That may be true, but the rest of the 99.99% of things are quite heavy on the bank account. Between bills, school, food, children, girlfriends, wives, entertainment, and subscriptions, how can anyone keep accurate track of their money? Personal finance is the collective term used for managing your money at home. It encompasses everything from diapers to government bonds. Here are steps one must take to ensure that every cent is accounted for.
Seek Advice
Seeking advice is an invaluable tool for any person that wants to keep their personal financial plan on the straight and narrow. Find an expert you can extract information from and mold your strategies around these insights. If you don’t have access to a professional financial planner, MoneyTaskForce.com is a great tool to keep you up to date on trends and news. Big-time search engines also have their financial sections you can look at. The idea is to get a strong feel of how successful people work with their money.
Set Goals
Every person needs goals. A person without goals is probably not going anywhere. Same goes with money. Money is a means--a proof of value. What you do with it determines your wealth. Having a financial plan is crucial to this. Figure out what your goals are. Do you want that new motorcycle? Do you want to save enough to pay for your child’s college? Do you want to take copy-cat selfies in Bali with friends? None of these things can be responsibly done on a whim. Determine a series of goals and attach timelines to them. Have a short, medium, and long term goal. Short is within the year. Short is that vacation mentioned earlier and whatever other purchases you may take on. Medium has a range of five to ten years. Medium is that motorcycle and your eye on that nice apartment in the city. Long term is looking towards the horizon towards retirement. Having a solid plan to stay afloat during your unemployed golden years is always a good idea.
Set Up A Budget
Your primary tool to accomplish what you want financially is the budget. Your budget is a set guideline as to how much you’re allowing yourself to spend within a given time frame. It can be simple or it can be complicated. Like most things, the answer is somewhere in the middle. The Goldilocks quotient of any good budget means that you’ll be aware and somewhat challenged by the boundaries, yet not completely restricted. Ease of use still plays a factor in a financial plan. It’s not all about spending as little as possible. It’s about understanding your habits, curtailing the unnecessary ones, and rewarding the good ones.
[ymal]
Create Safety Nets For When You Splurge
The tendency for anyone under an extremely strict budget is to accrue a feeling of entitlement. “I’ve been so good with my money, I deserve a night out.” This is dangerous. Anything you feel like you “deserve” is absolutely undeserved in the world of personal finance. That attitude primes you to go overboard and splurge way too much. Set up systems that ensure that you don’t go completely off the rails. A very common and highly effective way to do this is to squirrel away money without you even knowing. Have a relatively small percentage of your paycheck go to a savings account in a bank separate from where you have your checking account. Lose the account number. Lose the pin number. Lose everything pertaining to said account and just forget about it. This means you won’t feel the hit of this savings strategy, and you’ll have something to fall back on in case overdraft fees are in your immediate future. Make it as inconvenient as possible. That means that the only way to access that money is to physically go to a branch, wait in line, and retrieve it in person.
Pay Off Debt
Pay off your debt. It doesn’t matter how much money you have in your pocket, if you’re in debt, someone else owns that cash. Make an effort to pay off all your debt within a certain time frame. Let's say in your early years you took on a lot of debt to get life going the way you wanted it to. Pay extra on all of them, focussing on the ones with higher interest rates. Once the high-interest rate loans are paid off, pay that same amount total, but towards the other loans. For example, if you have three loans that each cost you $100 a month, pay that same $300 total towards the remaining two when one of them is paid off. This ensures that you pay off your debt as quickly as possible. It’s called the debt-paydown snowball effect.
Invest
Lastly, invest. Start investing and getting good at it as soon as you can. You have tons of options ranging from bonds to stocks, to real estate. The sooner you get into the investing game, the more you’ll focus on your long term goals and retirement. It’s never too early to start, but due to the nature of these plans, there is such a thing as too late. You just have to choose the right one and tailor your plans around it. But be careful. There if you delve in stocks and bonds, there is a gambling aspect that is sewn into the system itself. Your goal is to buy low and sell high, of loan out big to get an even bigger return. Due to the fluctuations in the market, this may not work in your favor. But if you do it right, you’re looking at a lifelong habit of making significant passive income.
