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According to the Bank of England, the average UK household spends around £2000[1] per month, however in the run up to Christmas we end up spending at least £500 more on festive activities and purchasing gifts. It sounds like an exaggeration, but we’ve all fallen victim to the odd £8 Christmas Market mulled wine… Haven’t we? The costs surrounding the festive season can often take away the joy and cause a lot of stress, with 1 in 10 Britons[2] saying that they ‘regularly worry’ about money leading up to Christmas. The months of buildup to the big day can really take its toll, but celebrating in a cost-effective way may be easier than you think. Here are our top tips for enjoying Christmas on a budget.

Plan ahead

Sometimes it helps to have everything laid out in front of you. Write down your estimated festive spending alongside your day to day outgoings and adjust your budget accordingly. Seeing what you have and need to spend make sit much easier to create a Christmas savings plan.

Remember that it’s never too late to start squirrelling away a few pounds here and there when possible. This could just be a matter of collecting loose change in a jar, only to be dipped into for stocking fillers, or you could take the step to open a saving account for Christmas (just be sure to check on the terms of the account regarding any restrictions on withdrawal). Regardless of how you go about it, every little really does help and just having a pocket of cash put aside can put your mind at ease.

Research is key

Panic buying can lead to us overspending when there was most likely a saving to be made elsewhere. It’s so easy to give into the hype and get swept along the high street with the masses. It’s common to be told to simply do it all online which certainly has its perks, but for some, a touch of the mad rush is all part of the fun. If you are venturing out, have a quick scan of the internet for deals available in store (think, the annual 3 for 2 sale in Boots), this will help you target the shops with the best offers and not buy the first thing you see.

Popular voucher sites such as Groupon often have great offers on a wide variety of gifts, and experience sites such as Virgin Experiences tend to have great offers, often up to 40% off, on their festive excursions and adventures, shopping smart really can help you save for Christmas!

Be prepared to say no

Being a time for eating, drinking and being merry, spending can add up really quickly without you really noticing. It just takes one diary clash for a pre-Christmas dinner and drinks with friends to descend into four or five smaller (bust just as costly) outings to ensure you’ve celebrated with everyone. The old ‘never mind, it’s Christmas’ chestnut becomes the most used sentence in conversations. Drinks on a Monday? Sure…it is Christmas after all. We’re not suggesting a ‘bah humbug’ approach but it’s worth having a think about whether gatherings can be consolidated or whether you’re up for everything you’re invited to.

The same principle can be applied to gift-giving. Knowing where to draw the line is key. It’s the best feeling being able to treat those close to us, but it’s certainly not the main point of Christmas. If you find yourself struggling to gather gifts for friends of friends and extended family members that you rarely see or speak to, take a minute to think about whether it really is necessary. Could a thoughtful Christmas card do instead? Sometimes you have to say no to yourself as well as others for your own peace of mind.

With the build up to the big event seemingly starting earlier and earlier, it’s totally understandable for the natural concerns about money to creep in simultaneously. However, with a head on approach, you can keep things under your control without feeling like you’re missing out. For even more ideas on how to save within the colder months, take a look at our blog on how to save money in winter.

[1] - Bank of England [2] - Money Advice Trust

Saving money can be difficult and is often easier said than done. If you’re on a low income or stuck in a cycle of living paycheck-to-paycheck, saving every month may feel even further out of your reach.

A recent study by the Independent shows that a quarter of UK adults don’t have any savings, with one third blaming too much debt and high monthly outgoings as the issue. One in ten also admitted they spend more than they earn each month.

Whether you need to save money fast for a holiday next month or you are trying to save as much as possible each month for a wedding or house deposit, there are several ways you can cut costs and increase savings.

At OpenMoney, we understand the importance of having enough cash savings put away, so we’ve put together some tips of how you can save money on a low income.

Budget, budget, budget

The first step you should take in trying to figure out how much you can save is figuring out how much you spend. To do this, take a look at your bank statements and try to categorise payments into things like rent, bills, travel, food, subscriptions and anything else that works for you.

Writing all of this down can help you understand where most of your money goes. You may quickly realise that you spend £100 on work lunches every month or that you’re still subscribing to a service you don’t use!

Once you have all this information, split your spending into ‘committed spending’ and ‘disposable income’. Everything you need to pay for, such as bills or essentials, is committed spending and the rest is disposable income.

Now it’s time to start setting a budget for your disposable income. If you have £600 of disposable income a month, try to set yourself a budget of £400 – roughly £100 a week. Stick to your budget and you’ll save £200 a month which is £2,400 a year!

You can go even further and set budgets for each category you created like eating out, weekly food shops and entertainment to make sure you stick to your overall budget.

Switch and save

Another great way to save money quickly is to look at your committed spending to see if you can save by switching your current providers for services like gas, electricity and the internet.

Companies are always battling for your hard-earned cash and there’s probably someone out there who can offer you a cheaper deal than your current one. If your energy bills cost £100 a month and you’re offered a new contract for £80, that’s a saving of £240 a year!

Do this across all of your household bills and it’ll soon start to add up and fast.

Later this year we’ll be partnering with uSwitch to make it really easy for our app users to find out if they could save by switching their energy bills. Keep an eye out for more updates from us on that one.

Round it up

Look after the pennies and the pounds will look after themselves.

Most transactions are now paid with our debit cards, meaning we never see the money pass through our hands. An old-fashioned way of saving used to be putting your spare change in a piggy bank and watching it grow over time.

If you take that principle and apply it to your debit card transactions, the pennies will soon add up. For example, if you spend £2.70 on a coffee, simply deposit 30p into a savings account to round up the transaction.

Many banks offer this as a service that directly deposits your ‘change’ into your savings account. Get in touch with your bank to see if this is something they can offer.

If not, simply add up your transactions on a daily or weekly basis and deposit it in your savings account manually.

Be open to change

One of the most difficult things we face when trying to save is changing your usual habits.

If you’re used to buying a coffee on the way to work every day, starting to take your own coffee may be a difficult change to make.

When making these decisions you need to weigh up why you’re doing it and whether it's worth it to you. 1 month of bringing in your own coffee could save you £90 (if you spend £3 a day). A good quality bag of coffee can cost as little as £5 and you still get to have your morning coffee.

There is a limit to how far you should take this. Don’t stop doing everything you enjoy as you may start to lose the willingness to save. Finding the right balance of sacrifice and saving is key to reaching your goals.

Find out what you’re entitled to

Not everyone is aware of the benefits - such as tax credits - that are available to them from the UK government. This may mean they’re missing out on extra cash.

A full list of UK tax benefits can be found on the Gov.uk website and there’s a handy benefits calculator to help you understand if there are any benefits available to you.

Try to take make use of all of the benefits that you can - they’re there for a reason!

Just like saving on your bills and rounding up your cash, these small wins can make a big difference over the course of a few months.

Remember why

One final tip is to always remember why you’re saving in the first place. It’s often easy to make an impulse purchase that you didn’t need or get your favourite takeaway after a stressful day. If in these moments you remember why you’re saving, you can avoid plenty of unnecessary spending and watch those savings grow!

If you’d like to learn about how to budget better in 2019 and money saving tips for your summer holidays read our other blogs on money management.

The thought of living on a budget or actively saving can be daunting. Sacrificing a couple of non-essentials is off putting and enough reason to put the idea to bed. We’re not suggesting that you shouldn’t be enjoying your hard-earned money, but when you see how far the money saved from simple swaps and stops can go over the course of a year, you might think a little differently about that last minute trip to the pub.

Alcohol

From after work drinks to sharing a bottle of wine in front of the TV, it all adds up. So why wait for Dry January to have a break. According to the Office of National Statistics, the average cost of a pint is £3.67 so it’s no surprise that the average UK household spends at least £17 per week on alcohol. It doesn’t sound like a ground-breaking amount, but when this rolls into £64 for the month, saving it can seem more appealing - particularly when you look at it as:

• Eight months subscription to Netflix • Two tickets to Alton Towers

High Street Coffee

Caffeine makes the world go round, but it can also run rings around us financially without us really noticing. That ‘essential’ high street coffee that you grab on the way into work may be waking you up, but it’s also eating away at your funds. Coffee giants are charging as much as £3 for a medium latte and assuming a Monday to Friday coffee shop routine, you could end up spending £60 a month on twenty coffees. Your twenty coffees could look like:

• A pair of return national flights • Two tickets to a West End show

Cigarettes

Research shows that giving up smoking for 28 days is long enough to break the habit entirely. The health benefits are endless, but what could this mean for your wallet?

The cost of a premium pack of 20 cigarettes averages around £11 and it’s set to rise. If we follow in the footsteps of the Australian Government – they’ve been implementing a steady increase in tobacco costs - that will see cigarettes costing the equivalent of around £20 a pack in 2020!

Based on current prices and a smoking habit of 40 a week, stopping for just a month could end up saving around £100. If the science works and you go forward and stop altogether, you’d be looking at a saving of over £1000 a year. Here’s what £1000 looks like:

• 90 trips to the cinema • Two season tickets for a Premier League club • An all-inclusive holiday to Cancun

As far-fetched as some of these alternatives may seem, the saving possibilities are very real. Put it away for a rainy day or kick start your pot of savings, the smallest of changes really could make a world of difference to your financial situation. It’s worth a try, good luck!

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When I started thinking about wedding planning, the first thing I did was try and understand how much it was going to cost us - typing ‘average cost of a wedding’ into Google was a big mistake!

There are so many articles, each giving different figures ranging from £17,674 to £32,273, but don’t let this fool you.

Not wanting to splurge too much on the big day, we managed to spend a fraction of that cost, without making any scarifies on what we really wanted.

Whether you’re planning a wedding and it’s coming in overbudget, or you’ve just started planning and know you want to keep it low-cost – these tips could help you plan a wedding without the price tag!

Decide what’s important to you

Start the process by deciding what’s important to you. Straight away we knew having a great band and photographer for the day was something we were willing to spend money on.

However, when it came to wedding favours, invitations or having a big countryside manor for a venue – we knew we didn’t want to splash the cash.

Everyone will have different priorities and there’s no right or wrong, but it will help to be clear on this from the outset so you're both in agreement on the areas that are most important to you and the areas you’re happy to spend less.

Cut costs where you can

There are lots of ways you can reduce costs on the big-ticket items for a wedding.

Guestlist: Your guestlist will be one of the biggest contributors to the cost of your wedding. The larger the guestlist, the bigger the venue needs to be and the more food and drink you need to buy.

If you’d prefer to keep costs down by having a smaller wedding, stick to your guns – you may well feel pressured into inviting more people than you’d like. Try to explain to others the impact these additions will make to the cost of your wedding.

You could also cut costs by keeping the ceremony and wedding breakfast smaller, then inviting everyone you want to the evening. Without the need for arrival drinks and a full wedding breakfast meal – the cost per head for evening guests is so much cheaper.

Music: If you aren’t bothered about having a band or even a DJ for entertainment, load up a Spotify playlist and put it on shuffle. You can even ask for song requests from guests on your RSVP cards!

Suits and dresses: Don’t be afraid to go to high street retailers for your wedding outfits, whether that be suits, bridesmaids’ dresses or even the wedding dress! ASOS have some lovely wedding dresses for £100 - £500, all with free returns. And remember to shop the sales – especially online.

When it comes to bridesmaids’ dresses, I saw many for £70 - £150 each but if you don’t want to spend that much, you really don’t have to.

You might feel comfortable enough to ask the bridesmaids or groomsmen to buy their own dresses and suits - particularly if you’re flexible on the outfit itself. You can stick to one colour and let them get their own mix and match styles – they’ll be happier paying for something if they choose it and are likely to wear it again.

Venue: Venue prices vary wildly. They can charge anything from a few thousand pounds upwards – one we contacted was £18,000 just for one day because they offered exclusivity over the whole complex!

With finding a venue, you will need to research to find the right place with the right price tag. There are websites like Hitched and GuidesForBrides which have long lists of venues you can search through. Make sure you take advantage of wedding fairs and showcases so you can get a look inside venues you might be interested in.

One option is to save by choosing a non-registered venue. If you’re happy to get officially married and go through the paperwork the day before or after, you could hold a symbolic ceremony and party anywhere you like.

Also, don’t forgot to take into account decoration. If you opt for a plainer venue, you will have to consider the additional cost of décor and a venue dresser to put it up for you (unless you want to do that yourself on the morning of the wedding). If you choose a venue with enough character, you won’t need any additional décor!

Your wedding date: If you’re flexible on your wedding date, you might find you can make huge savings. Many venues offer discounts on their last few available dates for the year or for Autumn and Winter weddings. You can also save by getting married on a weekday.

Flowers: Fresh flowers can be very expensive, but often you can save if you choose to rent from an artificial flower supplier. If flowers aren’t important to you then perhaps you should decide not to have them at all – all weddings don’t need to look the same!

Food and drinks: The timing of your ceremony can impact the amount you need to spend on food and drinks at your wedding. If you opt for an early ceremony, the longer people will be in your care and you will need to keep them fed. If you choose a ceremony time 1pm or later, you can often forget the canapes and only the wedding breakfast and evening food are needed.

A ceremony even later than that can mean only one meal in the evening is necessary, cutting costs even more!

An open bar might be on the top of your list but if that’s not the case and you’d rather use the money elsewhere, don’t feel the pressure to keep a drink in everyone’s hands all night. An arrival drink or toast drink will go down a treat – but we found that most wedding guests are happy to pay for their own drinks.

Watch out for creeping costs

It’s really important to be clear with your suppliers from day one what the prices will be for the date of your wedding.

Most suppliers will raise their charges year on year. With weddings often being organised years in advance, you need to be sure whether the price you’re quoted is the price locked-in for your wedding date, or whether the suppliers expect the price to go up when it comes around to payment for your big day.

For example, our venue locked in the meal prices for us when we booked so we knew what we’d be paying. Whereas our florist waits until January on the year of the wedding to raise her prices and give final costs. This is when they know more about the cost of flowers for that season. You can ask for previous years price increases to give you an idea of what to expect.

When considering your wedding budget, ultimately, it’s about whether getting that extra drink for everyone, ordering the gold foil invites rather than plain or having a bouquet in your hand for the day will make a difference to your enjoyment of the day.

It’s so easy to get wrapped up in what you think you should have but it’s your wedding, so make sure you stay focused on what will make a difference to you both and not everyone else – even if that may be easier said than done!

Good luck!

Whether you’re in your 20’s, 30’s or even 60’s. Moving in with another human is a big thing. It can open doors to new possibilities in that relationship. But it can also get very messy if you’re not careful with your finances.

We put together our top tips for managing money when moving in with someone else.

Be honest from the start

Money isn’t the easiest topic to approach in a relationship but it’s important to get a clear picture from the start.

The best way to make sure that things go smoothly when it comes to managing your money, and making sure you have enough for bills, rent and food is to be honest with each other.

Be honest about your income and what you can and can’t afford so that you’re both on the same page.

This might mean you need to think more realistically about the standard of living you’re able to afford.

Make sure you’re on the same wave length

Moving in together is a big step in any relationship so it’s important to make sure that you both know each other’s goals going forward.

If you’re looking to save for a mortgage, then make sure that the other person is invested in this as well. The same goes for if you want to save up for a holiday together.

Make sure you talk about what your financial goals are so you can work towards them together. You don’t want to book a holiday if the other person can’t afford to pay their half.

Budget before you buy

Whether you’re renting or buying a property make sure that you work out your budget before you commit to anything.

Although you might like the idea of living in a city centre it could increase your outgoings as rent in the centre of a city may be higher. Plus, it can be even more tempting to go out if you leave nearer to bars, restaurants and cafes – which can add to your overall outgoings.

It might be cheaper to live further away from the city center and commute in every day if you work in the city. The added travel costs are outweighed by the lower rent.

Factors like the council tax band you’re in, travel costs and rent can determine how high or low your monthly bills are. Make sure you take these into account when budgeting.

Have an account for rent and bills

When you live with other people who are contributing to bills and rent your bank statements can start to get confusing with all the different transactions and transfers flying around.

You might find it easier to set up a joint account just for the household direct debits. That way you can transfer a set amount over each when you get paid to cover the cost of the shared outgoings.

You could even use this account to add extra money to cover food and other services you both use such as broadband and TV subscription packages.

