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The Independent
16-05-2025
- Business
- The Independent
Experts reveal the three money tips they wish everyone knew
For many, money is a constant source of anxiety. This is especially so given the current economic climate marked by a cost-of-living crisis, inflation, and increasing bills. A lack of financial literacy can also be a barrier to making the most of one's finances. From budgeting to choosing the right savings account and understanding investment options - it is important to make your money work. To provide some clarity, we spoke with Brian Byrnes, head of personal finance at Moneybox, Jason Hollands, managing director at Evelyn Partners, and Mark Weston, director of financial support at Santander, to learn their top money tips. Set some money aside for emergency funds New research by Santander, carried out in April by IPSOS with members of the UK public, shows that one in five (20%) respondents do not save anything from their personal income across the year. However, Weston says saving is important. 'We do recognise that the cost of living and inflation over the last few years has made it much more difficult for people to save,' says Weston. 'However if people do have the ability to save a little, it is a real benefit for things such as rainy day funds or for the future. This means if you have an unexpected expense, having those savings takes pressure off.' When it comes to household finances, investments or utility bills, Weston says keeping on top of the best deals out there is crucial. 'Whether the deals are for your energy costs or anything else for that matter – make sure you've got the best value for money for the service that is needed,' Weston says. 'Also make sure you keep an eye on all those expenses and don't just let them roll over every month.' Do a household budget 'It's important to understand and make sure that your outgoings aren't greater than your income or you're going to end up with a problem and possibly in debt,' Hollands says. 'It can be very easy to build up added costs, such as subscriptions that you don't actually use, so it's important to be aware of those things through a budget. 'When designing a budget for yourself, think about the things you know are essential. This would be the cost of your housing and groceries for example. Then you have your wants, which are the luxuries and nice things to have that you could live without for a period of time. Prioritise what you need most and keep the other things to the end of your budget.' 'It's really important to try and clear any debts, particularly those with high servicing costs like credit cards. People of course have mortgages and other things for a longer term that they aren't going to clear right away,' Hollands says. 'However, if you're paying high levels of interest on a loan or credit cards, you really need to get those under control before starting to put money aside for the future.' Use spare change to invest your money Byrnes says that rounding up spare change and using it to invest could be done rather than saving this money. 'The reason that works is because investing tends to concern or scare people,' he says. Byrnes explains that the initial step of putting money into investments or the stock market can feel risky. 'However we found over the years with clients that the spare change which feels less like real money is easier rather than a big lump sum. It can also break down the barrier to investing and as time goes on, they will start to see the benefit of it without having to necessarily take a big leap with larger sums.' Automate finances in the summer months 'We have found with customers that it's actually easier to save during the winter where there is less social pressures to go out,' Brynes says. 'When we get into the summer months and various social invites such as weddings tend to pop up more – it is important to automate your finances and pay yourself first. 'This should happen on your pay date,' he says. 'Put money into your emergency fund, your savings account, your investment accounts and ensure they come out automatically on the first day you get paid. This is more successful for savings in comparison to doing it at the end of the month – especially at this time of year.'
The Independent
16-05-2025
- Business
- The Independent
3 financial experts outline the money tips they want you to know
Money can be an ongoing stress for many people, particularly in today's economy with a cost-of-living crisis, inflation and rising bills. There can also be a lack of education when it comes to making your finances work best for you, from knowing how to budget, understanding which is the best savings account to open, and knowing how to invest. We spoke to the head of personal finance at Moneybox, Brian Byrnes, the managing director at Evelyn Partners, Jason Hollands, and the director of financial support at Santander, Mark Weston, about their best and most important money tips that people should know. Set some money aside for emergency funds New research by Santander, carried out in April by IPSOS with members of the UK public, shows that one in five (20%) respondents do not save anything from their personal income across the year. However, Weston says saving is important. 'We do recognise that the cost of living and inflation over the last few years has made it much more difficult for people to save,' says Weston. 