Gone are the days where things were primarily cash or check. It’s all card and recurring payments. It’s absolutely necessary for one to be on top of their money. Being financially responsible means the difference between knowing when you’re in the red and somehow finding yourself deep in it. Financial responsibility is the key to getting ahead of the game and making sure that you can live a good, happy, worry-free life for years to come. That is the essence of good personal finance.
Most sectors are having to comply with said rules and conform to industry trends, thus evolving based on the limitations regulations have imposed on them. According to Aravind Srimoolanathan, Senior Research Analyst - Aerospace, Defence & Security at Frost & Sullivan, this is particularly applicable in the biometrics sector, as it progresses in line with regulation presenting increasing opportunities for biometrics to excel in a security driven data world.
The Swedish data protection authorities (DPA) recently levied the first fine of approximately $20,000 to a high school which ran trials of facial recognition technology among a group of students to monitor their attendance. The school authorities argue that the program had the consent of the students, though that did not soften the stance of the regulator. The European data protection board citing the ‘imbalance’ between the data subject and the controller of data. Canvassing the multiple opinions floating on the web1, Frost & Sullivan notes multiple cases of violations reported in Bulgaria and Austria post the incident in Sweden. The regulatory breaches have led to similar fines levied by the respective local data protection agencies tasked to enforce GDPR. Have the flood gates opened? Will this drown the Biometric market? Probably not, but it does raise significant concerns which need to be assessed and responded, to continue bringing the associated benefits of Biometric technologies to business and security operations.
General Data Protection Regulation (GDPR) is designed for the protection of personal data. GDPR emphasises on a person’s right to protect their personal data, irrespective of whether the data are processed within or outside the EU. Any data that could be linked to a person is subsumed into the definition of “personal data”. The regulation comprises of several articles and clauses which require compliance by all forms of agency - public, private or individual, that processes personal and sensitive data of clients, companies or other individuals. The regulations not only addresses data protection and privacy of individual citizens of European Union (EU) and European Economic Area (EEA) but also data transfer outside EU and EEA.
[ymal]
In summary- data is expected to be stored, managed, and shared in an individual-centric approach rather than a collateral approach.
The challenges in managing identity in the modern world through conventional methods such as ID cards and PINs/ passwords are failing to address efficiency, accuracy and security requirements. The exponential demand for biometric-based ID management and access control systems drives the need to overcome such challenges. Biometric technologies (yes, facial recognition is one of them) curtail unauthorised physical and cyber access preventing identity fraud, enhance public safety, and drive seamless and efficient processes ensuring higher safety, convenience, and profits.
The Sweden High School case indicates the extent of GDPR is not just limited to giant corporations such as British Airways but also smaller public and private entities ‘mishandling’ data and hence violating the dictates of the GDPR regulations.
Frost & Sullivan’s collation of perspectives and insights from across the industry indicates that biometric technologies will replace conventional methods of Identity and Access Management in the years to come, not a case of if but when. Continued enforcement of data regulations would drive proper use case definition and regulatory compliance, but for this the suppliers and operators of these technologies need to create compliant secure by design solutions and processes. The first step is ensuring secure operations of the systems, and second is to design robust and verifiable processes for the associated data generated. Thirdly, defining the application of harvested data within the ethos of GDPR and related governance.
In the short-term though, with a surge in biometric technologies adoption, Frost & Sullivan anticipates we will witness an uptick in number of GDPR violation cases, due to partial and/or improper understanding of data privacy regulations. Though there is a risk that the hefty fines may slow down the pace of widespread adoption of biometric technologies, Frost & Sullivan proposed three-step strategy will drive healthy demand. Organisations that are digitally transforming their businesses for enhanced process efficiencies as part of their digital strategy would need to realign strategies to comply with general data protection regulations.
Biometric technologies are gaining infamous popularity with the data breaches, privacy concerns and unethical commercialisation of the associated data. GDPR, the Achilles heel as it may prove to be for the Biometric market, does not necessarily need to be – instead, the principles of GDPR can itself become the value proposition of the future biometric technologies.