Seems like a good idea but, it’s important to remember that you’ll both be responsible for any debts or overdrafts – and opening a joint bank account may affect your credit rating, so don’t rush into it.

The Money Advice Service has a great article on things to consider when splitting your finances.

If you decide a joint account isn’t right for you, you could consider opening another account for bills, for yourself. It will be easier to keep your own spending money separate from money you need for bills and rent - and it will make sure you always have enough to cover the bills without having to think about it.

Try and build up a cash buffer

Although when you first move in with someone it might take time to get your ducks in a row, it’s always good to make sure you can put a bit of money aside every month and start to build up a cash buffer.

We recommend people to have at least 3 months’ worth of outgoings saved up in a cash buffer.

This can be used to help pay for any unexpected bills that may come up should you or your partner fall on hard times.

Work out what’s fair for your situation

When moving in with someone it’s important to make sure that you‘re realistic about both of your incomes and what you can both afford to pay.

If you or your partner is on a much higher income, splitting everything right down the middle might not be the fairest option.

Instead maybe consider working out a ratio or percentage you each should pay towards household items and outgoings in relation to the amount of money coming in.

We’ve seen some great examples of how couples, including some of our team, split their finances:

One of our team members lives in Sheffield, she commutes via train everyday which takes a fair chunk out of her salary! As her boyfriend owns their flat, works in Sheffield and doesn’t want to move, he pays the mortgage and she pays her commuting costs.

Some people pay different amounts into joint accounts, for example if someone earns £1,500 and their partner earns £2,500 per month, he pays £750 and she pays £1,250 into their joint account for bills and savings.

Moving in with someone is a big commitment and it can take time to adjust, especially when money is involved. But as long as you’re able to talk about things and work together you will be able to get through it.

Managing your money in your 20’s can be hard, usually due to moving out, university, car insurance and those weekly nights out. But according to research by ClearScore, 31 is the most expensive age for Brits.

The average Brit spends £43,000 during their 31st year because of major life events like getting married, having kids and buying a house. Some of which can add to your yearly bill throughout your 30’s and beyond.

We think it’s just as important to manage your money efficiently in your 30’s as it is in your 20’s. So here are some of our tips on keeping costs low and spending your money wisely.

Split up your savings

Dipping into your savings to pay for unexpected bills is something we’ve all done at some point. But 60% of people rely on their savings to pay for those big milestones too.

Your savings can be a good option when it comes to paying for expensive events but with so many milestones usually occurring in your 30’s you can be left with next to nothing by the end of it.

Splitting up your savings or having multiple pots for your wedding, mortgage deposit and holiday can help you budget for these events. It can also help you to visualise where you are in relation to any saving goals you set yourself.

Prioritise

It can be very easy to get wrapped up in the moment by planning multiple events in the same year and investing in your future. The next thing you know you’re paying out for a new car, mortgage, wedding, honeymoon, 30th birthday and a summer holiday.

Sometime though we need to remember to take a step back and rethink our spending and our priorities.

If you can go without a big birthday bash or a summer holiday then you can focus your saving and budgeting on the bigger things that take priority in your life.

It’s not just big purchases but small ones as well. Cutting back on those non-essentials or switching them for cheaper alternatives will help you in the long run.

Don’t give into debt

When you have a lot of things to pay for it can be tempting to turn to other finance options such as taking on debt, dipping into your overdraft or taking on credit.

In fact, 1 in 5 under 34 year old’s turn to credit to fund big purchases.

Being able to pay something off in instalments or not have to pay anything at all for several months sounds like a great idea.

But when you’ve bought a TV, games console, laptop and coffee machine on finance it all soon starts to add up each month.

Saving up the money for 6 months to pay for these items can be very different to paying for the items over the course of 6 months on a finance option.

Although taking on credit options means that you will have the item straight away, it also means that your income is tied up in paying off that debt every month. You may also have to pay interest which can make a big difference to the total amount you pay!

Where as if you are saving up for the item and you get an unexpected bill you can use the money you’re saving to pay for it.

You can also reduce your savings if you have an expensive month, where as there’s rarely any wiggle room with credit.

Try not to give into debt. If you don’t need it then don’t buy it.

If you have to use credit options, then make sure you’re able to pay back the instalments every month.

Think of the bigger picture

Prioritising your finances for the next 5 years is great, but don’t forget about the bigger picture.

There are things you need to start thinking about now, even though they might not be happening for another 10 or 20 years from now.

Retirement is something you should definitely be thinking about in your 30’s. If you haven’t already done so in your 20’s make sure you’re putting money aside each month to go towards your pension.

If you want to help your children finance their education, first car and first home then you need to think about this as well. Lump sum payments are easier to finance when you’ve planned for them in advance.

Life insurance

Nobody likes to think about the possibility of getting sick but getting life insurance in your 30’s is something worth thinking about.

Getting life insurance whilst your young and healthy is most likely going to be the easiest time to get approved for a life insurance plan.

Although you might not think you need life insurance it’s always worth looking into, especially if you have dependents. Whether it’s children, a partner or if you care for someone. You’ve now got to think about other people as well as yourself.

Increase your cash buffer

Everyone should try and have a cash buffer.

Then if you ever get an unexpected bill you have a 3 months worth of rent and outgoings saved up to help you out.

But as you get older your outgoings may increase so it’s important to make sure that your cash buffer increases to cover any additional costs.

It might be particularly difficult to keep this sum aside in your 30s as you are likely to have more outgoings, but it can be even more important. You might have a mortgage, finance or credit payments and dependants that rely on your income.

Work out what you’d need to live on for three months and then you might decide to put some extra away to cover any upcoming purchases you might have.

Your 30’s don’t have to be a financial burden. Just make sure you’re prepared for the future and the major life events you have coming up.

There is no shortage of investment companies willing to look after your money (my social media and weekend papers are full of adverts promoting the different services) and reviewing all financial affairs is always good sense.

What is worrying is the growing use of incentives by these companies to get you to choose them and transfer your money for them to look after. I have seen everything from cashback offers, a heap of airmiles to even cases of wine!

Everyone loves something for free but when it comes to money and investments then I believe that these offers are really irresponsible. The decisions you make with your money have long-reaching effect and the wrong decision today could lead to problems in the future.

Here are a few of things to think about when you’re looking to switch your investment company.

What’s the true cost of that ‘free’ gift?

The phrase “there is no such thing as a free lunch” is absolutely spot on here. Any gift you receive is paid from the fees you will pay.

Not only that, but it could end up costing you a lot more if the new providers fees are higher than what you’re currently paying – is that case of wine really worth thousands of pounds in fees over the life of your investment?

Is it the right thing for your financial goals?

Whilst cost is a really important point when considering these offers, it is absolutely essential that you consider whether it is the right thing to do for your personal situation.

You could easily end up transferring your money into a product that’s not suitable for you.

Most of these firms make their money by investing yours, but they won’t tell you whether transferring your hard-earned money is the right thing to do for your financial circumstances. The risk involved in this decision still lies with the customer.

It’s not always easy to say if transferring is the right thing for your investments in the long run, but it is definitely easier to say that making those decisions based on the free gifts on offer isn’t sensible.

Unfortunately, there are too many examples in financial services where poor decisions, often as a result of unscrupulous investments promoting false hope, have led people to lose money or even their life savings. Not only can they ruin your finances but by their nature, these circumstances are incredibly emotional.

We offer free transfer reviews, which means we will tell you whether or not it’s in your best interest to transfer your investments to us. And if it isn’t, we’ll tell you honestly.

Financial advice doesn’t have to be expensive and having someone else look over your situation could give you piece of mind when it comes to your money. No gimmicks. No bribes. Just financial advice.

• Learning about money from a young age is an important part of growing up.
• Teaching your child good habits early on can help them become a money-savvy adult.
• But the way we use money is changing, so your advice needs to keep pace.

“Money doesn’t grow on trees, you know!” I think that was the main piece of financial advice my parents gave me in my earliest years.

But learning how to manage money is an important life lesson, and it’s not something that’s widely covered in the primary school curriculum.

That’s led to some pretty bizarre misconceptions about the cost of living, according to some research from Halifax. It found that most boys and girls aged between eight and 15 believe a loaf of bread costs £15 and a pint of milk £17!

The summer break can be a great opportunity to help them get to grips with the topic, which got me thinking about how best to first introduce money to younger children in an accessible, engaging and fun way.

Every child is an individual, and they all mature at different ages, but here are five tips to help start your little one off when you think they are ready to start learning about money.

1. Getting hands on

Debit and credit can be a tricky concept, so start with ‘real’ money. Let them get hands on with your notes and coins. Let them hold them and play with them. Show them the values of the different coins and notes.

2. How it works

Let them watch you spend your money. Explain that you have to exchange it for things you want. They can even hand over the money to the shopkeeper themselves, or put it in the self-service checkout, and collect the change.

3. The value of money

Show them the prices of the products on the shelves when you’re shopping and explain how they equate to the value of the notes and coins. Explain how things have different prices. A pint of milk costs less than a pair of shoes, for example. Get them to guess the prices of different products.

4. Being responsible

Give them a few coins of their own as a reward for good behaviour and a piggy bank or money box to keep it in. Explain that they must keep their money safe and secure. Children love responsibility and having their own money like mummy and daddy – it helps them to feel grown up.

5. Starting spending

Young children don’t tend to be terribly materialistic, but if there’s something they enjoy, whether its food, drink, a book or a toy, you can let them buy it with their own money. This helps them think about how they’re going to use money, and learn that when they’ve spent it, it’s gone for good.

Next steps

As children get older, it’s a parent’s responsibility to help them understand more complex concepts, as in today’s modern world, people use money very differently. It’s predicted that this year debit cards will overtake cash as the most popular way to pay for things in the UK1, for example. This can also present an opportunity to hand more responsibility to your growing children.

Cards for Kids

Increasingly, parents are using pre-paid debit cards to pay their child’s allowance, which are now available for children as young as eight. Some of the more popular cards include goHenry, Osper and nimbl.

The appeal is easy to understand. You can pay their pocket money digitally with a few taps on your phone’s banking app, set spending limits for your child and monitor what they are spending their money on, and it helps them learn about banking, saving and budgeting.

Your child gets a degree of independence, but you retain ultimate control.

The cards come with an app that your child can use to manage their money, so they can watch their savings grow and learn the basics of budgeting – they can’t go overdrawn, so once their money is gone, it’s gone.

The cards can be used in shops, online and for cash withdrawals, and you can even set up alerts so you are notified whenever they make a transaction.

Lessons for life

It’s a great next step to them having their first bank account, but beware, most cards come with charges.

There’s usually a monthly or annual fee, and some also charge for cash withdrawals, so shop around to get the best value.

As a parent, the lessons you teach your children about money can stay with them for life. Helping them understand and respect money from an early age can help them become confident, responsible adults. Keep an eye out for the next blog in this series for some top tips on supporting your children through their teenage years - and when they finally fly the nest.

A summer holiday abroad can be expensive, and it may take time to save the money to pay for it. It’s easy to see how it might be difficult for a family to find the money for a summer break when the average cost per person for a holiday is £855

Some expenses like buying a new passport aren’t avoidable, but there are a few ways you might be able to reduce the costs and save money on your holiday.

Shop around

Going for the first deal you see may not always be the best option. Instead looking around different websites for deals on hotels or flights could save you money.

Comparison websites like Skyscanner, Trivago or Expedia will compile deals from multiple websites for you, so you can see everything all in one place.

It’s also a good idea to check these prices on the hotel or airline’s own website as it may be cheaper to go through them directly.

Go last minute

If you have the luxury of taking a week off work without much notice, then you can sometimes get some cheap deals by going last minute.

If you’re flexible when it comes to your destination, then you can go for the break that works for your budget.

If you’ve got time off booked already and no plans it’s always worth checking to see if there are any holiday deals for a super last minute break.

Stay for a shorter time

Most holiday packages last for either 7, 10 or 14 nights. But these don’t have to be your only options.

Depending on how you book your holiday you could go away for the time that suits your budget. This could be a few nights or a little short of two weeks.

If you book your flights and hotel separately then you could look for a period that works out cheaper or within your budget.

Pack light

Whether or not you have to pay for your baggage will depend on your flight package details.

Some airlines may charge you more for each extra bag you bring, and some may charge per kilogram.

If you’re able to take a reasonable sized hand luggage bag for free then this may be enough if you’re going on a short break.

Make sure you only pack the essentials and it could save you from having to pay for the extra weight.

Use up your toiletries

Depending on how long you’re going away for will depend on what toiletries you’ll be taking and how many of them.

You may want to buy things like toothpaste and deodorant at the airport once you go through security, or once you reach you destination. Both options will help to reduce your baggage weight.

If you’re looking to save money though you might be better off using up what you already have.

Buying new toiletries just for a week-long holiday can be expensive. But taking what you already have in the cupboard or even half open ones won’t cost you a penny.

Take advantage of free entertainment

Entertainment, along with food and drink is what costs the most when on holiday. If you’re traveling with children try and take advantage of any free entertainment for them at the hotel you’re visiting.

If you’re going on a city break why not research some of the free events and activities to do before you go. Most cities will have iconic landmarks and sites to see.

Keep your currency

Or exchange it back. Almost £1 billion is spent at airports every year by UK holidaymakers looking to ‘get rid’ of their foreign currency.

This might sound like a good way to get last minute gifts for friends and family, or even to treat yourself.

But saving your currency for another break could save you money. Especially if the exchange rate changes and isn’t in your favour.

If the exchange rate does change in your favour then you can always change it back into pounds and use it towards your next trip away.

You might spend up to two weeks on holiday every year. But this doesn’t have to be something you spend the whole year financing.

*On average the UK spends over £11,000 on their newborn baby a year, according to the Money Advice Service. If it's your first child then you might end up spending money on items you think you need, but you might not actually use.

We asked Ruth from Mouthy Money to share a list of her essential buys when it comes to having a baby. *

Finding out you are pregnant brings with it a whole gamut of advice about what you should buy and how much you need for your baby. But, with so many products to choose from, it’s hard to narrow it down, and very easy to go overboard.

When I became pregnant with my second baby, I knew what I would never use. By the time number three was born I’d got rid of the things I knew I wouldn’t need or use and only stuck to the essentials – saving me good money and time (which is so precious when you have a little one). Here are some of the things I could not have done without.

Muslin cloths

I was rarely without a muslin cloth during the first six months of my children’s lives. But, by the time I’d given birth to number three, I had realised that the bigger the muslin, the better.

A large muslin cloth is not just something used to mop up milk, it can be used to create shade, as a lightweight blanket for baby, or coverage for when you need to feed in public.

I found large muslin cloths invaluable. My youngest two children still use them as comforters, aged three and 21 months. You can pick muslin cloths up from many places, but I particularly liked the cloths from Aden and Anais.

Baby Sling

There are a lot out there to choose from so it can be difficult to know what to buy. It’s a good idea to wait until your baby is born so you can see what is comfortable for you both, and definitely try before you buy, if you can!

Many towns and cities have NCT run sling libraries where volunteers can give you advice and help you to decide which is the best fit for you and your baby.

Bouncy chair

The bouncy chair was an absolute life saver when my children were little. I could put them in it and transport them from room to room while I showered, washed up, got dressed.

When you spend most of your time holding your baby, the bouncer can make all the difference. Being able to put them down, even just for two minutes to brush my teeth when my husband wasn’t there, would make a huge difference to my day.

I would recommend a bouncer or rocker which can be adapted from newborn, through to when they start to sit independently. We had a simple bouncer from Chicco but there are plenty out there to choose from.

Baby monitor

Video, movement, breathing – there is a baby monitor out there for absolutely everything. Some monitors can be connected to apps on your phone, others use separate video monitoring units, and you can buy ones with pads that go under the mattress to monitor movement, too.

Choosing a monitor is a very personal thing, but elements to really consider are its reliability, its range and its quality. Read independent reviews from trusted sources such as Which? and consider what particular things you will need help with.
These are just some items I could not have done without, but the list is by no means exhaustive.

It can be easy to go overboard with your first child, but by speaking to other parents you can find out what essentials they would recommend so you feel more prepared for when your baby arrives.

The 2019/20 tax year ends on April 5th 2020.