'However if people do have the ability to save a little, it is a real benefit for things such as rainy day funds or for the future. This means if you have an unexpected expense, having those savings takes pressure off.' Make sure you've got the best value financial deals When it comes to household finances, investments or utility bills, Weston says keeping on top of the best deals out there is crucial. 'Whether the deals are for your energy costs or anything else for that matter – make sure you've got the best value for money for the service that is needed,' Weston says. 'Also make sure you keep an eye on all those expenses and don't just let them roll over every month.' Do a household budget 'It's important to understand and make sure that your outgoings aren't greater than your income or you're going to end up with a problem and possibly in debt,' Hollands says. 'It can be very easy to build up added costs, such as subscriptions that you don't actually use, so it's important to be aware of those things through a budget. 'When designing a budget for yourself, think about the things you know are essential. This would be the cost of your housing and groceries for example. Then you have your wants, which are the luxuries and nice things to have that you could live without for a period of time. Prioritise what you need most and keep the other things to the end of your budget.' Clear up debts 'It's really important to try and clear any debts, particularly those with high servicing costs like credit cards. People of course have mortgages and other things for a longer term that they aren't going to clear right away,' Hollands says. 'However, if you're paying high levels of interest on a loan or credit cards, you really need to get those under control before starting to put money aside for the future.' Byrnes says that rounding up spare change and using it to invest could be done rather than saving this money. 'The reason that works is because investing tends to concern or scare people,' he says. Byrnes explains that the initial step of putting money into investments or the stock market can feel risky. 'However we found over the years with clients that the spare change which feels less like real money is easier rather than a big lump sum. It can also break down the barrier to investing and as time goes on, they will start to see the benefit of it without having to necessarily take a big leap with larger sums.' Automate finances in the summer months 'We have found with customers that it's actually easier to save during the winter where there is less social pressures to go out,' Brynes says. 'When we get into the summer months and various social invites such as weddings tend to pop up more – it is important to automate your finances and pay yourself first. 'This should happen on your pay date,' he says. 'Put money into your emergency fund, your savings account, your investment accounts and ensure they come out automatically on the first day you get paid. This is more successful for savings in comparison to doing it at the end of the month – especially at this time of year.'
Yahoo
11-04-2025
- Business
- Yahoo
Lifetime ISA is still best bet for first-time buyers, says Moneybox exec
For many aspiring homeowners in the UK, the journey towards getting a foot on the property ladder can feel like chasing a moving target. Soaring house prices and the ongoing cost of living crisis have made saving for a deposit harder than ever. But according to Moneybox head of personal finance Brian Byrnes, there's one underused savings product that could make all the difference — the Lifetime ISA. Speaking on Yahoo Finance Future Focus, Byrnes called the Lifetime ISA 'an absolutely fantastic product' for those trying to buy their first home, thanks to the government's 25% top-up incentive. 'You can put in up to £4,000 a year, and the government will top that up by 25%,' Byrnes said. 'That's £1,000 free from the government every year, on top of your savings.' Launched in 2017, the Lifetime ISA is a government-backed savings and investment account designed to help people either buy their first home or save for retirement. What sets it apart from traditional ISAs or savings accounts is that government bonus. But while it can be a game-changer for many, Byrnes is keen to stress it's not a one-size-fits-all solution. Read more: Why pension funds are buying bitcoin 'There are some restrictions,' he said. 'The maximum property price is capped at £450,000, and you must open one before your 40th birthday. There's also a penalty if you withdraw the money for anything other than buying your first home or for retirement.' With house prices in London and the South East routinely exceeding that cap, there are growing concerns the product is no longer fit for purpose in some areas of the UK. 'The cap was set in 2017, and house prices have risen about 30% since then,' Byrnes said. 'It hasn't kept pace with inflation, and while it currently affects about 1% of savers — mostly in London — it's becoming an issue in cities like Bristol and Manchester, where prices are catching up fast.' Moneybox has been actively lobbying for changes to the Lifetime ISA to keep it relevant for a new generation of savers. Byrnes recently gave oral evidence to the UK Treasury Select Committee as part of the government's inquiry into the product. 'We're asking for two things,' he said. 'First, update the £450,000 cap and have it reviewed annually in line with house price inflation. Second, reduce the 25% withdrawal penalty to 20%, so that people don't lose their own savings if they need to access the funds in an emergency.' Read more: How to buy your first home in a cost of living crisis That penalty may sound symmetrical — a 25% bonus and a 25% penalty — but in reality, the maths doesn't quite add up for savers. With the current rules, people end up losing 6.25% of their own money if they withdraw funds early. 