1 http://www.enforcementtracker.com/
2 https://www.infosecurity-magazine.com/news/gdpr-spurs-700-increase-data/
The average American has a credit score of 704. If your Fair Isaac Corporation (FICO) score is around that number, that’s fantastic. But even though that’s a pretty healthy figure, there’s still plenty of room for improvement. And if your score is lower than that, don’t lose heart. You can do plenty to bring up your credit score - it all boils down to making the right financial choices over time.
-
Get A Copy Of Your Credit Report
If your credit score is lower than expected and you’re not sure why, it’s a good idea to get a copy of your credit report. This document spells out all your credit-related activities. You should be able to get a free copy of your credit report each year and Best way to repair credit from either Experian, Equifax, and TransUnion.
Go through the document thoroughly to check for errors or fraudulent activity. If you don’t find any, you should be able to find out what’s affecting your score, such as late payments, repossessions, and so forth. By having a clear picture of your credit standing, you’ll have a better idea of how to improve it.
-
Pay Your Bills On Time
Your payment history shows potential creditors how reliable of a borrower you are, as they’re indicative of how you’ll be paying in the future. Doing something as simple as paying bills on time can make a significant positive difference to your credit score. Conversely, paying late — or less than the agreed-upon amount — can damage your credit score.
Your credit card bills are the most important when it comes to your credit score, but this can also be affected by your other bills, such as student loans, rent, and even your phone bill. To make sure that you don’t miss any deadlines, you can set up automatic payments or calendar reminders to help you stay on schedule. If you’re behind on payments, try to catch up as soon as you can.
-
Improve Your Credit Utilization Ratio
Your credit utilization ratio (or credit utilization rate) measures the balance you owe on your credit cards relative to your credit limit. If your credit limit is $10,000 and your current balance is $5,000, your credit utilization is 50 percent. A high utilization ratio shows that you could be overspending, which is why it can damage your score.
To improve your credit utilization ratio, the best thing to do is paying off your debt. And if you have any unused credit cards, keep them open — especially if you’re not paying any annual fees. You can lower your ratio by getting a higher credit limit. There are two easy ways to do this: either by simply asking your credit card provider for a higher limit, or even applying for another card. (However, it’s important to note that this could tempt you to spend even more than you can afford to pay back, wreaking more havoc on your credit score.)
Your payment history and credit utilization ratios are two of the most important factors when calculating your credit score. Together, they make up to 70 percent of your credit score, so keeping these two in check is crucial. It takes time for your credit score to improve — late payments, for example, stay on your credit report for seven years. But the sooner you get started, the better.
What if we told you that you didn’t need to? There are lots of simple and easy ways to create a little breathing room without impinging on your quality of life – you just need some help working out what they are! Here are a few handy ideas to get you started.
Sell the stuff you’re not using
We’ve all looked around at some point and realised that we need a clear out, and whether it’s your wardrobe that’s bursting at the seams or your old TV gathering dust in the attic, it’s possible that there’s some money to be made. While we’re all for supporting charitable causes and donating to your nearest thrift store, take a long, hard look at what you’re throwing out before it finds its way into a plastic bag. Maybe those jeans don’t fit you anymore, but would somebody buy them if you uploaded them to Depop? Your television is missing a remote, but might somebody want it if you priced it cheaply and advertised it on Facebook Marketplace? One man’s trash is another man’s treasure, and no matter how little it’s worth, anything you move on equates to extra money in your pocket.
Make your home more energy efficient
Next up, it’s time to think about making your home more eco-friendly. Going green has many benefits, primarily for the environment, but it makes sense from a financial as well as an altruistic perspective. Luckily, there are lots of easy ways to make it happen. One of the simplest is to replace your lightbulbs with LEDs, which could purportedly save you around £240 per year on your energy bills. Air sealing your home will help too, decreasing your energy outlay by roughly 20 percent per month, as will turning the temperature on your water heater down a fraction. These might be small steps, but they could add up to some pretty significant savings. Remember, the less energy you use, the lower your bills will be.