The end of the financial tax year is a great reason to review your finances and make sure that you’ve taken advantage of all of the tax efficiencies available to you. We’ve listed the top things to consider before the end of the tax year.

Top up your ISA

The 2019/20 personal ISA allowance is £20,000. Any returns made within an ISA are tax efficient and are free of UK income tax and capital gains tax.

If you do not use your allowance, you can’t carry it over to a new tax year. So, if you’ve got savings lying around in your current accounts, it may be worthwhile putting as much savings as you can in a tax efficient ISA.

Don’t have an ISA? Take our financial health check and get personalised Financial Advice from OpenMoney.

Contribute towards your retirement

As with your ISA, it may be worthwhile considering topping up your pension to increase your savings for retirement. When saving in a pension you receive income tax relief, depending on your personal circumstances.

The annual allowance for 2019/20 for pension contributions is £40,000. It’s also worth noting that you can bring forward unused allowances from previous three tax years, as long as you were a member of the pension scheme within those years.

Save for your children

If you have children, it may be a good idea to start saving for when the reach the age of 18. Children who are not yet 18 can open a Junior ISA (JISA) in their name and they can only access when they reach the age of 18.

As with an adult ISA, returns on money made within a Junior ISA are free of UK income tax and capital gains tax. The annual allowance for a JISA in 2019/20 is £4,368.

Use your capital gains tax allowance

Everybody has an annual capital gains tax allowance of £12,000 in the 2019/20 tax year. This means that if you dispose or sell any assets such as property and stocks are shares, you won’t be taxed on the profits if they're below £12,000.

You cannot carry over any unused capital gains tax allowance to the next tax year, so if you are planning to sell your assets, it may be worth considering staggering them over two tax years to take advantage of your allowance.

Reduce your inheritance tax

When gifting money to your family or loved ones after you pass, it’s important to remember that any estate (that includes your home) worth over £325,000 will be taxed at 40% for everything above that amount. So if your estate was worth £400,000, £75,000 of that would be taxed at 40% - that's a staggering £30,000.

One way to combat this is to use your annual exemption allowance of £3,000. This allows you to gift that amount without being liable for inheritance tax in the future.

You can carry over your gifting allowance from a previous tax year if unused, making the maximum amount £6,000. There are other exemptions too, such as no tax on wedding or civil partnership gifts up to £5,000 to your children and £2,500 to your grandchildren.

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That completes our list of things you need to consider before the tax year ends in order to benefit from the tax efficiencies available to you.

Read more about financial wellbeing and money management over on the OpenMoney blog.

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Many people are confident about researching and making decisions about their finances without professional help, but that’s not the case for everyone. We carried out research with YouGov in 2019 and found that 19.8 million people feel they would benefit from free financial advice.

Managing money can be daunting, especially dealing with more complex financial matters like mortgages, investments and pensions. It’s hardly surprising some of us would like a bit of help. But how do you decide when you need guidance and when you need financial advice? And what’s the difference anyway?

Free guidance

There are several organisations offering free financial guidance including the government’s own Money and Pensions Service. They provide free specialist financial information but are not allowed to give a personal recommendation of where to save or invest your money. You are solely responsible for making sure any products you buy based on their information are appropriate for your needs.

Regulated financial advice

Alternatively, a regulated financial adviser will give specific advice around whether investing is right for you now, how much you should invest, and which investments best match your goals. They will manage your investments, meaning you don’t have to worry about them. You also have greater protection as advisers should be authorised and regulated by the Financial Conduct Authority (FCA), however you usually have to pay for regulated advice.

Our research with YouGov found that less than one in ten people had paid for advice in the last two years. Of those who hadn’t, three quarters were unlikely to do so in the future and when asked what would encourage them to do so, the top five changes were “I would need to be convinced it would save me money”, “I would need to be sure I could trust the advice”, “I would need to earn more money”, “I would need to be sure how to pick the right adviser” and “it would need to cost less”.

Adding value

Measuring how much value advice can add is difficult, but for complex products like investments and pensions, which can make a major impact on your future financial position, it can make sense to get help from a qualified adviser. A 2017 study by Royal London found that over the long-term, taking financial advice can add nearly £40,000 to the wealth of those on modest incomes.

While it’s true that some traditional financial advisers will not take on clients with small sums to invest, it’s not always the case. Some can also be pricey,charging an initial fee of anything from £75 to £350 an hour, or up to 5% of the value of the money being invested

At OpenMoney we provide personalised advice, no matter the size of your investment. You can start investing with us from as little as a £1 and our management fee is less than 0.53% of whatever you decide to invest.

We use the right mix of smart technology and qualified human advisers to give our customers personalised advice that’s always in their best interests.

Finding the right advice

Here’s our five-point checklist to choosing the right advice:

1.     Workout what you need: A free financial guidance organisation or comparison site could help you choose home insurance or a new current account and provide useful information about more complex financial products. But you may be better going to a regulated financial adviser for investment and pension planning or a mortgage as these are big decisions which can have a major impact on your future finances.

2.     Decide whether meeting face-to-face is important, or if an adviser who holds meetings by phone or online would work – the latter might be more cost effective and offer greater flexibility outside normal working hours.

3.     Check the adviser’s specialism and qualifications: not all advisers cover all products, so make sure they deal with everything you need, and have at least the minimum qualifications required for the products you want to discuss.

4.     Understand the costs: some advisers don’t display their fees on their website, but even if they do, it’s worth clarifying up front all the fees you’d pay for initial and ongoing advice.

5.     Ask for a free initial consultation: many firms offer meetings to help you decide if you trust their advice and whether they will add value to your finances.

All figures are sourced from The UK Advice Gap: Are consumer needs for advice and guidance being met?

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Millennials are generally classed as those born between the early 1980’s to the mid 1990’s.

Stereotyping any generation is misguided, and while all generations face their fair share of negative press, millennials seem to bear the brunt of the media’s negative headlines, especially around money matters.

They have been accused of wasting their money and spending too much on coffee and avocados[1], while simultaneously getting heat for not spending enough, and killing the napkin, cereal and golf industries to name a few![2] However, the topic of millennials investment habits is not talked about often.

Why should millennials be investing?

Almost half (47%) of those aged 18-24 prefer to put their money into a current account,with only 5% of this age group opting to invest.[3]

With interest rates at record lows for the past few years, current and savings accounts may not be the best option for millennials wanting to grow their cash over the medium to long term.

Investing is a great way to prepare for retirement as products like our Self-Invested Personal Pension offer tax relief (which you can find out more about here) as well as tax protection benefits. Many millennials are wanting to retire sooner, creating movements such as FIRE (financial independence retire early) which originated in the US. Millennials are also being expected to live longer than boomers or gen x-ers, so millennials should be investing at a younger age than previous generations.  ‍

When should millennials invest?

As with all investment the sooner you can invest the better. This is because your investments can generate interest and returns, reinvesting that means you start to make interest on your interest, this is called ‘compound interest’ and can make a huge difference to your investment pot over the long term.  

Where are millennials investing?

Millennials are conscious about where their invested money is going and what it will be supporting. Ethical investing is more popular among millennials than any other generation. If you want to find out more about ethical investments and OpenMoney’s stance on it, you can read this blog here.

For those investing in their property, Help to Buy ISAs are a government initiative investment product, available to first time buyers who are saving to get onto the property ladder. The Help to Buy Scheme has supported over 230,000 property completions since December 2015 and of those using the Help To Buy ISA, 29.9%were aged 19-24 while 69.4% were aged 25-34.[4]

How is millennial investing different?

Millennials grew up in a time where family members may have suffered as a result of the famous market crash in 2008. This means that millennials can be more cautious with their money, it is also clear that education about investment is lacking.

In a piece of research conducted by Barclays[3], 40% of those surveyed claimed that not knowing enough about investing is one of the biggest barriers to investing. This is something we at OpenMoney are addressing, we want to close the advice gap and make financial advice accessible to all.  

1. twentytwowords.com
2. independent.co.uk
3. barclays.co.uk
4. HM Treasury

When it comes to investing, it makes sense to shop around for the most competitive rates so that you can keep more of your potential returns, but it can be tricky to do so when not all providers are upfront with the costs involved in the management of your portfolio. A recent study by The Lang Cat[1] states that only 54% of investors are aware of what they are being charged for their Stocks and Shares ISA.

According to The Telegraph[2], investors could be paying fees up to six times higher than advertised rates, so are you aware of what are you paying for?

Exit Fees

We’re seeing an increase in investment platforms abolishing their exit fees which is shaking up the way the industry has operated for many years. As things stand, when looking to transfer your investment to another platform, your current provider can charge an (often sizeable) exit fee. This can often deter from a switch regardless of how competitive rates are and ultimately causes investors to miss out on the best rates available. As we offer financial advice here at OpenMoney, we have found ourselves in situations where we have advised customers against transferring to our products purely because the exit fees charged by their current provider would make transferring a more costly option, which is the last thing we want!

The OCF

The standard charge that comes with investing is the Ongoing Charge Figure(OCF) - here at OpenMoney we combine the OCF and Transaction Fees to give you our ‘Overall Portfolio Charge’. You should be made aware of from the offset. The OCF is made up of the fund manager’s fees for running your portfolio as well as admin and marketing costs. This fee will usually be presented in percentage format to represent how much of your investment is taken by running costs. It’s worth noting that although this fee is transparent as standard, it does not include others that could really ramp up the cost of your portfolio.

Transaction Costs

No two funds are the same and so you can expect that some providers will charge more in what’s called ‘transaction costs’ since they are buying and selling stocks more frequently than others, in order to make the most of the market in all states. It’s not necessarily a bad thing as long as you know what you’re paying for and why, and as long as you’re happy with the level of risk being taken with your investment.

Trading fees, commissions & stamp duty

You will need to pay Stamp Duty Reserve Tax (SDRT) on any electronic, paperless share transactions. The amount of SDRT you pay is worked out at a flat rate of 0.5%[3]based on what you give for the shares, rather than what the shares are worth.

So, if it’s a cash transaction, the amount of SDRT is based on the amount of cash you pay. For example, if you buy shares for £1000, you’ll pay £5 SDRT whatever the value of the shares themselves. If you give something else of value, the SDRT is based on the value of what you give.

[1] The Lang Cat – Can’t get there from here

[2] The Telegraph

[3] Gov.co.uk

Love, respect and kindness are just a few of the values I hope we have instilled in our children. Despite spending most of our time feeling like we are winging it, my husband and I like to think we are bringing up well-rounded individuals who know right from wrong, and treat others the way they would like to be treated.

Value is a word with many connotations which has morphed, in our household, from emotional, to practical, to tangible, and everything in between, over the past six years.

While we have tried to teach our children about value, whether that be looking after their favourite toy or cherishing kind words or acts bestowed upon them, teaching them the value of money is a whole different ball game.

My eldest son is now six and is becoming aware that in order for us as a family to have the things we need, or would like, money has to be earned.

The phrase pocket money has been bandied about over the past few weeks so a discussion about how he will earn it has taken place more than once.

But how does our view on teaching children about the importance of value and money tally with the rest of the UK?

According to a report from AXA Investment Managers, British children under the age of 16 are becoming increasingly savvy when it comes to finances.

Kids, aged between eight and 15, claimed they were actively tracking how much they saved a year, but less than half of those interviewed said they had learned how to manage money at school. More than half of the people involved in the study said they received pocket money regularly, giving an average weekly income of £12.76, or £663.52 a year.

Moves have also been made to arm thousands of schoolchildren with essential money skills. Last year, 16 of Britain’s leading savings and investment firms, brought together by TISA (the Tax Incentivised Savings Association), launched Kickstart Money, a collaborative project which aims to take financial education to nearly 18,000 primary school children in a bid to build a national savings culture for the future.

The project received £80,000 funding from the Money Advice Service (MAS) whose research found that behavioural attitudes to money are formed by the age of seven, and that a lot of teachers and parents lacked the confidence to equip young people with money managing skills.

For us, consistency and fairness when dishing out pocket money to our children will be key. We will give them the choice of doing extra chores to earn a bit more, allow them to make mistakes if they decide to splurge their cash, and show them ways to invest their money and watch it grow. The money will be theirs to save or spend as they see fit, but we hope that giving them autonomy over their own cash will teach them a valuable lesson.

Following our press briefing in London, we’re excited to be releasing our report with YouGov on the UK financial advice gap.

We found that 19.8 million people* across the UK would appreciate a bit of financial advice. But not everyone knows how to get it or that it’s even an option for them.

We speak to customers every day about their financial situations, and we’re all too aware of the financial advice gap across the UK.

When we launched OpenMoney we made it our missions to make financial advice available for everyone. Which is why we wanted to undergo this research to get a better understanding of the advice gap issue in our country.

Our advisers talk to people aged 18 to 75 and it’s usually the first time they’ve tried to get advice.

There are a few reasons for this.

Some people thought it was too expensive, whilst others felt they would be overlooked by advisers as they had a relatively small amount to invest.

There’s a belief that traditional face-to-face financial advice is only accessible to those who have already got a large amount to invest, typically those who are approaching or at retirement.

In 2015, Citizens Advice conducted some research around the advice gap and identified four different types.

1. The affordable advice gap affects consumers who are willing to pay for advice but think it is too expensive.
2. The free advice gap affects people who want advice but are unable to pay for it and are unaware of, or unable to access, free services.
3. The awareness and referral gap affects people who do not know where to get advice.
4. The preventative advice gap affects those for whom non-money issues can impact their financial position.

We decided to build on this research to understand to what extend these gaps still exist and if the availability of advice services has improved in the past four years.

Download the report

You can download the report here.

*Where figures like this are shown, OpenMoney has extrapolated the YouGov findings from our sample to represent GB population estimate of 50,644,094 (source ONS, June 2018).

• What is a financial adviser?
• What are they really doing for you?
• What do they charge?
• Are they worth the money?
• And do you really need one anyway?

A financial adviser is someone who can help you achieve your financial goals.

They can create a financial plan for you, based on your circumstances; taking into account what you want to achieve and how much risk you’re willing to take.

Their plan will lay out what you could do to help achieve your financial goals, whatever they may be. An adviser should let you know if your goals are realistic for how much risk you’re willing to take.

They should then monitor your savings and investments to make sure they are still suitable for you, and regularly review your goals and progress.

But for that they will typically charge you 2.5% (according to a study by Grant Thornton, Aug 2016) of all the money you have invested - every year.

What are you paying them for?

2.5% annually might not sound like much, but it can quickly add up. For this fee someone putting away £200 a month for 20 years could pay charges of more than £15,000 during the life of their investment.

So, if you’re thinking of investing, the big question you need to ask yourself is, ‘are traditional financial advisers really worth the money’?

A traditional financial adviser may tell you that their expertise and experience will help to ensure you don’t end up investing in an unsuitable product or one that gives poor returns. And it’s true that some advisers can help you access investment opportunities that aren’t readily available to the general public.

It’s also true that investing with a financial adviser means that you could be protected if things go wrong – as long as your adviser is approved by the Financial Conduct Authority (FCA), the body that regulates financial services firms in the UK.

But the reality is that consumers are paying fees of at least £1bn a year to financial advisers for investments that don't perform any better than far cheaper alternatives.

Some of the time, advisers just put an investor’s cash into passive investment funds, which simply benefit from the natural growth of the stock market and require absolutely no effort or active management on their part!

That said, investing with no advice means you run the risk of making the wrong investments, which could cost you a lot of money in the long run.

Thankfully, there is a third way.

Best of both worlds

At OpenMoney, our team of qualified financial advisers have designed an advice platform which uses algorithms to create personal recommendations for our customers.

By supplying some straightforward facts about yourself, including things like your goals, your earnings, your assets and your attitude to risk, we can build an accurate profile of you and provide you with a personal recommendation, which will let you know which of our products and funds are suitable for you.

We’ll always be honest with you – if we think you could be better off paying off your credit card or loans, we’ll tell you.

Even if that means you don’t invest with us.

Our use of algorithms helps keep our costs down, so you will never be charged more than 0.5 per cent every year – which could save you many thousands of pounds over the lifetime of an investment.

But, crucially, we always have human expertise on hand to answer your questions and guide you along your investment journey.

With a traditional financial adviser you’ll be lucky to see them once or twice a year, but at OpenMoney you can book as many phone or Skype appointments as you like with our advisers at no extra cost and at a time convenient for you.

