It's Official - The UK Public Are Getting Cleverer With Their Cash

It would likely be surprising to few, but positive aspects of the ongoing recession are rarely mentioned in the press, in comment columns or on blogs. Yet, recent research from financial experts Moneynet and The Office for National Statistics has drawn attention to trends amongst the UK public showing that since the credit crunch we have become more sensible with our money.

Data recently published by the Office of National Statistics has shown that the household saving ratio has increased from 3.9 percent at the beginning of the year, to 5.6 during the second quarter. The rise has caused Andrew Haggar of Moneynet to comment: "People are now getting a bit wiser with their cash, putting it away to cover emergencies or unforeseen events such as unemployment."

Although the credit crunch and ongoing recession has seemed to make the UK public more conscious of the need to save, and to be more sensible with their cash, the competitiveness of fixed rate savings accounts have also been a direct influence on the habits of savers and spenders.

For example, interest on fixed rate bonds has increased from 2.87 percent to 3.53 percent according to moneyfacts. In comparison to average easy access accounts, the highest return on the best bond rates are around 2 percent more. Simply put, for anyone to make any interest out of their cash, they have little choice but to part with that money for a significant amount of time.

Similarly, ISAs have also hit the news again after new rules for over 50s were introduced in order to allow them to save more money tax free. Yet, despite the increase in options for older savers, competitive rates are still being seen by a range of providers with some banks offering accounts to savers both over and under 50. Prospective savers are becoming more savvy with the type of accounts they are opting for, but they are also willing to invest more time researching providers on and offline in order to get the best rates.

Paul Roberts writes about savings accounts, fixed rate savings, bonds and ISAs.

Savings 2009 - Can Debt Still Be a Friend?

As the era of tight budgets and scraping just enough to save continues, the notion that debt is a positive thing may seem ridiculous to many - it should be avoided at all costs, and it certainly shouldn't be available to someone who is likely not to earn enough to pay it back.

Yet, if debt wasn't as available as it is - i.e. if it were capped, what would happen when we really needed it? Most of us are paid by the month, and if at some point you need to make an emergency payment, on your car, or on your property etc, acquiring the capital to pay immediately is an absolute life-saver - and if for some reason it wasn't accessible could be potentially disastrous.

Thankfully, huge emergency payments are few and far between, but seeing as I'm writing this as thousands of university students invest a good chunk of their student loan in a Fresher's Week binge (I know I did), student debt is certainly worth a mention. Tom Cockreill (quoted in The Guardian) has the following to say about this: "Society seems to be happy to let debt accumulation start at university. It's all the more dispiriting that higher education, the bedrock of future prosperity and a more secure society, is paid for via debt."

This is certainly a curious aspect of modern day living. But would further education be as open and equal as it is if the system were not run this way? And additionally, what better time is there in one's life to come to terms with such an expensive, and important, investment - when they are enthusiastic and ripe for learning?

That said, it seems that for people of all ages there is still room for learning how to contribute to making their society less indebted - and it is going to be more difficult for borrowers to simply borrow to much in the future.

Perhaps more transparency is owed to students regarding how much they are paying and borrowing for university - and how much their course and grades are really going to be worth in the future if they achieve the best they can do so. But for those who are borrowing for other products, i.e. desirables, capping may be a good idea - at least to ensure that we are as a society are in control of debt - and it is no longer in control of us.

Paul Roberts writes about banking, student finance and savings accounts and best savings rates.

Can I Afford a Gap Year?

Much has been written recently about the cost of university, and the increasing number of young people put off by higher education due to the thought of so much debt after graduation. However, as the new term kicks off this month, it is clear that the recession has made the application process even more competitive as more mature students enrol, at the same time as jobs are cut, pay is frozen and more people find themselves without work. So what are the other options after college or sixth form?

Of course, a gap year has long been an acceptable way to spend time after secondary school in order to build up your 'life experience' and to enjoy some well-deserved freedom. But with so much concern about debt, can you really afford one? The easy answer is probably yes, but you must plan and budget carefully.

Whether you decide to volunteer close to home, or want to fly to the east coast of Australia, it is likely that you will need to save up some money for the experience. Of course, earning is one thing, but saving is quite another and it is important that you are taking enough money from your monthly pay and putting it somewhere safe. The more research you can do on this at the moment the better as the best savings accounts available tend to be fixed term - meaning you are more likely to get good returns if you leave your savings alone for a certain amount of time.

Another positive boon to your funding could come from tax. If you are only working for a few months before leaving and not working for the rest of the year, you may be eligible for tax back. If you earn £6,475 or less over a year you do not need to pay tax.

Once your funds are in place you need to estimate how you want to access it, and the currency (or currencies) you are likely to use. Internet banking is a great way for travellers because it is free and is available 24 hours a day. After you know what currency you will need and where, it may also be worth considering a prepaid credit card - despite the bad reputation there are certain credit card options available that are free of debt risk and allow you to take out foreign currencies abroad for no charge.

The next plan is to budget the trip. If you are travelling abroad it is becoming increasingly important to take out travel insurance - and it is a good idea to research specialist gap year cover. If you are planning any special activities such as extreme sports, ensure that these are included on your policy also.