Switch to pay-as-you-go or a SIM-only plan
Most of us spend a significant amount on our monthly phone bill, but is this really necessary? While you probably took out a contract to get the most up-to-date phone, lots of us stick with the same deal even when we have a perfectly useable handset and the option to terminate the original agreement. While it’s true that you could upgrade, ask yourself whether you really need to do so in the instant. If not, take our advice and contact your provider to end your contract. Once this is done, opt for pay-as-you-go or a sim-only plan instead, and you’ll find that you could save a tidy sum each month. There are so many good deals out there that you won’t even have to settle for fewer minutes or a less attractive overall plan.
Buy in bulk
We said that this article would help you to spend less, so asking you to shell out more than you normally would perhaps seem counterproductive. However, although a lot of people are deterred by the thought of a higher initial outlay, buying in bulk can save you a vast amount of money, and it requires no real sacrifice at all. If you’re wondering where you can do it, wholesalers like Costco are an obvious option, but there are also plenty of places online, from Amazon to British Cornershop. This article is particularly handy, and offers some great tips for getting to grips with it all.
Cancel your gym membership and take up jogging
The reality is that most people who have a gym membership are not getting their money’s worth. While you might go once or even twice a week as a rule, there are also periods where you’re too busy to visit at all, so perhaps it’s time to find a more cost-efficient alternative. Our advice is to cancel your membership and take up a free outdoor activity instead. Jogging is an obvious choice, but if it’s not to your taste, there are plenty of other free ways to exercise, from extending your daily dog walk to taking advantage of your local tennis courts or following yoga tutorials on YouTube. All of the above are free, fun, and will keep you fit to boot.
Keep an eye out for special offers and discounts
We promised that every method included on this list would give you the chance to save money without making your life miserable, and here is a perfect case in point. Instead of telling you not to spend at all, we simply suggest that you look for special offers and discount options before you buy. Imagine, for an instant, that you want to indulge in a little online gambling. Rather than going to the first provider you stumble upon, we’d recommend using an online directory site like Oddschecker to see what offers are out there. Similarly, if you want to purchase a new pair of jeans, we’d urge you to see what sales are on before paying full price for something you could get significantly cheaper.
Unplug your electrics when you’re not using them
We told you these solutions would be simple and straightforward, and it doesn’t come much easier than this one: make sure that you’re unplugging each of your devices when you’re not using them. Although most will consume only a small amount of energy when they’re in standby mode, this still drives up your monthly bill, and you simply don’t need to be paying the excess. An Xbox 360, for example, would add roughly 15 kilowatt-hours to your total if you were to leave it plugged in on standby for a month, so a small step like this really can make a difference. From your coffee machine to your phone charger and laptop, don’t have them plugged in unless it’s absolutely necessary.
When it comes to saving money, there are so many ways to do it, and lots of them require little to no effort to accomplish. Far from impinging on your life or forcing you to stay indoors and be miserable, they can even come with their own unique benefits, from helping to make your home more eco-friendly through to encouraging you to declutter. Isn’t it worth giving them a go to see how much you could save?
Of course, there are the traditional ways of saving such as budgeting and setting aside a certain amount of funds each month. But, without overly restricting your leisure activities, what everyday changes can you make to spend less?
1. Spend less on your energy bill
Make small everyday changes to lower the cost of your energy bill.
Did you know that 4% of your energy bill is attributed to cooking? Work on lowering this if you can. Your oven stays warm for a long time after you’ve switched it off. Try turning it off 10 minutes before you’re finished cooking to save on energy.
Instead of turning your thermostat up during the colder months, layer up instead to save on pennies! Switching down by just one degree Celsius can save you £85 per year — it all adds up. When it comes to showering, cutting your shower time down to 5 minutes instead of 15 minutes can save you £98 per year — less singing and faster washing!
2. Storing food properly
When we’re packing food away in the fridge or freezer, we usually don’t think about how it’s stored. But, the way that you put away your goods can have an impact on your energy bill.