And we are authorised and regulated by the FCA too, so you can feel confident that we are treating our customers fairly.

To see if investing is right for you just answer a few questions on our website.

It can be easy to assume that the older we get the better we get at managing our finances.

There may be some truth to this as research we conducted with YouGov earlier this year found that 44% of 25-34 year olds are more likely to have a short-term outlook on their finances, compared to 24% over 55.

In fact, 30% of over 55’s say that they plan a year or more in advance.

Confidence in managing money also seems to improve with age, with 92% over 55s agreeing they know what they’re doing, but only 68% of 18-24 year old’s.

Is it just a millennial issue?

It could be easy to say that the reason younger generations are ‘bad with money’ is because they spend too much on brunch, coffee and frivolous things as they follow trends – at least that’s what the media would have you believe.

In reality, there are many reasons why younger generations are finding it tough to stay on top of their money.

36% of 25-34 year old’s blame unexpected bills or one-off costs for their financial difficulties, and 24% say that their income didn’t meet the essential costs of living.

While we would like to imagine that our income will go up as we get older, and our household debt will reduce, this is not always the case.

Those aged 35 to 44 are more likely (56%) than any other age group to struggle to keep up with their household bills and credit commitments, compared to 39% of all ages.

Three quarters (76%) of 35-44 year olds also had outstanding debt, compared to an average of 56%, with the most common being mortgages (46%), credit cards (40%), authorised overdrafts (19%), student loans (16%) and unsecured personal loans (15%).

You could put this down to the extra responsibilities often associated with this age group, such as buying a house and managing a young family.

Our CEO, Anthony Morrow said, “those in the middle age group are more likely to be facing the financial pressures of creating their own home and starting a family, while still paying off outstanding student loans.

“While providing financial education in schools is an important objective, offering support and advice around good financial management and planning to adults seems just as crucial to improving the wealth of the nation as a whole.”

Let’s break the cycle

You’ve probably heard the saying ‘money makes the world go round,’ and although this isn’t true scientifically of course, money undoubtedly has a huge influence over our lives.

Money management and planning is a skill that everyone would find useful, no matter age, gender or income. And it shouldn’t be something we only think about when the going gets tough, or major life events take place.

There are financial cycles we fall into. These are cycles that need to be broken to improve the nation’s wealth.

There is help out there, but 25-34 year old’s are more likely to use money from savings to resolve financial difficulties, lean on family and friends (40%) or take out a loan (21%), than seek financial advice from a specialist (4%).

But why are UK adults less inclined to reach out to financial experts?

The answer may be within what the industry calls the ‘advice gap’. Many people across the UK fall into this advice gap, people who are unable to or unaware they can access help with their money.

In fact, 19.8 million (39% of our sample) want advice but are unable to pay for it and/or are unaware of or unable to access affordable services.

That’s why our co-founders Anthony and Duncan created OpenMoney. To make financial advice accessible and affordable to those who need it.

You can download our report on the advice gap to get the full picture.

Deciding to get any pet is a big commitment, even if they’re small. With this commitment can come a lot of added weekly costs and monthly bills, which can catch you by surprise if you’re not prepared.

The UK is full of pet lovers with 49% of UK adults owning one and 24% of the population having a dog. So we asked the dog owners of OpenMoney to share what the real cost of having a dog is.

Vet bills and vaccinations

What medication, vaccination and medical procedures your dog needs will depend on a multiple of things including their age, breed and what they’ve already had done.

There is no way of knowing what medical issues your dog may have as it gets older so it’s important to factor in for this.

Some vets may offer a monthly subscription fee and in return you may get worming, vaccination top ups and other services as part of the package. This could save you money in the long run and it also gives you peace of mind when it comes to taking care of your dog’s wellbeing.

Microchipping

It is now a legal requirement to have your dog microchipped. It can cost between £15 to £20. But if you don’t do this you could be fined up to £500!

Food

How much you spend on food and treats for your dog will completely depend on how big your dog is and what type of food you want to buy.

Pet food can be tinned or fresh and wet or dry, and there are a variety of options on the market. You can pick up a basic 1KG bag of dry food for just under £3 at Pet’s at Home, or a 4KG bag of luxury dry food for nearly £60!

What type of treats you give your dog is up to you but this is another added cost you will need to think about.

Insurance

It’s always important to get insurance for any pet you get. It might not seem like a priority when your dog is a puppy but you never know what is going to happen.

Insurance could help you cover costs if your dog is involved in an accident, needs intensive medical care or ends up developing a chronic illness when it gets older.

When it comes to picking your pet insurance make sure you think about your dog’s needs. The cheapest option may not be the best. Check what your pet insurance will cover and make sure that it suits your breed of dog.

Toys

Some dogs love to play whilst others prefer to sleep. It might not seem like an important expense but buying your dog toys will hopefully keep them busy and away from your furniture.

But be warned, some dogs can go through toys very quickly, whether that be breaking a ball or squeaky toy.

Even the toughest of toys are no match for some dogs, so expensive high-quality toys aren’t always best. Some dogs might just want a cheap tennis ball to keep them entertained.

Obedience and daycare

Sadly not all dogs are quick to learn tricks or to be house trained so you might want to enroll them into obedience school.

The Dog’s Trust offer courses for £55 but prices can vary.

If you work during the day you might not want to leave your dog at home alone, so daycare or paying for a dog walker may be something you need to think about.

Luxuries

It is completely up to you how much you spend on luxury items for your dog. You might decide to keep it simple with a new bed or dog house every few years. Or you might go all out and treat them to new collars, grooming and pamper sessions. No matter what you treat your dog to, it will add to your extra monthly and yearly outgoings.

Whether you’re wanting to pamper your dog daily or just treat them every now and again there are a lot of costs to think about before getting any pet!

If you’re not sure if you can afford a dog right now, then it might be best to hold off and wait till you can give them everything they need for a happy, healthy life.

There is no shortage of investment companies willing to look after your money (my social media and weekend papers are full of adverts promoting the different services) and reviewing all financial affairs is always good sense.

What is worrying is the growing use of incentives by these companies to get you to choose them and transfer your money for them to look after. I have seen everything from cashback offers, a heap of airmiles to even cases of wine!

Everyone loves something for free but when it comes to money and investments then I believe that these offers are really irresponsible. The decisions you make with your money have long-reaching effect and the wrong decision today could lead to problems in the future.

Here are a few of things to think about when you’re looking to switch your investment company.

What’s the true cost of that ‘free’ gift?

The phrase “there is no such thing as a free lunch” is absolutely spot on here. Any gift you receive is paid from the fees you will pay.

Not only that, but it could end up costing you a lot more if the new providers fees are higher than what you’re currently paying – is that case of wine really worth thousands of pounds in fees over the life of your investment?

Is it the right thing for your financial goals?

Whilst cost is a really important point when considering these offers, it is absolutely essential that you consider whether it is the right thing to do for your personal situation.

You could easily end up transferring your money into a product that’s not suitable for you.

Most of these firms make their money by investing yours, but they won’t tell you whether transferring your hard-earned money is the right thing to do for your financial circumstances. The risk involved in this decision still lies with the customer.

It’s not always easy to say if transferring is the right thing for your investments in the long run, but it is definitely easier to say that making those decisions based on the free gifts on offer isn’t sensible.

Unfortunately, there are too many examples in financial services where poor decisions, often as a result of unscrupulous investments promoting false hope, have led people to lose money or even their life savings. Not only can they ruin your finances but by their nature, these circumstances are incredibly emotional.

We offer free transfer reviews, which means we will tell you whether or not it’s in your best interest to transfer your investments to us. And if it isn’t, we’ll tell you honestly.

Financial advice doesn’t have to be expensive and having someone else look over your situation could give you piece of mind when it comes to your money. No gimmicks. No bribes. Just financial advice.

What is tax relief?

Tax relief is a government scheme designed to help you plan and save for your retirement.

Depending on the type of pension, tax relief can be a reimbursement of the tax already paid on a pension contribution or it can be the ability to put away for your pension straight out of your wage, before paying any tax.

Tax relief is one of the key benefits of investing in a private Pension such as our Self-Invested Personal Pension (SIPP) but often it can be confusing. I’ve answered some of the key questions we get asked about tax relief and how it works…

How does tax relief work?

Tax relief on employer pensions

For most employer pensions, you will receive a form of tax relief known as tax relief ‘at source’.

The government allows your Pension contributions into an employee Pension to be made before any tax is deducted from your pay packet. Given employer Pension contributions are a percentage of your wage, the amount you contribute is larger than it would be had you already been taxed!

Tax relief on private pensions

Tax relief on a private Pension acts as a top-up to your Pension pot – it essentially reimburses the tax you have already paid on the contributions you make. How much you’ll receive depends on your tax bracket.

Basic-rate tax payers, and those who don’t pay tax, will earn 20% tax relief. Higher-rate tax payers earn 40%.

So, for example, a basic-rate tax payer will have been taxed £20 on every £100 they earn, leaving them with £80 after tax. If they then contribute this £80 to a pension, they will receive £20 tax relief, giving them back the tax they paid on that £100.

Higher-rate tax payers paid 40% tax on their £100, and so receive £40 back for every £60 they contribute to a pension.

For additional-rate income tax payers, who earn more than £150,000 a year, tax relief is 45%, so they get £88.81 for every £100 they pay into their Pension. There are other rules that apply for additional-rate payers depending on specific circumstances.

How can I claim tax relief?

For tax relief at source into an employee pension, you don’t need to do anything to claim tax relief regardless of your tax rate.

Similarly, if you’re contributing to a private Pension such as a Self-Invested Personal Pension (SIPP) and you’re a basic-rate tax payer, you shouldn’t need to do anything to receive your top-up of tax relief – it gets automatically added to your Pension pot.

However, if you’re a higher or additional-rate tax payer, you may have to fill out a tax return to receive tax relief on a private Pension.

What about claiming back tax relief on Pension contributions from previous years?

If you’re a higher or additional rate tax payer and you didn’t claim tax relief on past contributions, there may be something you can do.

The government allows you to claim back tax relief you missed within four years of the end of the tax year you are claiming for. This can be done through a tax return.

Is there a limit to how much I can claim tax relief on?

There is an annual limit on the amount of money that you can pay into a pension and earn tax relief on.

The limit is currently 100% of your earnings up to a maximum of £40,000 a year, and a lifetime limit of £1 million.

If you earn £3,600 or less, the limit is £2,880 (excluding the tax relief you receive).

You will have to pay income tax on any payments into your pension that are over these limits.

Tax relief can make a huge difference to your retirement income and it’s important to be aware of what relief you can claim, so you make the most of what’s available to you for free!

If you’re considering investing into a private Pension and you want to know how and what’s best for you, you can try out our online journey and we’ll give you a personalised recommendation to suit your goals.

• The UK tax system includes breaks for savers and investors.
• This tax relief amounts to free money.
• Make the most of all the savings available.

There’s no such thing as a free lunch, or so they say, but there are ways that savers and investors can enjoy government tax breaks that amount to free money.

We aren’t talking about shady tax avoidance deals, these are incentives that the government has included in the tax system to encourage people to save and invest for the future.

These incentives are known as tax relief.

Paying money into a pension

You can make the most of tax relief when planning for your retirement.

Every time you pay into a personal pension, you get money back from the government in recognition of the tax you’ve already paid on those earnings. How much tax relief you get depends on how much you earn. Think of it as a reward for planning ahead and saving for your future.

For basic-rate income tax payers – that’s anyone who earns between £11,501 and £45,000 every year - the level of tax relief is 20%.

That means that if you put £100 into a pension, the government will give you £25 back as tax relief.

Higher-rate income tax payers, who earn between £45,001 and £150,000 a year, get tax relief at 40%, so get £66.66 from the government for every £100 they pay into their pension.

And additional-rate income tax payers, who earn more than £150,000 a year, get tax relief at 45%, so get £88.81 for every £100 they pay into their pension. There are other rules that apply here depending on specific circumstances.

That’s free money, straight into your pension pot, and you don’t have to make any special arrangements – depending on how much tax you pay and the type of pension you have, your pension company will automatically claim the basic level tax relief of 20%, back from the government for you. However, if you are a higher or additional rate tax payer, you will need to claim your additional tax back from the government yourself.

Either way, it’s free money in your pocket, so it makes sense to take full advantage.

There is an annual limit on the amount of money that you can pay into a pension and earn tax relief on, which is currently 100% of your earnings up to a maximum of £40,000 a year, and a lifetime limit of £1 million. You will have to pay income tax on any payments into your pension that are over these limits.

Before you contribute to a personal pension, it’s important to check whether you can get free money through your workplace pension!

The minimum employer contribution to a workplace pension is currently 3%, however, some employers may offer to match more than the minimum. It could be worth your while to check whether your employer will match additional workplace pension contributions you make.

Getting money out of a pension

Once you retire, you will have to pay tax when getting money out of your pension.

Your state pension, workplace pension, personal pension and any other money you have coming in during your retirement, (for example from investments or a property you own) all count as income, so you have to pay 20% income tax on any payments you get that are over your £11,500 personal allowance. However, there are still ways you can take advantage of tax relief on this money.

If you have a personal or workplace pension, when you retire you can take 25% of your pension pot as a one-off lump sum without paying any tax on it – and it doesn’t count towards your £11,500 personal allowance.

So, for example, if you are a basic rate taxpayer who has contributed £100,000 into your pension pot, you will have received £25,000 tax relief, leaving you with a £125,000 pot.

Once you retire, you can then take £31,250 of that pension pot as a tax free lump sum!

As a basic rate tax payer, the remainders of the pot would be taxed at 20% as and when you take it out. So, if you are thinking of taking any portion of your pension as a lump sum, or a few big payments, it’s always worth taking advice to make sure that you are doing it in the most tax efficient way as you could end up paying more tax than you have to.

Saving with an ISA

An ISA or ‘Individual Savings Account’, is a way to save or invest that is tax free. There are two main types of ISA: Cash ISAs and Stocks and Shares ISAs.

A Cash ISA is essentially the same as putting your money in a bank or building society account, except that any interest earned is protected from the taxman.

A Stocks and Shares ISA, like the one offered by OpenMoney, means your money is invested in assets such as shares in companies and investment funds. Any income or capital gains from investments, including dividends, is sheltered from the taxman. The potential returns from a Stocks and Shares ISA can be much higher than with cash ISAs – research by Moneyfacts found that the average return during 2017 was 11.75%, compared to the 2.15% that the best cash ISA currently pays.

You can pay money into one of each kind of ISA each tax year, up to a total £20,000. The tax year runs from 6th April to 5th April the following year. So, if you haven’t already, you could still use this year’s ISA allowance.

A big benefit of ISAs is that they offer tax breaks but are still very flexible and usually don’t tie your money up for long periods of time. You can switch providers at any time and you can transfer your money from one type of ISA to another, all without losing any tax benefits.

But bear in mind that often, when trying to achieve higher returns you may end up taking more risk, and the value of a stocks and shares ISA could go down as well as up.

If you’re thinking about using this year’s ISA allowance before it’s too late, our online financial advice platform assesses your appetite for risk and capacity for loss to help work out what kind of investment will suit your circumstances best.

You can also book a free appointment with one of our Financial Advisers who are always on hand to help.

Whether you’re making the most of free money through saving or investing, planning for the future shouldn’t be too taxing!

• More people than ever now have one pension pot.
• Consolidating them into one pot can have many advantages.
• We explain why and how it works.

Some interesting research was released recently, which found almost two thirds (64%) of Brits now have more than one pension pot.[1]

And the introduction of automatic enrollment on workplace pensions means this figure is likely to grow.

Whether you have pensions worth £1,000 or £100,000, we can review your current pensions and tell you honestly whether you’re better off consolidating and transferring to us, or staying where you are.

That’s a service that a traditional financial adviser could charge hundreds or even thousands of pounds for, but which we offer for free.

Here, OpenMoney financial advisors Hayley and Will explain why you might want to consolidate your pensions, and what the process is.

Advantages

There are a few strong reasons why consolidating could be right for you.

Hayley Millhouse, our Head of Advisory Services, said: “Probably the biggest advantage is that some pensions have better investment options than others, so your pot can grow bigger and you can have more money when you retire.

“Every pension provider also charges fees, so consolidation can be cheaper - because you only have one pension pot, you only pay one set of fees.