'During the pandemic, the government temporarily reduced the penalty to 20%, and we didn't see a spike in withdrawals,' Byrnes noted. 'So we know it's possible to make the product fairer while still encouraging long-term saving.' While much of the focus has been on helping first-time buyers, Byrnes was also keen to highlight the Lifetime ISA's (LISA) potential as a tax-efficient retirement savings tool — especially for self-employed workers or people who don't benefit from auto-enrolment pensions. 'There are two types: a cash LISA and a stocks and shares LISA,' he said. 'The cash version is great for those saving for a deposit in five to ten years. But for those using it for retirement, the stocks and shares Lifetime ISA is a powerful tool. It compares very well with pensions for many people, especially basic-rate or nil-rate taxpayers.' Read more: How to achieve financial stability in retirement He added that the flexibility of investment options with a Lifetime ISA is a big plus. 'You can invest in equities, gold ETFs, and a wide range of assets depending on your provider,' Byrnes said. 'You can't access the funds until you're 60 if you're using it for retirement — but that long time horizon actually makes it a great vehicle for long-term investing.' When considering a Lifetime ISA, savers should be aware of the eligibility criteria, potential penalties, and the product's limitations, especially when it comes to property price caps in high-cost regions. Still, Byrnes remains enthusiastic about its potential. "For the vast majority of first-time buyers, it's a no-brainer,' he said. 'And for those looking to boost their retirement savings — especially the self-employed — it's an excellent addition to your financial toolkit." Read more: What's driving the surge in UK private health insurance? How AI could change the internet The impact of freedom and choice pension reforms 10 years onSign in to access your portfolio
Forbes
28-03-2025
- Business
- Forbes
7 Myths About ISAs – And The Truth Behind Them
More than 22 million adults currently hold at least one Individual Savings Account (ISA) according to HMRC – yet many of us still don't fully understand how these tax-efficient savings accounts work. We approached five personal finance experts to share – and dispel – the most common misconceptions they've encountered around ISAs to set the record straight. 1. 'You need a lot of money to open an ISA' According to Brian Byrnes, head of personal finance at Moneybox, many savers mistakenly believe you need a large amount of money to open an ISA. And this can be off-putting, especially if you're starting to save for the first time. Actually, you can open an ISA with as little as £1, and how much you save thereafter – up to your annual tax-free allowance of £20,000 – is up to you. Byrnes comments: 'By consistently setting money aside, you can take advantage of interest rates and compound growth to maximise your returns. The key is to start early and make saving a habit.' Many providers, including Moneybox, Monzo and Plum, also allow you to 'round-up' the spare change from everyday purchases, and deposit it in an ISA automatically. Pro Tip Transfers are permitted from a cash ISA into a stocks and shares ISA – and between stocks and shares ISAs – without the transfer counting towards your annual ISA allowance 2. 'Once you choose an ISA provider, you're locked in' According to research from the investment platform Charles Stanley, almost a fifth (19%) of adults believe that, once you've opened an ISA with one provider, you're locked in forever. But this is not the case. Charlotte Kennedy, financial planner at Rathbones group, explains: 'ISAs have become more flexible over time, and you are always able to transfer to alternative providers.' That said, if you've opened a fixed rate cash ISA, you'll need to wait until the end of the term before you can transfer the balance – or face an early withdrawal charge. When you open a new ISA, you will need to complete an ISA transfer form with the new provider if you have an existing balance you want to move over. Simply taking out the cash and paying it into a new ISA without using this process means you will lose the tax-free benefit. 3. 'An ISA is just a cash savings account' In the minds of many savers, ISAs are just another place to put your cash. While this is true, ISA offerings go much further. First, interest earned on cash held in ISAs is paid free of tax. Second, ISAs aren't limited just to cash savings – you can also invest in the stock market through a stocks and shares ISA, again with a £20,000 annual limit. Any dividends you earn on shares in an ISA are paid to your account tax-free, while any capital gains you earn by selling investments held in an ISA are exempt from Capital Gains Tax (CGT). 19% of UK adults believe ISAs are only for cash savings.' – Charles Stanley survey, February 2025 Since, according to Charlotte Ransom of Netwealth, the average ISA holder typically maintains their account for five years or more, many savers who currently hold cash ISAs may benefit from a stocks and shares ISA. That's because, over five years or more, investing in the stock market tends to produce greater returns than cash savings. Charlotte Kennedy of Rathbones says: 'There is also a risk with holding cash for long periods of time that its value can be eaten away by inflation.' Just remember that, when you invest, there are no guarantees, and the value of your investments can go down as well as up. Tax treatment depends on one's individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of tax advice. If you want some money for short-term goals of less than five years, stick to cash for that part of it, and use investments for the longer-term ones – so use both cash and stocks and shares ISA accordingly.' – Rob Morgan, chief investment analyst at Charles Stanley 4. 