If you pack your freezer more tightly, this keeps more of the cold air in when you open the door. This means that the appliance doesn’t have to work as hard to lower the temperature again. The same applies for the refrigerator too — a full fridge requires less energy to stay cool than one that’s empty. If you’re struggling to pack your fridge or freezer full, filling it with newspaper can do the job.
3. Save money booking holidays
Even when we’re trying to save money, we all deserve a holiday now and then! The good news is that you can save money by following a few top tips the next time you book a vacation.
Try and fly out on a Friday if you can, this can save you 18% on your airfare compared to if you flew out on a Sunday. Taking into consideration the average cost of a flight and the fact that the average Brit goes on holiday three times a year, you could save £85 annually by following this top tip.
Be calculative about when you book your holiday too. You can save £36 per year by booking your trip on a Monday as flights are 5% cheaper.
Consider packing more economically too. You can save £144 per year by only taking hand luggage on your flights. Squeeze more into your suitcase by rolling clothes and packing garments in your shoes.
4. Meal prepping
Being prepared when it comes to grocery shopping and planning lunches for the week can help save on cash.
Even making a shopping list before you head to the supermarket can help. In fact, 60% of people who take a shopping list to the supermarket said it saves them money. It stops you buying things that you don’t necessarily need and helps you stick to your budget.
Create a meal plan for the week too. This means that you’re only buying what you need and don’t need to spend money on unexpected lunches out. Statistics have shown that you can save an impressive £1,300 per year by preparing lunch at home rather than eating out during the week.
5. Eco-conscious coffee drinking
There are a few ways that you can be eco-conscious about your coffee drinking while saving money.
First of all, you can start by making your coffee at home when you can. You can save £507 per year by making your coffee at home instead of buying one each day from a retailer. If you prefer coffee from the store, why not take your own cup? This is helping the environment and you can save £150 per year as many high street retailers now offer 50p off coffee when you present your own cup.
Make the small changes above and watch your pennies turn into pounds this year! For more saving tips, check out True Potential Investor’s Life Hacks interactive.
Sources:
https://www.uswitch.com/energy-saving/guides/5-lifestyle-hacks-to-save-energy/
https://www.bobvila.com/slideshow/slash-your-electric-bill-with-11-savvy-hacks-48497#efficient-fridges
https://www.express.co.uk/life-style/life/755367/money-saving-tips-electricity-bill
https://www.telegraph.co.uk/travel/comment/how-airfares-have-fallen-since-golden-age-of-flying/
https://metro.co.uk/2017/05/13/how-far-the-average-british-tourist-travels-every-year-6635197/
https://www.skyscanner.net/news/tips/expert-tips-for-snagging-a-cheap-flight
https://www.statista.com/statistics/304108/number-of-passengers-on-united-kingdom-airlines/
https://www.skyscanner.net/news/7-ways-beat-easyjet-cabin-baggage-rules
https://www.moneyadviceservice.org.uk/blog/five-ways-to-save-at-the-supermarket
https://www.vouchercloud.com/resources/lunch-at-home-research
http://www.mintel.com/press-centre/food-and-drink/uk-coffee-shop-sales-enjoy-a-growth-high
https://www.thesun.co.uk/news/3979712/coffee-costa-starbuck-nero-chains-cost-each-year/
Below Gemma Platt, Managing Executive for Vigilant Software, discusses with Finance Monthly how we can restore consumer trust in the age of disruptive banking using better compliance measures.
Atom Bank launched publicly in April 2016 and secured total funding of more than £200 million by the following year, specialising in savings accounts and mortgages. In April 2017, online bank Monzo had its UK banking licence restriction lifted, allowing it to offer current accounts for the first time. Tandem, Starling Bank, Loot and Revolut are more digitally led financial services brands that didn’t exist a handful of years ago.
Changing consumer behaviour
Meanwhile, research by Accenture has shown that customers’ physical interactions with traditional banks are decreasing; from 2015 to 2018, the number of consumers who visit branches at least once a month dropped from 52% to 32%. Over the same period, the number of consumers who use ATMs at least once a month dropped from 82% to 62% – a decline of nearly a quarter.