“The amount of fees you pay can be one of the biggest factors affecting the long-term growth of your pension.

“With modern pension providers, you can also track the value of your pot online and see how it is performing at any time.

“And pensions taken out many years ago may no longer be suitable for your circumstances now, so consolidation is an opportunity to get advice and make sure yours suits your current goals and the level of risk you want to take.”

Disadvantages

It’s worth mentioning that consolidation might not always be in your best interest.

Will Lenehan, one of OpenMoney's financial advisers, said: “If you’re lucky enough to have a pension that will pay you a guaranteed income, you may be worse off if you move your money elsewhere, so we wouldn’t recommend that.

“We’d also always advise you to stick with your current workplace pension, as your employer pays in to that too, and you’d miss out on their contribution if you opt out.

“High exit fees might also be a reason not to move money out of a pension scheme, and it could be that your current arrangements are already well suited to your retirement ambitions and provide good value for money, so there’s no great advantage in switching.”

But, if you do decide to look into consolidating your pensions, what happens next?

How it works

Hayley said: “First you need to go through your drawers and find your most recent pension statements.

“HMRC has a really useful free service that can help you track down any pensions you may have forgotten.”

With your permission, we can then contact all your pension providers to get the details of your current schemes.

Will said: “We use that information to write you a personal report that clearly explains if we think consolidating your pensions with us would be in your best interests, as well as any potential drawbacks you should be aware of.

“It gives an overview of your current arrangements, and the investments we’d recommend instead, based on the information you’ve given us about your personal circumstances and your appetite for risk."

“We’ll include a like-for-like comparison of the fees charged by your current plans versus OpenMoney, so you can see which is the cheapest option.”

The report also considers any extra services your current pension providers may offer, like advice. With OpenMoney you get free advice, but most pensions just offer guidance, which means they lay out your options, but don’t make a recommendation.

The next step

Hayley said: “There’s a lot of work involved, so once we have all the information from your current providers, it takes us about a week to create every report. Our review service is free and we’ll only recommend a transfer if we’re absolutely confident it’s in your best interest.

“Then it’s completely up to you what you choose to do next.”

We know that consolidating your pensions can appear complicated and intimidating, which is why we’re trying to make the process as simple as we can.

And the benefits can ultimately mean that you have a pension that gives you peace of mind and the retirement you’ve always saved for.

• It’s never too early to start saving for your retirement – the sooner the better.
• How much you need in retirement depends on the lifestyle you want to live.
• We explore how much you might need for your golden years.

Long story short - there is no set amount of money you need to retire. Many factors contribute towards how much you’ll need to live comfortably in later life but having a plan from early on can help reduce stress and money worries later down the line.

In this blog, we’re going to look at what you might need to do to prepare for the life you want to lead after you retire and explore how every situation is different.

When do you want to retire?

Data published by the DWP (Department for Work and Pensions)[1] tells us that the average retirement age in the UK for men and women is 65 and 63 respectively. However, the age you decide retire is down to personal choice.

If you have enough money to tide you over until you can access your SIPP at 55 or State Pension at 65 (increasing to 68 years old by 2039), then you can technically retire at whatever age you decide to. Although, just because you can, doesn’t mean that you should.

Planning when to retire is a balancing act between when you want to retire and how much you can comfortably afford to save for your retirement. If you want to give yourself extra time to save or reduce your monthly contribution to take the pressure off, you could choose to move back your retirement date.

How much will I need for my retirement?

How much you need in retirement depends on the lifestyle you want to live.

Keeping up the same lifestyle as you have when you’re fully employed might seem a little farfetched, but it may be achievable if you plan ahead. Your outgoings are likely to go down quite a bit. You may have paid off your mortgage, have no dependants and cut down on work-related costs like commuting, lunches or your morning coffee.

According to consumer group Which?[2], a couple who are retired would need a household income of £26,000 per year to cover basic living expenses, such as groceries, utility costs, European travel and more. However, if you plan to live a more luxurious lifestyle with comforts like a new car every 5 years or an annual long-haul holiday, you’d be looking at a yearly household income of £39,000.

How much are you able to save before retirement age?

You can decide when you want to retire and how much money you’d like to save for your retirement, but ultimately, how much you have comes down to how much you’re able to save.

It’s a good idea to think about how much you can save each month now and think about how much you may be able to save in the future. It won’t be concrete, but you to give yourself an idea of what could be achievable for you – rather than bury your head in the sand!

Calculated by research company CLSA [3], people who put £2500 per year into a pension from the age of 21 and 30 years of age (10 years) and then leave their pension pot untouched until they reach 70 will have a bigger pension pot than those who begin saving £2500 into their pension each year at 31 and carry on contributing the same amount until 70 years old (40 years) – all because of compound interest. No wonder Albert Einstein called it “the 8th wonder of the world”!

It’s not just how much you can save, it’s more about how soon you start saving into a pension.

How to get more from your pension

That’s what we all want to do – make our pension go further. There are couple of ways you can do this.

1. Get free money from the tax man Every time you pay into a personal pension like our Self-Invested Personal Pension (SIPP), you get money back from the government in recognition of the tax you’ve already paid on those earnings. How much tax relief you get depends on how much you earn. That’s free money, straight into your pension pot!
2. Combine and conquer If you've worked for various employers over the course of your career, you’ve probably have several different pension pots. Consolidating them all into one place could help you better manage monitor and manage your money, and it could also help to reduce the charges you pay.
   Rather than paying various fees for different pots, your whole pension pot can be managed by one low cost provider, like us – a win-win! If you’re not sure whether you’d benefit from consolidating your pensions, we can also review your pots for free and tell you whether it’s in your best interest to transfer them to us.

• Statistics show a worrying gender pension gap that could leave women struggling in retirement.
• Women have significantly less pensions savings than men - £32,950 on average compared with £54,409 for men*.
• Women leave it a lot later in life to begin saving – 21 is the median age for men but it’s 29 for women.

The pay gap is a hot political issue, one which is often in the headlines following releases of pay information from organisations like the BBC and the Bank of England.

While there is still a long way to go before men and women are paid equally, the long-term trend seems to be heading in the right direction. The median UK gender pay gap has almost halved since the government began collecting data on it in 1997 and it now stands at 9.1%*.

But there is another important area where women are less well off than their male counterparts - saving for their retirement.

According to YouGov figures from August last year, men have a lot more money held in pensions, with the average male pension pot reaching £53,409 compared with just £32,950 for women.

That’s the mean average, at least. The median (imagine everyone lined up in order of how much they have saved and looking at the person right in the middle) reveals a much more startling difference. Half of men have more than £37,000 invested in a pension, while half of women have less than £17,000.

While much of this disparity can be explained by men’s higher earnings, the statistics reveal another worrying difference – women tend to leave it significantly later in life to begin paying into a pension.

Again, according to YouGov, the median age at which men start saving for retirement is 21, while for women it is 29. That means that millions of women are leaving it very late in life to begin putting away any pension savings at all, risking significant financial challenges as they grow older.

Never too soon

When it comes to building up a pension, the sooner you start, the better. This is just as true and arguably even more important for those with more modest incomes, as it is much easier to build a large saving by putting away smaller amounts over a long period of time.

Of course, it’s vital to choose an investment strategy that is right for your circumstances, and pensions are a long-term saving that must be balanced against short and medium-term financial goals. At OpenMoney, we always take your specific circumstances into account before making any recommendations.

It’s also important to regularly review your contributions to ensure they reflect your circumstances as they change. For many people, income tends to increase as they progress in their career, and it’s important that pension contributions grow alongside this. Checking in every 12 months will ensure you don’t neglect your fund and that it keeps growing at the right rate for you.

There is clearly an awareness-raising job to do in encouraging young people, and especially young women, to think carefully about saving for their future. If the gender pension gap doesn’t begin to close, we risk a generation of women reaching retirement age without the financial support they need.

*According to a YouGov poll of 2207 adults conducted in August 2007. The results figures have been weighted and are representative of all GB adults (aged 18+).

• Consumer debt is a growing worry.
• Don’t ignore it – it won’t go away!
• There are five simple ways you can take control.

Statistics about consumer debt are always popping up in the media and with over £1.5 trillion owed by individuals in the UK as of last year there’s no wonder it’s a talking point.[1a]

Cconsumer credit is up to £207 billion as of December 2017, with research suggesting per household this is £2,567 of credit card debt. [1b]

But the easy availability of products like credit cards, with low minimum repayments but high credit limits, make it all too easy to become trapped in cycle of debt.

A shocking 276 people are declared insolvent or bankrupt every day. [1c] So it’s never too early to reassess our attitude towards debt.

Borrowing money isn’t necessarily a bad thing, but if you find yourself borrowing to pay your monthly bills – and that includes using your credit card or dipping in to your overdraft – that’s not going to be sustainable in the long run.

So how can you burst out of the debt bubble?

Don’t be complacent or bury your head in the sand - persistent debt can be hard to move on from, but the earlier you address the situation, the less painful it will be.

Here are five rules to live by that can help you take control of your debt:

1. Borrowing and bills.

We believe you shouldn’t borrow money to buy something that doesn’t last as long as it takes to pay for. So, borrowing to buy a new kitchen could work well, but try not to take on debt to pay this month’s gas bill, which should usually be covered by your income.

2. More than the minimum

If you really are serious about getting out of debt, you should really try to pay more than just the minimum amount needed on your credit or store card every month, even if it’s just by small amount. Pay as much as you can realistically afford.

3. It’s best to budget

Set yourself a budget by analysing all your outgoings to make sure you are living within your means. If you are getting into debt because you’re spending more than you’re earning, it’s time to reduce your costs.

Maybe take a packed lunch to work, or make your own coffee? Our free OpenMoney app can really help you stick to your budget.

4. Don’t act on impulse

If you have money in your pocket, it can be all too easy to give in to temptation and overspend, but you should always try to plan your purchases and compare prices online to make sure you get the best deal, especially on big ticket items like appliances or furniture.

5. No excuses

If you’re going to get serious about getting out of debt, it’s going to take discipline. A few months of denying yourself some small pleasures will all seem worth it when you can enjoy the peace of mind of being debt free.

Good luck!

If you’ve ever considered saving your money for the future - whether that be for a house, wedding or a car - you’ve probably heard the term ‘ISA’. ISA stands for ‘Individual Savings Account’ and is exactly what it says on the tin – a financial product designed to help individuals save.

Before opening an ISA, it’s important to understand what they are and how they can affect your financial situation. Continue reading our blog to find out the answers to questions like; how many ISAs you can have, what are the benefits of an ISA are, and what types of ISA there are.

How do ISAs work?

 ISAs are like savings accounts but come with additional benefits like tax allowances and bonuses, depending on the type of ISA you open. For example, Lifetime ISAs (LISAs) give individuals a 25% bonus on contributions made up to the value of £1,000, but they can only be used towards a first house or retirement.

The main benefit of an ISA product is the annual tax allowance you receive when saving. Any interest or gains made in an ISA is not subject to taxation, meaning you get to keep any money you make as long as you stay within your allowance.

ISA Allowances

 Each individual has an ISA allowance of £20,000 in the 2019/20 tax year. This means between your ISAs, you can’t deposit more than £20,000 in a tax year. However, you are able to split your allowance between different types of ISA. This means you could deposit half in a Cash ISA and half in a Stocks & Shares ISA, but you couldn’t split the money between two Stocks & Shares ISAs.

For a Junior ISA (JISA), the allowance is lower at £4,368. This does not affect your personal ISA allowance of £20,000 as the product is held against a child’s name.

How many ISAs can you have?

You can open and contribute to more than one type of ISA in each tax year, but you’re not able to contribute to another ISA of the same type (confusing, we know). So, if you contributed to a cash ISA in 2019/20, you couldn’t contribute to another until 2020/21 tax year, but you could contribute to a stocks & shares ISA in 2019/20.

JISAs are held against a child’s name which means you can also contribute to that without affecting your allowance, but that money is only accessible by the child once they reach 18.

What are the different types of ISA?

Cash ISA

Cash ISAs are often offered by bank and building societies. They are similar to normal savings accounts and offer a fixed rate of return on your contributions.

Cash ISAs can be good for short-term savings as they come at no risk. However, be careful of which type of Cash ISA you choose as some may have charges for withdrawing. For Instant Access ISAs, there should be no penalty, however for Fixed Rate ISAs you may face some penalty if you withdraw before the set period.

Stocks & Shares ISA

With a Stocks & Shares ISA your money is invested in company shares, investment funds and sometimes cash. They are riskier than Cash ISAs as you could get back less than you invested, but they do have the potential to have higher returns.

Stocks & Shares ISA are more suited to long term goals as you’re able to balance out the ups and downs of the stock market over time.

If you invest with OpenMoney, you’d be investing in a Stocks & Shares ISA. Find out more here.

Lifetime ISA (LISA)

Lifetime ISAs were introduced in April 2017 so are relatively new in the world of ISAs. Lifetime ISAs are a little different to cash and stocks ISAs as they’re designed to help first time home buyers and those wishing to save for retirement.

A LISA can be either a cash or stocks and shares ISA and can be opened by people ages 18 to 40. The limit for a LISA is lower at £4,000 but the government add a 25% bonus to any contributions up to the value of £1,000.

The bonus must be used against your first home or can only be accessed when you’re 60. If you use the money for anything else, you will be charged and are likely to get less money back than you put in.

Junior ISA (JISA)

Junior ISAs are designed to let parents invest for a child below the age of 18. The limit is £4,368 per child for the current tax year.

As with a LISA, a JISA can be cash or stocks and shares, with any interest paid tax-free.

JISAs are a great way to save long-term for your children, but parents and adults should be aware that the account belongs to the child and can only be accessed by them at the age of 18.

OpenMoney ISA

It’s important that you understand the impact an ISA will have on your financial situation before you open one.

If you’re interested in opening a Stocks & Shares ISA, you can take the OpenMoney financial questionnaire to find out if you’re currently in a healthy position to invest.To take the quiz, click Get Started.

‍

• The UK tax system includes breaks for savers and investors.
• This tax relief amounts to free money.
• Make the most of all the savings available.

There’s no such thing as a free lunch, or so they say, but there are ways that savers and investors can enjoy government tax breaks that amount to free money.

We aren’t talking about shady tax avoidance deals, these are incentives that the government has included in the tax system to encourage people to save and invest for the future.

These incentives are known as tax relief.

Paying money into a pension

You can make the most of tax relief when planning for your retirement.

Every time you pay into a personal pension, you get money back from the government in recognition of the tax you’ve already paid on those earnings. How much tax relief you get depends on how much you earn. Think of it as a reward for planning ahead and saving for your future.

For basic-rate income tax payers – that’s anyone who earns between £11,501 and £45,000 every year - the level of tax relief is 20%.

That means that if you put £100 into a pension, the government will give you £25 back as tax relief.

Higher-rate income tax payers, who earn between £45,001 and £150,000 a year, get tax relief at 40%, so get £66.66 from the government for every £100 they pay into their pension.

And additional-rate income tax payers, who earn more than £150,000 a year, get tax relief at 45%, so get £88.81 for every £100 they pay into their pension. There are other rules that apply here depending on specific circumstances.

That’s free money, straight into your pension pot, and you don’t have to make any special arrangements – depending on how much tax you pay and the type of pension you have, your pension company will automatically claim the basic level tax relief of 20%, back from the government for you. However, if you are a higher or additional rate tax payer, you will need to claim your additional tax back from the government yourself.

Either way, it’s free money in your pocket, so it makes sense to take full advantage.

There is an annual limit on the amount of money that you can pay into a pension and earn tax relief on, which is currently 100% of your earnings up to a maximum of £40,000 a year, and a lifetime limit of £1 million. You will have to pay income tax on any payments into your pension that are over these limits.

Before you contribute to a personal pension, it’s important to check whether you can get free money through your workplace pension!

The minimum employer contribution to a workplace pension is currently 3%, however, some employers may offer to match more than the minimum. It could be worth your while to check whether your employer will match additional workplace pension contributions you make.

Getting money out of a pension

Once you retire, you will have to pay tax when getting money out of your pension.

Your state pension, workplace pension, personal pension and any other money you have coming in during your retirement, (for example from investments or a property you own) all count as income, so you have to pay 20% income tax on any payments you get that are over your £11,500 personal allowance. However, there are still ways you can take advantage of tax relief on this money.