'ISAs are the only way to protect your savings from tax' In the past, most UK savers paid tax on any interest they earned on non-ISA savings accounts. But things changed in 2016, with the introduction of the Personal Savings Allowance (PSA). Now, basic rate (20%) taxpayers can earn up to £1,000 in interest each year before tax kicks in. For higher rate (40%) taxpayers, the allowance is £500, while additional rate (45%) taxpayers do not get any PSA. Thanks to the PSA, many savers are not liable to pay tax on the interest they earn – regardless of whether or not they're using an ISA wrapper. If your savings account paid interest at 4% AER, for example, you could save up to £25,000 before breaching your PSA. In other words, if you're looking to shield your cash savings from tax, you might not need an ISA. Nick Perrett, chief executive officer of wealth management app Prosper, comments: 'I suspect that many people are using ISAs when they don't need to. 'Pay attention to the interest rate, because if you're not paying tax anyway, you might be sacrificing a higher interest rate but not actually getting any benefit.' Pro Tip In the UK, basic rate taxpayers can earn up to £1,000 interest from their cash savings each year without having to pay any tax Meanwhile, when it comes to shielding your savings from tax, ISAs are not the only option. If you're saving for retirement, and don't plan on touching your money for decades, a Self Invested Personal Pension (SIPP) could be a better fit. Savers can contribute up to £60,000 to a SIPP each year, and receive tax relief on their contributions (remember that employer contributions count towards this total). In practice, this means for every £80 a basic rate tax payer contributed to their SIPP, the government will add an extra £20 in tax relief. 5. 'If you don't use up your ISA allowance, you can carry it into the next tax year' According to the experts, many savers are unsure of how their annual ISA allowance works. One key misconception is that if you don't use the full £20,000 allowance in one tax year, you can 'carry over' the unused portion into the following year. If you don't use up your annual ISA allowance, you lose it every year. So it's a good idea to think about ways you can take advantage of your allowance if you can.' – Charlotte Ransom, chief executive officer at Netwealth Unfortunately, this isn't the case. Each tax year, on 6 April, your ISA allowance resets – regardless of how much you paid into ISAs during the previous tax year. In other words, it's a case of 'use it or lose it'. 6. Myth: 'ISAs are only for adults' ISAs aren't just for grown-ups. With a Junior ISA – or JISA – parents and guardians can save up to £9,000 on behalf of a child each tax year. Just like their adult counterparts, any interest, capital gains or dividends earned through a JISA is shielded from tax. Nick Perrett of Prosper says: 'It surprises me how many people with kids have never heard of a junior ISA. 'A lot of people will be saving for their kids, but if they don't know that the JISA exists they won't be doing it in a tax-efficient way.' According to AJ Bell research, UK children collectively hold around 1.25 million junior ISAs – a fraction of the 22.3 million adult accounts that are currently active. Two types of JISA are available: Cash JISA Stocks and Shares JISA Children can hold multiple JISAs at once, and parents can split the annual allowance between cash and investments however they like. 7. Myth: 'Current ISA rules are set in stone' The ISA wrapper has been around since 1999, and although the basics have remained the same, it has undergone several key changes. In 2011, for example, the Junior ISA was introduced, opening a new route for parents and guardians to save on behalf of their children. Later, in 2017, the Lifetime ISA entered the scene, with the goal of helping first-time buyers get on the property ladder, and helping individuals save for retirement. Just last year (April 2024) changes came into effect that allowed savers to open and pay into more than one of each ISA type every tax year – which wasn't previously permitted. And further changes could be on the horizon. In her Spring Statement, Chancellor of the Exchequer Rachel Reeves said the government is considering ISA reforms that aim to help savers 'get the balance right' between cash and investments. Charlotte Kennedy of Rathbones, says: 'The Chancellor has indicated that any changes to ISA allowances will be looked at again later in the year, so although ISAs are safe for now we would expect some tweaks in the near future.' But since nobody has a crystal ball, it's best to make the most of the current rules, rather than attempting to plan around future regulation. Brian Byrnes of Moneybox says: 'Instead of trying to anticipate policy shifts, it's best to make informed choices based on your current needs and long-term plans. 'That said, it is always worthwhile doing what you can to maximise your contributions before the end of the tax year to make the most of the annual £20,000 tax-free allowance you are entitled to this year.'