In many ways, these shifts are unsurprising. We live in an increasingly connected world. As mobile devices become more powerful, and the networks connecting them faster, banks can offer better functionality to customers anytime, anywhere. If the goal is to put customers first, to tailor services to suit them and to work with their daily patterns, digital technology is a great enabler.
However, just as the digital era is disrupting the ways in which consumers engage with their banks, it is also disrupting the trust those consumers have in their banks.
Wavering trust levels
Trust, as all financial organisations know, is the foundation of their relationship with customers. When trust fails, so do banks.
According to Accenture, consumer trust in banks has been rising steadily, and is now at its highest point since 2012. It seems likely that, following the 2008 global financial crisis and subsequent recession, consumer relationships with their banks have stabilised.
However, at the same time, consumer concerns about cyber security and online fraud are on the increase. PwC research in 2017 suggested that a massive 85% of consumers would not do business with a company if they had concerns about its security practices, and 71% said that they found companies’ privacy rules difficult to understand. This was before the introduction of the GDPR (General Data Protection Regulation), which has shifted the issue of personal data protection into mainstream consciousness.
Similarly, the Ping Identity 2018 Consumer Survey: Attitudes and Behaviour in a Post-Breach Era, which surveyed more than 3,000 consumers in the UK, US, France and Germany, found that one in five of them had fallen victim to a corporate data breach, and just over a third of those had suffered financial loss as a result. Unsurprisingly, the survey also found that 49% of consumers would not engage a service or application that had suffered a recent breach.
Where banks are digitally led, two areas of trust collide. Customers might have more faith that their banks are reliable, well run and unlikely to collapse, but are simultaneously more fearful of the wealth of risks and threats in the online world, from the theft of their personal data to viruses and malware that can attack their personal devices.
Where banks are digitally led, two areas of trust collide. Customers might have more faith that their banks are reliable, well run and unlikely to collapse, but are simultaneously more fearful of the wealth of risks and threats in the online world, from the theft of their personal data to viruses and malware that can attack their personal devices.
Furthermore, research into the security posture of banks and other financial services organisations suggests that consumers may be right. When the Economist Intelligence Unit surveyed more than 400 C-suite executives at major banks around the world last year, it found that just under half of respondents believed that a cyberattack would cause “at least one systemic bank failure in the next two years as the digital transformation of the banking industry continues to automate the sector”.
In other words, as banks rely on digital technology more and more, whether to offer customer-friendly mobile apps; to automate manual processes to streamline management and reduce costs; or to take advantage of new innovations such as AI, Cloud computing and the Internet of Things, they expose themselves to ever greater levels of cyber risk.
‘Always on’ compliance
Digital banks – whether challenger brands that have entirely bypassed physical premises, or traditional institutions that have branched out into highly functional apps and websites – are ‘always on’. And this is precisely how they need to see their approach to cyber security and compliance.
Traditional approaches to regulatory compliance – whether with frameworks for best practice such as ISO 27001 or legal requirements such as the GDPR – tend to involve organisations undergoing a single period of reviewing, updating their tools and processes accordingly, and creating a record for audit purposes. This is repeated perhaps once a year to demonstrate that compliance is being maintained.
However, in a dynamic, digitally driven world, compliance needs to be dynamic and digitally driven too. This means undertaking compliance checks more frequently and maintaining online dashboards that offer a real-time snapshot of the current compliance posture and are automatically updated when elements of the organisation’s digital infrastructure are changed. Banks have embraced digital technology to offer their customers something new; the next step is to use digital portals, dashboards and compliance management tools to ensure a next-generation approach to building trust.
While there are many things that we can do to try to save money when we make purchases or try to live frugally, there are also ways to keep better track of our finances. Maybe some of what we consider to be immutable expenses are actually a lot more flexible, or perhaps we have spent money somewhere that we can claim back. By restructuring our monthly plans, we are actually able to save money with very little effort. Here are two things we may have overlooked when crunching the numbers for that budget.