If you have a personal or workplace pension, when you retire you can take 25% of your pension pot as a one-off lump sum without paying any tax on it – and it doesn’t count towards your £11,500 personal allowance.

So, for example, if you are a basic rate taxpayer who has contributed £100,000 into your pension pot, you will have received £25,000 tax relief, leaving you with a £125,000 pot.

Once you retire, you can then take £31,250 of that pension pot as a tax free lump sum!

As a basic rate tax payer, the remainders of the pot would be taxed at 20% as and when you take it out. So, if you are thinking of taking any portion of your pension as a lump sum, or a few big payments, it’s always worth taking advice to make sure that you are doing it in the most tax efficient way as you could end up paying more tax than you have to.

Saving with an ISA

An ISA or ‘Individual Savings Account’, is a way to save or invest that is tax free. There are two main types of ISA: Cash ISAs and Stocks and Shares ISAs.

A Cash ISA is essentially the same as putting your money in a bank or building society account, except that any interest earned is protected from the taxman.

A Stocks and Shares ISA, like the one offered by OpenMoney, means your money is invested in assets such as shares in companies and investment funds. Any income or capital gains from investments, including dividends, is sheltered from the taxman. The potential returns from a Stocks and Shares ISA can be much higher than with cash ISAs – research by Moneyfacts found that the average return during 2017 was 11.75%, compared to the 2.15% that the best cash ISA currently pays.

You can pay money into one of each kind of ISA each tax year, up to a total £20,000. The tax year runs from 6th April to 5th April the following year. So, if you haven’t already, you could still use this year’s ISA allowance.

A big benefit of ISAs is that they offer tax breaks but are still very flexible and usually don’t tie your money up for long periods of time. You can switch providers at any time and you can transfer your money from one type of ISA to another, all without losing any tax benefits.

But bear in mind that often, when trying to achieve higher returns you may end up taking more risk, and the value of a stocks and shares ISA could go down as well as up.

If you’re thinking about using this year’s ISA allowance before it’s too late, our online financial advice platform assesses your appetite for risk and capacity for loss to help work out what kind of investment will suit your circumstances best.

You can also book a free appointment with one of our Financial Advisers who are always on hand to help.

Whether you’re making the most of free money through saving or investing, planning for the future shouldn’t be too taxing!

• It’s always good to know what your investments consist of.
• Busting the jargon can help you get your head around the world of investing.
• We delve into what you need to know about your portfolio with OpenMoney.

Our investors often ask what their investments are made up of or what they’re actually investing in. The short answer for this is that your money is invested into different ‘asset classes’ - but what actually are ‘asset classes’?

Investing and the world of financial advice can be confusing, especially for first time investors. Many companies try to overcomplicate things even further by using lots of unnecessary jargon and complex fee structures.

Here at OpenMoney, we want our investors to feel confident and comfortable with their investments.

In this blog, we’ll break down your investment portfolio with us.

Let’s start with our funds

When you invest with OpenMoney, your money is put into something called an “index fund”.

Essentially, an index fund is one big pot of different investors’ money all pooled together that tracks a certain index. Depending on the type of fund, the money is then used to invest in the 4 main different asset classes; cash, properties, bonds and equities.

What is an “asset class”?

The official definition [1] of an asset class is “a broad group of securities or investments that have similar financial characteristics”.

As simply as we can put it, it’s a type of investment. With OpenMoney, there are 4 asset classes your money will be invested into:

1. Cash The “safest” of all the asset classes. Holding your money in cash is almost risk free, but it has limited returns. We use cash as part of our investors portfolio to control the risk level of the portfolio. A higher risk portfolio will have less cash investment, and a low risk portfolio will have more.

2. Properties A misconception here is that you are investing in the brick and mortar of an actual house. Instead, the property fund invests in equities of leading property companies listed on exchanges all over the world.

3. Bonds Bonds can be quite a confusing asset class until you break it down.

A bond is a loan or a debt issued by governments and companies. When an investor buys a bond they are essentially loaning money to a company or government for a fixed period.

In exchange, the company or government may pay interest payments called coupons or give the investor more money than they paid for the bond when the fixed period is over.

4. Equities Equities are considered to be one of the highest risk assets our portfolios invest in. Owning an equity, stock or share (which are all the same thing) means you own a small part of a company.

Equities can go up and down in value, depending on how well the company is doing (or is expected to do) and some of them pay their investors dividends which is like interest, but not always guaranteed. Some of the companies that you’ll be investing in with OpenMoney could include; Amazon, Facebook, Vodafone and many more household brands from around the world.

How does risk level impact my investment?

At OpenMoney, we have 3 different investment portfolios, going from lowest risk, medium risk and then highest risk.

With each portfolio, the investment is split across different funds which in turn invest in different asset classes.

With the lowest risk portfolio, we keep 22% of your investment in cash, which does have the lowest potential for returns but it also lowers the overall investment risk. Equities take 24% of the investment and fixed interest bonds take 54%. Our lowest risk portfolio doesn’t invest in property.

You start to see changes when you look at our medium risk portfolio. Cash is lowered to 6%, as this can free up more of the investment for the higher risk asset classes. We start to invest in property with it taking 5% of the money. The amount invested in fixed interest bonds almost halves to 28%, and we push the remaining 61% into equities. That’s almost triple of what we would invest with our lowest risk portfolio. This gives our investors a more balanced investment of low and higher risk assets.

Our final portfolio is the highest risk. It invests the lion’s share of the money at 89% into equities. The remaining 11% is shared between property (5%), cash (3%) and fixed interest bonds (also 3%).

What is diversification?

“Diversification” is another piece of jargon that is quite simple when you break it down.

In the simplest form, it’s spreading your money into different investments so you’re not putting all your eggs in one basket. With shares for example, it can mean spreading the investment between companies in different industries or investing in businesses in different markets across the globe.

Diversification within investment helps to minimise and control risk. For example, if you invest £1000 into one company and then it dips, your total funds take a dip. However, if you split that in 2 and have £500 in two different companies, one may dip but the other could prosper, meaning that your total fund may not suffer as much from the loss.

If you think you might be ready to start investing, we can tell you whether investing is right for you. You cna also check out our blog where we answer more common questions about investing.

ISAs (Individual Savings Accounts) have proved incredibly popular with savers since they were first launched in 1999, with hundreds of billions of pounds now squirrelled away in these tax-exempt accounts.

There are many different types of ISA, including Help to Buy, Lifetime and innovative finance ISAs. But the two main types are Cash ISAs and Stocks and Shares ISAs.

A Cash ISA is just like putting your money in a bank or building society account, except you don’t pay tax on any interest earned.

With a Stocks and Shares ISA, like those we offer at OpenMoney, your money is invested in companies and investment funds, and again you pay no tax on any profits.

Whichever kind of ISA you choose, you can only pay in up to £20,000 a year.

ISAs are a fantastic resource for savers, but, more recently, the economic climate has shifted and Cash ISA holders have seen their appeal start to fade. There is one big reason for this.

Interest rates were at a record low for a long time, so Cash ISAs weren’t earning very much money. 2017 was the worst year on record for Cash ISAs since they launched, with some accounts paying just a few pennies interest on savings of £1,000.[1]

However, Stocks and Shares ISAs have bucked that trend. According to industry data from Lipper, the average Stocks and Shares ISA generated a return of 11.75% in 2017 - more than 10 times what the average Cash ISA earned.[2]

It’s important to point out that last year’s strong performance is no guarantee of more growth in the future, and that a Stocks and Shares ISA could even lose money in any given year if the stock market performs particularly badly.

But, for those saving for the long term, a Stocks and Shares ISA can be a flexible and profitable option.

So, with so many people looking for alternatives to Cash ISAs that may offer a better return, we look to answer some of the burning questions they are asking about Stocks and Shares ISAs.

Is a Stocks and Shares ISA worth it?

Looking back on 2017, it’s hard not to conclude that a Stocks and Shares ISA represents good value for money, especially when compared with a Cash ISA or bank savings account, but it’s important to look at what charges are attached.

The costs of investing into a Stocks and Shares ISA varies from provider to provider, and most will either charge you a flat annual fee or a percentage of the total value of your investment.

At OpenMoney our charges are less than 0.53%, with no upfront fee, which could mean you keep more of your money than with other investments. Better still, this 0.53% fee covers everything, so there’s no hidden charges in the small print for you to worry about.

Is a Stocks and Shares ISA tax free?

In short – yes! You don't pay capital gains tax on gains made within a Stocks and Shares ISA, dividend income from stocks and shares held in this type of ISA is tax free and interest paid on corporate bonds or bond funds held in a Stocks and Shares ISA is tax free too.

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Is a Stocks and Shares ISA safe?

Any investment in stocks and shares comes with risk. The value of stocks and shares can go up and down every day.

But, looking at the last 20 years, the value of the UK stock market has grown by 68%, or 3.4% a year on average. [3]

And, with an OpenMoney Stocks and Shares ISA, your money is invested in companies around the world, as well as other assets like property, so the risk of any one investment performing badly and pushing you into a loss is reduced.

Here at OpenMoney we offer three portfolios with different levels of risk, so you can find one that’s right for you.

Can you withdraw money from a Stocks and Shares ISA?

One of the most useful features of a Stocks and Shares ISA is their flexibility. You're not locked in and you can withdraw your money whenever you need it.

However, a commonly quoted rule of thumb is that you shouldn’t put any money into a Stocks and Shares ISA that you think you will need to withdraw within five years.

That gives you enough time to ride out any peaks or troughs in the market that could see you make a loss on your investment.

Can I transfer from one ISA to another?

Yes, with some restrictions. If you already have a Stocks and Shares ISA or a Cash ISA with someone else, you can transfer it to OpenMoney – or any other provider – at any time.

You can also transfer your money between a Cash ISA and a Stocks and Shares ISA at any time, and vice versa.

But if you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.

For money you’ve invested in an ISA during previous years, you can choose to transfer all or part of your savings.

To find out if investing your money into an ISA is right for you, just answer some quick questions.

• It’s never too soon to think about investing.
• But it’s worth thinking about what you want to achieve.
• We’ll ask about your goals to help create an investment strategy that’s right for you.

So, you’re thinking about investing?

It’s never too soon to start, but it’s helpful to consider why you want to invest first.

You might just want to build up your savings in an investment that’s suitable for you or you might have financial goals for yourself or for your loved ones in mind, such as buying a house, getting married or just having a comfortable retirement.

If your recommendation from us is that you could be investing your money then we will be able to guide you through the process. This includes asking you about these goals and when you might want to achieve them buy. This helps us to create an investment strategy that’s right for you.

Do the right thing

One of our core values is to always do what’s best for our customers and one of the ways we stick to that principle is by only recommending investing if it's right for your circumstances and you can afford it.

If you have expensive debts we might tell you investing with us isn't right for you right now, as we think you’d be better off paying what you owe first.

We might recommend that you hold a "rainy-day" fund of at least three months’ wages, just in case of any unsuspected events, like illness or unemployment.

We also won’t recommend that you invest with us if your goal is within the next 5 years. Whilst you can withdraw your investment at any time, we consider investing with us to be a medium to long term solution (at least 5 – 10 years).

How it works

When you register as an investor with us, we’ll ask you a few questions about your financial situation and attitude such as your income, outgoings, debts and attitude to risk. This information helps ensure we recommend an investment portfolio that’s right for you, by balancing your appetite for risk with your desire for returns.

If you register as an investor with OpenMoney, we’ll ask you about these goals and when you might want to achieve them to help us create an investment strategy that’s right for you.

Foresight with flexibility

Before you commit any cash, we’ll show you how your investments could perform by calculating the projected annual return, after fees and inflation, so you can imagine what your investment could be worth for years to come.

As all of our funds are tracker funds, we’ll monitor how they perform against the relevant benchmark and, if we need to, we’ll buy or sell some of the investments to maintain your original allocation – which is known as ‘rebalancing’. This will help ensure that your investment remains suitable for you.

We want to make sure we’re doing the best we can for you. So, if your situation or investment goals change, or if you just want to check your investment is still working for you, you can book an appointment with one of our qualified financial advisers for free.

You’ll also pay less than 0.5% in fees annually; a fee which includes as many adviser appointments as you need, at no extra cost.

As with most investments, we can’t guarantee your returns and your capital is at risk, however by continuing to make sure your investments are suitable for you and the amount of risk you’re willing to take, we will try our best to help you achieve your financial goals.

We've answered the most common questions when it comes to investing in our blog.

• Consumer debt is a growing worry.
• Don’t ignore it – it won’t go away!
• There are five simple ways you can take control.

Statistics about consumer debt are always popping up in the media and with over £1.5 trillion owed by individuals in the UK as of last year there’s no wonder it’s a talking point.[1a]

Cconsumer credit is up to £207 billion as of December 2017, with research suggesting per household this is £2,567 of credit card debt. [1b]

But the easy availability of products like credit cards, with low minimum repayments but high credit limits, make it all too easy to become trapped in cycle of debt.

A shocking 276 people are declared insolvent or bankrupt every day. [1c] So it’s never too early to reassess our attitude towards debt.

Borrowing money isn’t necessarily a bad thing, but if you find yourself borrowing to pay your monthly bills – and that includes using your credit card or dipping in to your overdraft – that’s not going to be sustainable in the long run.

So how can you burst out of the debt bubble?

Don’t be complacent or bury your head in the sand - persistent debt can be hard to move on from, but the earlier you address the situation, the less painful it will be.

Here are five rules to live by that can help you take control of your debt:

1. Borrowing and bills.

We believe you shouldn’t borrow money to buy something that doesn’t last as long as it takes to pay for. So, borrowing to buy a new kitchen could work well, but try not to take on debt to pay this month’s gas bill, which should usually be covered by your income.

2. More than the minimum

If you really are serious about getting out of debt, you should really try to pay more than just the minimum amount needed on your credit or store card every month, even if it’s just by small amount. Pay as much as you can realistically afford.

3. It’s best to budget

Set yourself a budget by analysing all your outgoings to make sure you are living within your means. If you are getting into debt because you’re spending more than you’re earning, it’s time to reduce your costs.

Maybe take a packed lunch to work, or make your own coffee? Our free OpenMoney app can really help you stick to your budget.

4. Don’t act on impulse

If you have money in your pocket, it can be all too easy to give in to temptation and overspend, but you should always try to plan your purchases and compare prices online to make sure you get the best deal, especially on big ticket items like appliances or furniture.

5. No excuses

If you’re going to get serious about getting out of debt, it’s going to take discipline. A few months of denying yourself some small pleasures will all seem worth it when you can enjoy the peace of mind of being debt free.

Good luck!

• Investing should be open to all, and we believe everyone should be able to do it with confidence.
• But we understand that the investment world can be intimidating.
• We’re answering some questions that you might be afraid to ask.

For a long time, it may have seemed that investing was only easily accessible to wealthier people with more disposable cash than the average household.

It’s still estimated that only around 20 per cent of UK households invest in shares [1], but at OpenMoney, we want to make investing accessible and affordable, giving everyone the power to make the most of their money.

We recognise that committing your cash to something new requires confidence, so we’ve gone back to basics to answer some of the not-so-stupid questions that first-time investors might be embarrassed to ask.

How much money should I invest?

How much money you decide to invest depends on what your investment goals are and what your current financial situation is. With some online investment platforms such as ours, you can invest anything from £1 so there really is no amount too small.

When you join OpenMoney, our dedicated financial advisers are on hand to help you make the right choices on your investment journey.

We can advise you on how to best manage and grow your money to achieve your goals, and we won’t recommend investing unless it’s right for your current circumstances.

How long should I invest for?

There’s no right or wrong answer here, but broadly speaking, investing your money should be a medium to long term commitment. We recommend that you invest for at least 5 years without dipping into or withdrawing your funds.

Any shorter than that, and you may be better off leaving your funds in cash savings where they will be easily accessible and won’t be subject to short term market fluctuations.

Don’t worry though, if something unexpected happens and you need access to your funds, here at OpenMoney we don’t have a minimum term, so you’re never locked-in.

Of course, the longer you can invest for the better. Your funds will have more potential to grow, benefit from the magic of compound interest and will have a better chance at riding out any market fluctuations that might occur.

