in rock-bottom interest rates and rising inflation – both anathema for those trying to build a decent nest egg for their retirement.
While the Bank of England’s economic policies have cushioned those who mortgaged themselves to the hilt, splurged on credit cards and spent all they earned, helping to create the debt bubble in the first place, many are angry that no help has been given to savers, who outnumber borrowers by nine to one.

Now they are being urged to sacrifice some of their hard-earned savings in order to give a temporary boost to the country’s output.

Mike Warburton, an accountant with Grant Thornton, is one of many to have branded Mr Bean’s comments “irresponsible”, saying they run contrary to sound financial advice.

Housing group gives 4 year Negative Equity Warning.

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Aug 312010

Homeowners who bought at the peak of the market face four more years of negative equity, a housing group said.

The National Housing Federation (NHF) said the average buyer in England paid £216,800 for a home in 2007.

They may now have to wait until 2014 before prices recover enough to make their homes worth more than their loan.

Meanwhile, figures from the Bank of England show that the number of mortgages approved for UK home buyers was barely changed in July at 48,722.

You can read more at the BBC Website here.

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Are Self-service Bank paying in machines safe?

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Aug 182010

Do you worry about paying your cash into a self service machine? Well maybe you should be !!

A legal loophole is leaving bank customers who use self-service paying-in machines at risk, experts warn. The machines, which require customers to post cash using an envelope, do not issue receipts – meaning there is no legal right to demand it back if the cash goes missing. Hundreds of people a year are denied compensation by their bank after claiming they have lost money deposited in their account this way, says the Financial Ombudsman Service.

If cash is lost or stolen when staff members count it at the end of the day, the bank can deny it ever existed since there is no evidence of how much was paid in. According to the Financial Services Authority (FSA), customers have little legal protection if their money goes missing and the acknowledgment slip is the only proof they have.

James Daley, editor of Which? Money, adds: ‘If banks are not willing to provide a guarantee, then they should be putting signs up at the machine warning customers.’ Customers who lose their money in this way can complain to the Financial Ombudsman Service, but only half of all complaints it received last year were upheld.

All six of the banking groups have introduced new machines which count the cash and provide proper receipts, but not all branches have them.

Read more: http://www.dailymail.co.uk/money/article-1303967/Self-service-paying-machines-money-risk.html#ixzz0wxCO76Zj

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Child Trust Funds – Viable Savings Alternatives

Family Money Saving, Savings Advice No Responses »

Jul 312010

Now that the new government has announced the demise of the state supported Child Trust Fund (CTF), what are the alternatives for parents who are still keen to put cash away for their little ones?

Previously awarding each and every child in the UK two vouchers of £250, CTF payments will be reduced as from August and be completely axed at the end of the year – but if you’re locking away money for 15-20 years there are loads of viable options still available on the market.

Offshore Personal Savings

Easy access and fixed term offshore savings accounts generally offer low or tax free conditions, easy access and higher rates of interest. The later generally offering a better rate of return for the saver – perfect for long term investments.

Children’s Products

There are a few high street lenders in the market who offer products aimed specifically at investments for children. These are great because they tend to deliver on key areas such as control and beneficiary, but if the investment is intended to be long term, any saver would do well to compare returns, terms and conditions with other non-child packaged products on the market.

Trusts

These fall under bare, unit and investment trusts, all of which are opened in a trustee’s name on behalf of the child. Unit trusts are a type of ‘pooled investment’ – a fund manager buys shares in a range of different companies and pools these in a fund; you then buy ‘units’ in the fund. Investment trusts invest in the shares of different companies, allowing investors to spread their risk. The main difference from unit trusts is that investment trusts are themselves companies in which you buy shares. Unlike unit and investment, the trustee’s of bare trusts are simply nominees and must act according to the beneficiary’s instructions.

ISA’s

A long term investment ISA is a great option if you’re planning to lock money away for a long period, and despite recent watchdog revelations in the media about low paying ISA’s, there are still a few choice products on the market that offer up to 5% return – plus they’re tax free. If you want to play with your money, cash ISA’s offer excellent tax-free annual returns.

National Savings & Investments

Backed by the HM Treasury, National Savings and Investments (NS&I) are one of the largest savings and investment providers in the UK and offer 100% security. Alongside Premium Bonds, NS&I offer a variety of products, including index-linked and fixed-interest savings certificates, children’s bonus bonds, direct ISA and investment accounts.

Bank’s Savings Compensation Scheme

Savings Advice No Responses »

Dec 302009

piggybank Following the collapse of the Icelandic banks Kaupthing and Landsbanki, the Government raised the amount of savings protection for individual savers from £35,000 to £50,000 in October last year, which would be paid through the Financial Services Compensation Scheme (FSCS).

Instability has racked the UK banking industry since September 2007 with the nationalisation of Northern Rock, part-nationalisation of Lloyds Banking Group (including HBOS) and RBS, the collapse of Bradford & Bingley and the bailout of Alliance & Leicester by Spanish bank Santander.

Maximum compensation limits (and how to make the most of it)

All of your savings are covered up to £50,000 by the FSCS as long as they are not all held with the same savings compensation licence (see link at the top of the page). The limit on joint accounts is £100,000. These limits do not apply to money held with National Savings & Investments or Northern Rock where all of your money is 100% guaranteed by the Government.

• Foreign banks compensation limits

These limits do not apply if your bank is a foreign bank operating in the UK with a higher compensation limit in its home country. For example, as of September 2008, the deposits of the Post Office and Irish banks operating in the UK such as Anglo-Irish Bank, Allied Irish Bank and Bank of Ireland, are 100% covered following an increase in compensation from the Irish government.

• Essential advice: spread your savings

Due to the rule on different savings accounts with one provider, it is best to spread your savings over as many savings institutions as possible. Yet a series of mergers, takeovers, joint ventures and subsidiaries has created a confusing web for savers to negotiate. And this would have huge implications were your savings provider to go bust. If you had three accounts with the same banking group – which does not have separate compensation licences for each of its brands – instead of getting three compensation claims of £50,000, totalling £150,000, you would only get back £50,000. However, if the bank is separately authorised by the Financial Services Authority then you would get a separate compensation limit.

Older Entries Newer Entries

Will our kids get into more debt?

Bank of England advises “spend not Save”

Housing group gives 4 year Negative Equity Warning.

Are Self-service Bank paying in machines safe?

Child Trust Funds – Viable Savings Alternatives

Bank’s Savings Compensation Scheme

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