Claiming Money Back
Sometimes we end up spending for something but are actually due a lot of that money back. PPI is an infamous example of the way many people ended up spending money on something they didn’t need to. Another common area where people miss their opportunity to claim money back is air travel. Flightright offers air passengers online legal advice for claiming compensation for disruption to their travel stemming from things such as bad weather, strikes, flight cancellations and flight delays. This legal advice is easy to follow, transcends complex jargon, and 99% of cases have been successfully won in court. This works with airlines such as easyJet, which is referred to by some as Britain’s most unpunctual airline. What's more, train companies in the UK such as LNER, offer delay repay, which promises to refund the price of tickets if the train or its alternative was delayed by more than 30 minutes. Claiming money back when the services we expected haven’t been up to par isn’t just part of our consumer rights but could actually make a significant difference and can change an inconvenience into a welcome relief.
Claiming money back when the services we expected haven’t been up to par isn’t just part of our consumer rights but could actually make a significant difference and can change an inconvenience into a welcome relief.
Change Your Provider
It can often seem paralyzing: We sign up to a contract service and are forced to stay with them because shopping around and cancelling the contract seems too much hassle, or seems to incur additional fees. However, long-term contracts with necessary services such as internet providers, phone companies, energy providers and even banks may not be giving us the best deal; in fact, they may be costing us more than their competitors. How much you pay for a service depends on many factors, but shopping around and seeing what you should be paying could result in you clawing back a significant amount of your monthly budget. For instance, according to Martin Lewis at Money Saving Expert, your energy bills could be cheaper if you investigate cheaper tariffs and other methods of making payments such as a direct debit. Even threatening to cancel or swap could sometimes shock your current provider into giving you a better service or cheaper deal, so it pays to go down that route as well.
How much you pay for a service depends on many factors, but shopping around and seeing what you should be paying could result in you clawing back a significant amount of your monthly budget.
By making sure that you recoup any unnecessary payments and collecting all money owed to you, you will find that you could be making greater savings each month. Similarly, by shopping around for all your providers and being savvy about it, you could be spending less each month. As a result, your outgoings are decreased with very little effort on your part.
This is according to a recent study by KnowYourMoney.co.uk. Meanwhile, separate data shows that, in total, there are just over 11 million mortgages across the country, with the combined value of the mortgage market coming in at £1.3 trillion. Here John Ellmore, Director at KnowYourMoney.co.uk¸ discusses further the correlation between a lack of financial planning and subsequent mortgage troubles.
It’s a huge market, and for most people a mortgage will be the largest single debt they take on in their life. It is vital, therefore, that consumers are thorough and diligent in both finding the right mortgage product and making mortgage repayments.
Navigating the mortgage market
Returning to the aforementioned research by KnowYourMoney.co.uk, not only did the survey uncover the types of debt people have, but it also offered insight into the ways Britons are managing their finances. And there were some concerning findings.
Most notably, two thirds (67%) of those in debt have no savings stored away to enable them to pay off debt if required, with men (73%) more likely than women (62%) to lack a financial safety net. Furthermore, nearly three in ten (29%) said they do not feel in control of their debt and have no plans of how they will pay it off.
In light of these figures, it is perhaps less surprising to note that 24% of people in debt said they lose sleep because of it.
When it comes to mortgages, planning and preparation are key. Indeed, with so many mortgages available – 4,214 new products were introduced into the residential mortgage market between 2016 and 2018 alone – choosing the most appropriate option can be challenging.
Importantly, this challenge starts with an individual understanding his or her personal finances.
Debt-to-income ratios
Essential within this planning phase is to know one’s debt-to-income (DTI) ratio. In short, this offers an indication of how much debt a person has in relation to their earnings – it is calculated by dividing total recurring monthly debt by gross monthly income.
But many people are in the dark about DTI ratios; 44% of UK adults do not know what their debt-to-income ratio is, with 39% admitting to not understanding the term.
This needs to be addressed. Without understanding exactly how much debt one can responsibly handle, securing the right mortgage is extremely difficult.
Of course, a mortgage provider will undertake its own due diligence in ensuring a borrower’s income is sufficient for the terms of a particular mortgage. However, in truth, the lender will never be able to match the borrower’s granular insight into their finances.