What am I investing in?

At OpenMoney we invest your cash into funds (if you’re not sure what a fund is, or find financial terminology generally confusing, take a look at our handy jargon buster).

These funds own shares in various companies across the globe. They spread your investment across a large number of businesses to reduce the risk to you - think of the phrase ‘don’t put all your eggs in one basket’.

If those companies grow and become more valuable, so does your investment. When you exit your investment, the shares may be sold for more than you originally paid for them and you would make a profit.

We work with three of the five biggest asset management companies in the world: Vanguard, Fidelity and Blackrock. -they manage assets worth nearly £8 trillion!

To give you peace of mind OpenMoney is covered by the Financial Services Compensation Scheme which may provide protection to consumers up to a certain limit.

How much profit will I make?

That is impossible to tell.

No one can predict how the stock market will perform in the future, but we know that you can maximise your profits by minimising the cost of investing.

Why do I pay fees?

All investments come with costs. They are usually in the form of annual fees, calculated as a percentage of the total amount you have invested.

Some investments are far more expensive than others, and can include management charges, administration charges, platform fees, entry and exit fees, and advice fees. These charges can really stack up.

We have no up-front costs, so you keep more of the money you invest from day one. Furthermore, our charges are capped at no more than 0.5% a year, whereas a traditional financial adviser might charge more like 2.5%. [2]

This means, if you had £10,000 to invest, after 10 years you would have saved almost £2,000 in fees with OpenMoney, compared to traditional adviser.

Can I lose money?

With any investment, although you may stand to make a healthy return, there’s always the chance that you may get back less than you put in.

For example, if you had £1,000 in 1997, you could have put it in a bank savings account, where it would have earned interest every year. By now it would be worth £2,088. Not a bad return at all. [3]

However, if you had invested that £1,000 in shares on the UK stock market, and reinvested your profits every year, after 20 years it would return over twice as much - £3,172! [4]

Should I get financial advice before investing?

Decisions about your long-term financial future are important, so it’s a good idea to get advice.

When you join OpenMoney, we’ll ask you questions about your financial situation, your attitude to risk and investment experience to help us work out the best financial plan to achieve your investment goals.

We offer restricted advice, so depending on your answers, we might suggest you open a pension, put money in an investment fund or we might advise you not to invest, and to pay off any debts first.

You can then book an appointment with one of our financial advisers to talk through our personalised advice and answer any questions you might have - at no added cost.

New and improved for 2020

Our brand new app has just gone live on the app store, we are really proud of it and believe it’s  a great tool to help you get more from your money. Product Analyst Adam Briggs-Dawson talks you through what’s new and the thinking behind the new features!

Here at Open Money we have been working on a new and improved app to make managing your money work better  for you.

As a product team we have spent a lot of time putting ourselves into our customers’ shoes to figure out what the most important and helpful features in a money management app should be.

We’ve been working really hard on making an app that goes one step further than money management. We’re excited to also offer financial recommendations within our app.  

We believe that financial advice should be accessible for all, that’s why our app is designed to guide you towards your financial goals. Whether you have £10 or £10,000 - our app could help you make your money work harder for you.

The new app is a real progression from our pioneer app and we are really proud of the result. We’ve improved the on-boarding process, making it very simple to link your accounts and there are lots of new features we didn’t have before.

Better Budgeting

First of all, we feel that visibility is key. The OpenMoney app allows you to see all of your money in one place. This sounds like a basic concept, but with many people having accounts with different banks, alongside loans, credit cards and investments,  it ’s a simple, but sometimes overlooked element, we didn’t want to miss out.

Secondly, saving money should be simple, easy, even fun! We wanted to create a way for you to set up savings goals for yourself and track your progress – and we have done just that!

Our app also gives you the option to set your own budgeting period, specific to your schedule. We know not everyone gets paid on the same day of the month, so set your custom budgeting period and get rid of second guessing.

If you are looking to work down debt, the app has a feature to allow you to set this up as a goal and allows you to track your progress.

You can also see a predicted forecast for the month based on your current spending, allowing you to plan ahead and adjust your spending if needed - so you’re not caught short at the end of the month.

You can also group your transactions together into categories such as dining out, bills etc. This allows you to see what you are spending your money on each month.

Ongoing Advice

The app is more than just money management, it also offers advice based on your spending activity. For example, if you’ve told us that you want to save money, the app will notify you of areas you could be saving. Such as letting you know you’ve spent £20 on takeaway coffees this month.  

We also have a new and exclusive partnership with uSwitch, where we are able to proactively tell you if you could be saving money on your bills – starting with energy. This way, we are constantly analyzing your finances for you and you can have the peace of mind knowing it is being taken care of, without you having to lift a finger.

There are lots of great features on this app and we believe it is going to make managing your money, easier, simpler and more efficient than ever.

I am really proud of what our team has created and hope that it will make managing your money easier for you. Let us know on our social media channels what you think of the new app if you’ve tried it, we love to get feedback and new ideas!

You can download the app on the App Store or Google Play now.

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We’re really excited to announce our acquisition of respected employee benefits platform Jargonfree Benefits.

Our mission at OpenMoney is simple: To make financial advice accessible and affordable to everyone, and the work Jargonfree Benefits does complements this perfectly.

Jargonfree Benefits was set up in 2013 with the aim of helping the estimated 16.3 million workers[1] employed at UK small or medium-sized companies (SMEs), gain access to the same standard of workplace benefits as those enjoyed by workers at larger firms.

It currently provides services to almost 40,000 employees and over 500 employers. We want to enhance these services and build on this platform. Whilst there is a lot of work to closing the advice gap, we believe it is absolutely possible and are excited to play our role in doing that. Steve Bee, founder of Jargonfree Benefits, said: “This is a hugely exciting moment for the business, our existing clients and the millions of employers up and down the country who care deeply about the people who work for them.

“It makes sense to me that the tools people need to both understand and control their own finances should be readily available in the workplace. “We’ve got a long way to go, but I’m confident that as part of OpenMoney we can make huge strides in building the benefits market for SMEs and in doing so ensure high quality affordable financial advice might one day become accessible to every worker in the UK.”

This is just the first of many exciting announcements we have planned over the next few weeks and months.

[1] House of Commons Business Statistics Briefing Paper, 12 December 2018

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Buying a house is likely to be the biggest financial decision most of us will make, but many people are struggling to get onto the property ladder at all. For those who do, the process is often confusing, expensive and time consuming, with multiple parties to contact and chase.

As part of the continuing work we do to make your financial life easier, we have taken the first step to expand our offering into the mortgage space and we are really pleased to announce that we have recently hired James Brocklebank as our Head of Mortgages.

James’ experience as a mortgage broker and developing fintech mortgage solutions will be so valuable as we begin to shape our mortgage advice process over the next few months. We can’t wait to get started, and we’ll be sure to keep you updated along the way.

We aim to make the entire home-buying journey easier and less stressful with clear, continuous, communication and at a low cost. From setting deposit goals and providing mortgage, insurances and mortgage protection advice, to linking to conveyancing, we want to support customers all the way through to their final repayment.

We have always strived to help people make the most of their money, and by adding mortgage advice to our growing list of services is the next step in our ambition to become a one-stop-shop for people’s financial affairs.

• New partnership announced with uSwitch.com.
• Giving customers more ways to make the most of their money.
• Offering comparison services on utilities, broadband and more.

We’re really excited to announce our new partnership with price comparison and switching service uSwitch.com!

Our ambition is simple: To help people make the most of their money, and this will allow us to do just that.

Our new service will launch this year and we will be the first company to partner with uSwitch on this unique offering.

You will be able to see your finances in one place using our app, and we will offer recommendations on how you can make the most of your money.

Rather than the traditional comparison services where you have to input the information and make the decision on which is the best option, we will recommend personalised deals when it is in your best interest.

This will include the comparisons of utilities, broadband and mobile, with credit cards and insurance products coming early 2019.

Kushal Ghuwalewala, Head of Partnerships at uSwitch, said: “At uSwitch, we're passionate about helping as many people as possible save on their household bills. We're excited to be working with OpenMoney and look forward to helping more households pay less for their everyday bills.”

We’ll be sharing more details on our partnership with uSwitch as we add more features to the app and service.

Figuring out the best ways to use your money isn’t always easy, so it makes sense to seek advice from professionals. But that advice usually comes at a price and can be time consuming.

At OpenMoney we want to help you make the right decisions with your money, and make sure that these services are accessible to everyone!

We will give anyone who comes to us honest and expert advice, and because of our extensive use of technology we’re able to keep costs very low.

How it works

We’ve tried to make our advice process as quick and simple for you. Firstly, we’ll ask you a few questions on our website to determine how we can help you.

These are all simple questions such as your age, how much you earn each month, what your monthly outgoings are and how much you might pay towards short-term debt every month, plus what you have in savings.

This step should only take a few moments and we will use this information to guide you towards the next best step for you.

Depending on your situation we may be able to help you to start managing your money better – such as cutting down your spending and working down any debt you might have.

Or we could help you to start saving and building up a cash buffer.

Your answers might even mean we’re able to help open you up to the world of investing or get more from the investments you might already have.

But we will never recommend something that isn't right for you!

How we can help you will depend on your answers to the above. But whatever we recommend the next step is for you to provide us with more information so we can understand your situation and figure out what's best for you.

In some cases, this includes requesting access to your bank details. This can scare some people (and we totally understand) but be assured that your privacy and security are our number one priority.

We have all the legally required and rigorous data privacy and security provisions in place to protect your data.

Our app will be able to use this information to analyse your finances and to help us to provide you with advice advice on how to manage, save or invest your money.

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Helping you to manage your money

Our new OpenMoney app will be able to help you see your income and outgoings clear as well as help you manage them better.

Due to our app’s technology we will be able to analyse your financial situation, including your spending and debts. We will help you reduce them so you cna save to meet your goals.

Saving your money

We always recommend that you have at least 3 months’ worth of outgoings saved. If you haven’t already got this cash buffer saved up, we will point you towards our OpenMoney app.

One of our key features on the app is a service we have developed in partnership with uSwitch.

It will allow you to look at your outgoings for utilities and household bills and provide you with ideas on where you can save money.

In the past you’d have to actively search for cheaper deals on your utilities but now you’ll be able to receive information on potentially cheaper alternatives though our app.

Investing your money

After answering the questions at the start of the process it might be clear that investing your money could be an option for you.

If investing is right for you then we can guide you through your investment choices on our website and recommend a diverse portfolio to suit you.

In order to shape our recommendations to you we will ask you further questions about your existing assets, how much you want to invest and your appetite for risk

One of the biggest barriers to investing for some people is the cost involved. But our charge for your investment is a market-leading 0.53%*.

Personal advice

As well as offering you advice through our website and app our team of qualified financial advisers are available to speak to if you have any questions.

We offer a web and app chat option for any general queries. If you need a more detailed conversation about your recommendation you can book a free phone appointment with them.

Our team are on hand between 9am and 8pm and you can make as many appointments with them as you like – even on weekends and evenings!

*based on the maximum charge payable across all evestor/openmoney portfolios as at 16/08/2018. Fees may vary and may be higher than this stated amount.

You may have heard the media or popular social media influencers discussing terms such as ethical investments, ESG (Environment and Social Governance) portfolios or SRIs (Socially Responsible Investments). They differ very slightly in the areas that they cover, however a running theme throughout them is the premise of using your money to invest in industries that are not damaging to the environment or members of society. Naturally the growing popularity of this type of investment has brought questions to the surface regarding the products that we offer and the impact that these are having on the planet. Ethical portfolios are not currently something that we actively promote or provide for our customers, so let’s take a look at why.

On trend investing

The world of investing is slowly becoming more accessible and therefore possibly less daunting for the masses. Conversations about money are beginning to take place on platforms that were once reserved for aspirational lifestyle content as well as within mainstream press. Breaking down the barriers surrounding the topic of money and how we choose to manage it is a huge step forward, so we are glad that our customers are interested in progressing with their portfolios.

According to the 2018 Ethical Consumer Markets Report, the UK spends roughly 80 billion pounds on ethical goods (green energy, fashion, ethical food choices) every year[1]. This is no surprise given the spotlight that has been shone on our ethical conscience throughout traditional, digital and social media. With this move towards a more sustainable and responsible way of life, we are seeing an increase in customers wishing to invest in a more ethical manner.

Our stance on ethical investment portfolios

Hannah Cole, our Support Team Lead & Financial Adviser is often first on hand to look after queries such as this from our customers.

“We are often asked to look into ways that our customers can make their portfolios more ethical such as avoiding certain industries (American tobacco, Oil and Gas etc), or even how they can withdraw their money altogether to place it into an ethical portfolio...

... At OpenMoney and our investment site, evestor, we operate by offering model investment portfolios comprised of Mutual Index Funds as opposed to Exchange Traded Funds which is where you will mostly find ethical portfolios. The mutual funds that we use, aim to track specific market indexes such as the FTSE All Share and the S&P 500.”

This means that the only way our portfolios will exclude companies deemed to be unethical is if they are removed completely from the indices. As we don’t actively manage our own funds, we don’t pick the individual companies that they are made up of. Instead, we favour a passive investment approach, which you can read more about on our Jargon Buster page.

What are the ethical boundaries?

As well as being a functional decision, it is also worth taking a look at how far other providers go in terms of being ethical and are we really a lesser option because of our seemingly limited products? When looking to invest, it’s common to be averse to harsher industries that could have a negative reputation such as weaponry, alcohol, gambling etc and support a more sustainable, environmentally friendly portfolio.

However, Hannah raises a strong point in that we need to look at where the boundaries lie. “Where do we draw the line? There are respected companies that we know of, who boldly offer ethical investment opportunities despite having faced fines due to various misdemeanors.” Would investors be happy to invest in an ethical fund, but with a provider who has a somewhat tarnished track record?

Moving forwards

Our current opinion on how we operate within the realms of the ethics is not set in stone. We are constantly researching ways in which we can keep up with political and cultural climates at the same time as maintaining our extremely competitive costs and levels of service. However, if we are going to involve ourselves in the world of ethical investments, it needs to be for the right reasons rather than as a reaction to the media. If we cannot offer a justified rate of costs and returns, then we would be doing our valued customers a disservice which is not an option for us. As the market develops over time, ethical investment is of course something we would like to incorporate within our proposition, and our Investment Committee continue to assess the benefits and risks involved for those choosing to invest with us. As these conversations progress, we will keep our customers updated with developments.

[1] UK Ethical Consumer Markets Report

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You might have heard in the media about Neil Woodford’s investment fund ‘Woodford Equity Income’ and the plans to close it down after months of hardship.

This is obviously a stressful and confusing time for investors and it’s important to learn from what has happened to Woodford Equity Income.

Difficulty for Neil Woodford’s fund (which is essentially a pool of lots of different investors’ money) began after a period of underperformance caused investors to withdraw their money in big numbers back in June of this year. This flood of withdrawals caused Woodford to ‘suspend’ his fund. This means that to avoid the fund from falling further in value and investors losing out, Woodford stopped investors from removing their money.

News has now come that Woodford will soon be ‘winding down’ his fund – meaning that he will begin the process of selling off the investments, returning investors’ money and closing his fund for good. We explore some of the learnings we can take from what’s happened with Woodford Equity Income...

Active and passive investment – what does it all mean?

Neil Woodford is an active fund manager. Active managers use their own research, judgement and experience to make investment decisions on what assets to buy and sell. This differs from a passive investment.

A passive investment strategy, like ours, is one where investments are bought and sold to mimic something called a market index. An example of a market index is the ‘Financial Times Stock Exchange (FTSE) 100’.

The FTSE 100 tracks the top 100 companies with the highest share values publicly trading on the London Stock Exchange (LSE). The FTSE 100 represents roughly 80% of the value of all the companies on the LSE!

A passive fund could track which companies fall within the FTSE 100 and buy and sell the stocks of those companies.

There are lots of assumptions made about active management bringing in higher returns for investors than passive, but research has shown that more often than not, active management does not outperform passive management. The charges however are certainly higher and this difference in fees can mean thousands of pounds over the life of your investment.

As an active manager like Woodford enjoys early successes, the media can fuel their growing ego - often heralding them as having some kind of stock-picking superpower! But, just as easily as this media hype builds, it can quickly fall apart.