Paul Roberts writes about finance for travellers, savings accounts and fixed term savings

Broadband tax to be made law - 50p per month

The 50 pence a month tax will apply to everyone with a fixed line telephone. Speaking at a debate in London, Mr Timms said the tax will be presented to parliament as part of the Finance Bill. But the Tory MP John Whittingdale said the tax, which could raise up to £175m a year to fund high speed networks, would be opposed by the Conservatives.

Are UK Universities Too Expensive?

As thousands of teenagers look over their A-Level results and decide what to do next, research from Child Trust Fund provider The Children's Mutual, has highlighted the cost of a three year university study to students and their parents. So are UK universities too expensive? And how can the financial strain be eased?

According to the latest figures from The Children's Mutual, for the average three year university course, a student will need to have around 42,000 pounds behind them - an amount of which a good proportion is likely to come from student loans. However, new research has shown that the rest of this funding is also likely to come from parents who are then either forced to take from their savings, or maybe even remortgage their house.

University costs are also likely to have been exacerbated by the lack of summer jobs available to those who are due to start their higher education in October. This has meant that unless children have been working during their A-Levels, they may have even less saved up for when they leave home.
Although it seems easy to label UK universities as too expensive, particular in regards to recent recessionary developments, in 2005 the government did establish the Child Trust Fund (CTFs) in order to ensure that future students will have a significant amount of money to fund their studies should they need it. CTFs are also intended as an incentive for both adults and children to open savings accounts - and to learn about the importance of putting money away.

However, it should be acknowledged that those eligible for a CTF must have been born on or after the 1st September 2002 - leaving a significant gap of future generations who are likely to be in a similar situation to this years graduates. Overall, the cost of this years graduates is said to be at around the 25 billion pound mark, 3 million pounds more than last year. If this is set to increase at the same rate, by 2015 this amount will have reached 43 million pounds. Consequently, if parents can afford to put any money away now, they should certainly do so - and as I write this, fixed rate bonds are currently a better option than ISAs in terms of average returns.

Paul Roberts writes about banking, savings and the best savings rates.

Research in Ireland Has Found That Women Are Better at Saving Money Than Men

Research in Ireland has found that women tend to be better than men at saving money. Of course, such 'data' will likely fuel the old 'it's official, women are better than men at something else - add that to the list above driving, multi-tasking and smelling nice,' argument that has been muttered, countered, and accepted since the dawn of time.

Yet, it also shows something more positive, i.e. that a nation also looks to be battling its way out of recession quite successfully - and that more people may now be aware of the importance of savings.


The research (collected and available at postbank.ie) shows that more than half (58 percent) of men and women asked in their Quarterly Savings Index consider the female of the species to be the better savers. Women themselves are confident that they the most frugal gender, with 65 percent claiming that they were the best savers. Yet, the actual statistics pitch men and women closer together - with 80 percent of men and 82 percent of women saving regularly - whilst men are said to put more away, with a third of those asked stating that they saved €250 a month.

The data is a good sign. The number of people devoted to saving is the highest in years, and the primary reason for doing so is security. This is a fact that is evident when one acknowledges the average decline in interest rates across the country - similar to that which is being seen in the UK and the rest of Europe - but it has also been backed up by nearly half (49 percent) of the postbank respondents who admitted they were concerned about the safety of their money at a time when possible unemployment is a lingering reality.
However, the risk of unemployment is clearly not the only reason that many are eager to put some money away each month. Clearly the system is showing its worth aside from the benefits of interest available at times outside of recession. With a small proportion of our income being deposited into our saving accounts automatically, it is easier to forget it is happening, and less easy for us to spend it without thinking. There is a barrier that doesn't exist when you're stuffing cash into your mattress.

With the global economic crisis, the public are seemingly reassessing the importance of saving and how it can best be managed at a time when it is seen as both difficult and vital. However, alongside each individual's assessment of their own responsibility and that of the banks over their savings, such control no doubt has a knock on effect on how they treat their finances generally.

How to Save for a Gap Year You’ll Never Forget

A gap year spent working or travelling overseas offers school-leavers or graduates the perfect opportunity to enjoy sun, sea, sand and adventure, before going to university or settling down to the world of work. So whether you fancy an extended holiday or a job volunteering for community or environmental projects in developing countries, the experience will be both unforgettable and could enhance your employment prospects when you return.

Start saving early

Before you start packing your rucksack, you need to remember that globe-trotting does not come cheap; fail to budget and your gap year could soon end up running into thousands of pounds. The key to a successful extended trip is forward planning – working out how you're going to finance it is just as important as deciding where to go.

Draw up a budget

Think carefully about your finances, and draw up a list of all the big expenses you might encounter, such as transport, food and accommodation. Also take the time to research the local cost of living – a good starting point is Lonely Planet.

Build up a cash reserve

While you may like the idea of working your way around the world, it may also be worth spending some time working here in the UK before you go. This will enable you to build up a cash reserve which could be held in a low-risk savings account paying a high rate of interest.

Where should I stash my cash?

A good starting point is a mini cash individual savings account (ISA) into which you can currently save up to £3,600 a year with no tax on interest (rising to £5,100 in April 2010).

Manchester building society is offering one of the “best buys” at the moment – paying 2.75% with no bonus on its Premier Instant Isa - although this does require a minimum balance of £1,000. For smaller balances, Standard Life is paying 2.65% on its Direct Access Isa on balances of just £1.