Active managers will naturally experience losses in their investment funds, much as any investment goes up and down in the short term – they can’t get it right all the time. When this happens for any extended period, the industry and media will pounce, and the sentiment can begin to turn on these managers, picking at their reputation. The media will then find someone else to build up as the new Woodford.

When you invest in an actively managed fund, you should be fully aware that you’re trusting these managers and relying on their experience and research to look after your money. You need to understand the risks associated with active management so you can make a sound decision that you feel comfortable with – don’t fall for the hype around active managers.

Diversification

No matter whether you’re invested in active or passive funds or a mixture of both, you should always make sure your investments are diversified. This means investing across funds in different markets and industries so you can spread your risk across all your investments – think of the old phrase ‘don’t put all of your eggs in one basket’.

If you’re making your own investment decisions and choosing your own funds, you should always make sure you diversify. If you get advice, your adviser should diversify your investments for you.

While it’ll be a worrying time for those invested in Woodford’s fund, hopefully they’ll have diversified portfolios and will be invested in a selection of other funds which have performed better, off-setting any loss.

Get advice

If you’re not sure, the best way to make sure you’re making the right decisions with your money is to get honest financial advice. As an online advice company, we talk a lot about the importance of asking an expert what the best thing for your money is.

It’s also really important to know the difference between ‘best buy’ tables and regulated financial advice. Lists and tables in articles online, telling people which investment funds are ‘the best’ can be dangerous. People may not fully understand the investment decisions they’re making when they follow these tables and have no protection if these decisions are wrong for them.

We really hope that what’s happened doesn’t put investors off completely. There are ways you can manage the risk you take with your investments and feel comfortable and confident even if you’re not a seasoned investor – diversify your investments, keep costs low, understand where you’re investing and, above all, get advice from a person or company regulated by the Financial Conduct Authority (FCA).

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Depending on where you live in the UK, your relationship with money may be different. Every one of our interactions with money will help form our understanding and confidence in dealing with financial situations.

In our recent Advice Gap report, we discovered some interesting statistics on each region’s relationship with money and financial decisions. Here’s what we found…

Londoners lack confidence

People living in London often face higher living costs in comparison to those living elsewhere in Britain[1] , which could leave them feeling less confident in making financial decisions. This was backed up by our research as we found that people living in London have the lowest confidence when it comes to selecting financial products.

54% were confident in choosing an appropriate mortgage in London, against the UK average of 60%. Scotland were the most confident, with 65% being able to confidently select a mortgage.

This lack of confidence also spread to more essential financial decisions such as choosing an appropriate current account. 81% of Londoners felt confident enough to do this against the UK average of 87%.

Our CEO, Anthony Morrow commented “Our research shows that the picture in terms of people’s confidence in choosing financial products is mixed across Britain, but those in London consistently come out as least confident. This may be due to the lower average age of Londoners compared to Britain as a whole[2]. Many Londoners have yet to deal with mortgages, energy tariffs and insurance and taking income from a pension is not yet on their radar.

“However, having an appropriate current account and savings product should be essential for all adults and it is concerning that those in the capital feel particularly ill-equipped to deal with these important financial decisions. We need to make sure that information around financial products is simple and easy to understand to make sure these crucial products are accessible to everyone that needs them.”

The East is struggling

Adults living the East of England were found to be struggling with their finances more than the rest of the UK. Although the East Of England is not a generally poor area of the UK, some of the most deprived neighbourhoods are located there[3].

In our Advice Gap research we discovered that 53% of the Eastern population ran out of money before payday at least once in the last year, with the average 46% across Britain.

Less than half (45%) said they were keeping up with their financial commitments without difficulty, less the UK average of 51%.

Finally, less than a third (32%) of those living in the East said they never experienced financial difficulties with the UK average at 36%.

It’s clear that these results show the East of England is struggling to stay on top of their finances and manage their financial situations confidently which can have a wider impact on their wellbeing.

Our CEO, Anthony Morrow commented on the issue saying “Our research shows that the picture in terms of people’s financial security is mixed across Britain, with those in the South of England generally faring better than their neighbours in the East of the country.

Financial services companies need to improve the financial confidence of the nation by ensuring that information is simple and easy to understand. Plugging the adult advice gap by making support and advice around good financial management and planning accessible to all areas of the UK is crucial to improving the wealth of the nation as a whole.”

What can we do to change this?

Education is very important when giving people the right tools to make the correct financial decisions for their personal situation.

There are plenty of websites available that have information on everything from current accounts, to mortgages. Check out Money Saving Expert or the Money Advice Service if you want more information on a specific financial product or issue.

We recommend researching as much as possible before making a financial decision as it can have a long-lasting effect on both your financial and mental wellbeing.

If you’re not sure of your next step, get some advice. OpenMoney was created to help people who aren’t sure what the next step is for their finances – after all, our research revealed that 19.8 million people would appreciate a bit of advice on their finances! So, if you want clear and honest advice, we’re here for you.

If you would like to read more about the Advice Gap report we produced in partnership with YouGov, you can head to our blog here and download the report at the bottom.

[1] - https://www.investopedia.com/articles/personal-finance/091415/how-much-money-do-you-need-live-london.asp

[2] - http://bit.ly/37F7jof

[3] - https://www.eadt.co.uk/ea-life/four-maps-show-some-of-suffolk-and-essex-s-poorest-and-richest-neighbourhoods-sit-side-by-side-1-5100441

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There are lots of headlines right now about Brexit, a potential general election and how these could affect house prices, the economy and so on. We can’t predict the future, but when it comes to investment, we can make smart decisions with the knowledge that we do have.

Diversification

Here at OpenMoney there are several ways we prepare our investment portfolios for uncertainty. We make sure our portfolios are diversified, this means we spread our investment funds across different markets, and across different geographies. We do this so that if an event affects one industry or market, your overall fund shouldn’t be impacted too much.

Rebalancing

We also rebalance your portfolio when needed. Over time as investments rise and fall, the original asset allocation can ‘drift’. Because the value of your better performing funds will grow and those lower risk funds may not grow as fast. Rebalancing is the process of buying and selling assets in a portfolio to maintain the original asset allocation.

Try not to panic

You may be thinking about withdrawing your funds in anticipation of a negative market change. You can of course withdraw your funds at any time. But it’s important to remember that the reason investing is for the long term, is to ride out these changes in the market.

The market has always seen periods of uncertainty and market turbulence is unfortunately just a part of the investing lifecycle. We know that the potential for market fluctuations around political events can be unsettling, however the global stock markets have continued to rise overall for much of the past ten years.

It is also important to remember that you only really lose money if you sell during these dips at a lower price than you bought.

We only allow people to invest if they have a cash buffer of at least 3 months’ outgoings saved. Having these savings easily accessible should help to ease any worry of seeing your investments fluctuate in value.

Still have some questions? You can chat to one of our friendly advisors for free via webchat, email or by phone.

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With the likes of contactless payment and even the ability to pay with your watch, the question of whether or not we need cash is debatable.

Our guest blogger Maddy shares her thoughts on if we should aim to become a cashless society.

As we approach the third decade of the millennium, technological innovations are happening all the time and old technologies are dying out.

Many of us have replaced our phones, computers, cameras, alarm clocks, calendars, roadmaps, photo albums, calculators, torches and a multitude of other functional objects in our day-to-day lives with a single device – the smartphone.

And then there’s money. You can now use your smartphones to pay at the till. As Apple Pay and similar services become more routinely accepted by retailers, could physical money be the next obsolete everyday item?

Our debit cards have gone contactless, making it incredibly easy to pay with just a tap of plastic – much simpler than fiddling around with 2p pieces, at any rate.

Speaking of which, the need for coppers is already being called into question. Yet, despite the fact that people have been talking up a cashless society since the 1940s, it hasn’t happened yet.

So, what are the pros and cons of potentially making the leap to cash-free? Let’s take a look.

Not everyone has a smartphone

Some 85% of UK adults owned a smartphone in 2017, according to a report from Deloitte, which means 15% don’t. In order to access services like Paypal and Apple Pay on-the-go, you are almost certainly going to need one. The 15% might be explained, at least in part, because of the expense. Even a basic smartphone with the capability to run these apps is costly.

But ‘physical money’ is expensive too

The cost of money is something that a lot of people don’t think about. The reality of the matter is that it doesn’t just cost money to print money, but there is also an expense in moving it around in heavily-guarded vehicles, as well as in maintaining the numerous ATMs scattered around a populated area.

The new polymer banknotes are said to cost 50% more than their paper predecessors to produce. Okay, perhaps none of this is of direct consequence to the consumer – but these are costs to almost every business that need covering.

Invariably, these costs will drip down to the consumer in the form of higher prices for products and services. Could going cashless reduce these costs to businesses?

Fraud

Some people fear that if we go completely cashless, it could make our funds more vulnerable because of the growth of online fraud and hacking.

If something went wrong digitally – perhaps we temporarily lost access to our bank accounts – without the ability to switch to cash, we’d be entirely without funds while the problem was sorted out.

On the flip side, other people believe a cashless society makes it harder for individuals to avoid taxes – ‘cash in hand’ wouldn’t be an option and so neither would ‘going off the books’.

Privacy

Finally, some argue that a fully electronic-money society equates to an invasion of privacy. Transactions through card payment or mobile payment services are traceable and recorded and require the sharing of personal information between both parties. Sometimes, the argument goes, it is necessary to have some anonymity where transactions are concerned.

All in all, there’s a lot to consider when it comes to going cashless but it seems to me that, even if we are using less cash than ever, people should still have the freedom to choose.

If you’re investing or have a financial adviser who invests for you, you’ll be paying an annual fee on your investments. Who or how much you’re paying can often be difficult to decipher.

If you’re lucky enough to receive an annual statement from your provider showing how much you’re being charged, this is usually represented as a percentage and sometimes isn’t very clear as to how much you’re really paying.

But that’s all about to change due to MiFID II regulations.

What is MifID II?

MiFID II is the Markets in Financial Instruments Directive II – a new set of rules that affects certain financial service companies across the European Union.

It is intended to strengthen regulations already in place and make sure financial service providers are being transparent with their customers. One of the main changes the new directive brought about was the requirement for investment platforms and advisers’ to disclose exactly what they’ve chargedto their customers over the past year.

This will make it much easier for investors to see what they’ve been charged – and then be able to compare the cost of various platforms to see whether they can get a better deal.

How will my annual statement change?

Due to new regulations all investment platforms must send their customers a statement explaining the full cost of their investments over the last year.

This includes the platform fee, fund costs, advice fees and any other costs. But instead of it just being show as a percentage, customers will now be able to see what they’ve paid for their financial adviser and investment in pounds and pence.

Why is this important?

For many investors this will be the first time they have received a detailed breakdown in pounds and pence of all the fees they pay for their investment each year – and the total amount may come as a surprise to many.

There is always a cost to investing, but any charges you pay can have an impact on the size of your pot and the effect of fees over time can make a big difference in the long term.

Although the figure on the statement may come as a shock to some, this new transparency will help investors understand exactly how much they are paying and decide whether the service they are receiving is worth the overall price or if an alternative option may offer better value.

This doesn’t mean that the cheapest is always the best, but it is important that you feel you are getting value for the money you are spending.

If you’re happy with the money you spend on your adviser; perhaps you have complicated financial circumstances, or you have a great relationship with your adviser, then you needn’t worry.

But if you’re not happy, or you’re not sure, there are other options out there which could cost you much less and still provide you with a similar, great service.

At OpenMoney, we’re cutting the cost of advice by offering an online financial advice service, with the added comfort of telephone appointments with our advisers.

So, if you do get a nasty shock in the post over the next few weeks, don’t worry – there are options out there!

• 92% of people have never heard of open banking.
• Open banking could change consumers relationship with money.
• Regulatory requirements help to keep consumers money safe.

A report by Which? In 2017 revealed that 92% of people have never heard of open banking. You may not be aware of what this new legislation is, but open banking could change how you manage your finances.

What is open banking?

Open banking is an initiative led by the Competition and Markets Authority (CMA) to change how banks handle and control your financial information.

In short, open banking will mean your financial providers have to share your financial information (this includes balances, transaction history and spending habits) with third parties, so long as you give them permission to do so.

These third parties dubbed ‘account aggregators’ access your financial information through your bank, building society, loan and credit card providers and compile all your balances and transactions in one place, often in an app.

Several money management apps existed to provide these ‘account aggregation’ services long before open banking came into play. They accessed your financial information through a technique called ‘screen scraping’.

Whilst this is a tried and tested technology, the new legislation will prevent companies using this technique to compile consumers financial information in the future.

Before 13th of January 2018, there was no regulatory financial institution keeping tabs on these money management apps, but now, any company hoping to provide these aggregation services through open banking will need to be authorised by the FCA with all the governance, security and protections this provides to the customer.

How does this benefit me?

There are clear benefits of this new legislation and at OpenMoney we’re thrilled that financial services are evolving to make managing money easier and more transparent for customers, something we’ve always championed.

We hope that the ability to see a single snap-shot of your overall financial position in one place and better compare financial products will allow people to get a better understanding of their finances.

Many of these apps (like our app OpenMoney) also allow you to analyse your spending across accounts and create budgets and savings goals for the future.

What about the risks?

I couldn’t use phrases like ‘open banking’ and ‘your financial information shared’ without addressing the security concerns that consumers will no doubt have about these account aggregators. After all, our banking information is always something we’ve been told to keep to ourselves.

As scary as it sounds, the truth is that there are very strict safeguards in place to keep your money secure:

No company can access your financial information without having your express permission to do so

Your banking log-in information provided to any money management service should be encrypted to at least the same level as your online banking service - do not provide these details to any services without reassurance that this is the case

As I mentioned above, any company attempting to use open banking to access your financial information must be authorised by the FCA.

If you’re not keen on the idea of sharing your financial information, you don’t have to. As long as you don’t give any third parties permission to access your data, nothing has to change for you.

We’re really looking forward to seeing how open banking encourages innovation and competition in the finance industry.

The choice and transparency can only lead to better outcomes for consumers, as long this isn’t at the expense of customer security and confidence.

• Consumer debt is a growing worry.
• Don’t ignore it – it won’t go away!
• There are five simple ways you can take control.

Statistics about consumer debt are always popping up in the media and with over £1.5 trillion owed by individuals in the UK as of last year there’s no wonder it’s a talking point.[1a]

Cconsumer credit is up to £207 billion as of December 2017, with research suggesting per household this is £2,567 of credit card debt. [1b]

But the easy availability of products like credit cards, with low minimum repayments but high credit limits, make it all too easy to become trapped in cycle of debt.

A shocking 276 people are declared insolvent or bankrupt every day. [1c] So it’s never too early to reassess our attitude towards debt.

Borrowing money isn’t necessarily a bad thing, but if you find yourself borrowing to pay your monthly bills – and that includes using your credit card or dipping in to your overdraft – that’s not going to be sustainable in the long run.

So how can you burst out of the debt bubble?

Don’t be complacent or bury your head in the sand - persistent debt can be hard to move on from, but the earlier you address the situation, the less painful it will be.

Here are five rules to live by that can help you take control of your debt:

1. Borrowing and bills.

We believe you shouldn’t borrow money to buy something that doesn’t last as long as it takes to pay for. So, borrowing to buy a new kitchen could work well, but try not to take on debt to pay this month’s gas bill, which should usually be covered by your income.

2. More than the minimum

If you really are serious about getting out of debt, you should really try to pay more than just the minimum amount needed on your credit or store card every month, even if it’s just by small amount. Pay as much as you can realistically afford.

3. It’s best to budget

Set yourself a budget by analysing all your outgoings to make sure you are living within your means. If you are getting into debt because you’re spending more than you’re earning, it’s time to reduce your costs.

Maybe take a packed lunch to work, or make your own coffee? Our free OpenMoney app can really help you stick to your budget.

4. Don’t act on impulse

If you have money in your pocket, it can be all too easy to give in to temptation and overspend, but you should always try to plan your purchases and compare prices online to make sure you get the best deal, especially on big ticket items like appliances or furniture.

5. No excuses

If you’re going to get serious about getting out of debt, it’s going to take discipline. A few months of denying yourself some small pleasures will all seem worth it when you can enjoy the peace of mind of being debt free.

Good luck!