Avoiding bad debt
Ultimately, despite the negative connotations that still surround the word, debt is an extremely valuable financial instrument. It enables people to pursue life goals otherwise out-of-reach. But we must recognise there are good debts and bad debts.
Good debts are both manageable and will provide value to the individual – mortgages are a prime example of this, assuming the amount borrowed can be repaid. Bad debts are those that cannot realistically be repaid or provide no value – taking on debt to pay-off other debt is a common example of this.
Mortgages, by and large, are good debts, but only when the monthly repayments can be made without being overly restrictive to a person’s financial situation. The first step is for consumers to ensure they know what their DTI ratio is – a task that takes just a few moments thanks to online DTI calculators.
Failure to do so could cause problems down the line. Illustrating this point, it is estimated around 88,000 mortgages in the UK are in arrears of 2.5% or more, while there are 52 mortgage possession claims made every day.
To avoid falling into this situation, borrowers must be sure they only take on good debt. Moreover, whenever possible they should set aside savings to help make repayments in case of cash flow issues or interest rate changes in the future.
Thorough preparation and careful management are at the heart of any successful financial strategy, and when it comes to mortgages these are essential in ensuring people navigate the market safely and only accrue debts in a safe, responsible manner.
You came to the right place. In this article, we will see how to apply and secure a personal loan.
What to Do Before Applying for a Personal Loan
1. Check Your Credit Score
A higher credit score will make it easy for you to get a loan. If your credit score isn’t good enough, then take steps to increase it before applying for a loan.
You can get a loan with a low credit score but at a higher interest rate.
2. Consider Different Lender Options Online
People usually go to banks to take a loan. Since the banks would be aware of your financial credibility, they would be flexible in offering you a loan.
However, you can also consider other lenders and any Non-Banking Financial Company (NBFC). Verify their credibility before approaching them. Check for loan costs, interest rates, terms and tenure.
3. Compare the Interest Rates
Shop around to check what interest rates different lenders are offering. Compare the loan amounts and the required monthly payments too. Some financial institutions may offer you an unsecured personal loan while a local bank may offer better interest rates.
Apart from comparing personal loan interest rates, check what other charges you may have to bear. These may include processing fees, payment penalties, and foreclosure charges.
4. Check your Eligibility
Banks or other lenders require you to be salaried or self-employed to be eligible for a loan. You should be in a particular age bracket as well.
5. Check the Documentation Required
Check all the documents you require to apply for the loan. These may include your recent payslips, letter of employment, current address, photographs, etc.
6. Choose the Appropriate Lender
Choose a lender who gives you a flexible tenure and different EMI options to pay off the loan. Use an EMI and personal loan interest calculator online to estimate your monthly cash outflow.
7. Read the T&C Document Carefully
Make sure you understand all the terms and conditions before you apply and secure the loan. If you have any queries, ask the lender immediately.
Once you complete the above-mentioned steps, you can apply for the loan – either online or through the financial institution’s app.
How to Apply for a Personal loan
8. Online Application
Fill up the online form and upload all the required documents. In this step, you need to mention:
- Desired loan amount
- Contact details
- Email ID
This is the stage when all the documents will be verified. The financial institute will check whether you are eligible for the loan or not. Once all the documents are verified, you will get an instant e-approval.
After the verification, the loan disbursal process will be initiated. You will have to e-sign the loan agreement document. By doing this, you agree to abide by the terms and conditions of the lender.
Once you e-sign the document, disbursal process will be started. Provide your bank account details where the loan amount will be disbursed.
9. Requests through E-mail or Phone Banking
Leave a request for a personal loan with the bank either through the customer service centre or an e-mail. The financial institute will review your eligibility and contact you to take the process ahead.
10. Offline Request at the Bank
If you don’t want to go the online route, go to the nearest bank of your choice. Talk to a relationship manager and request a loan.
Getting a personal loan has become a very simple process. You can use instant personal loan apps and have the loan amount in your bank account in no time.
The SME market is becoming a key target sector for most banks, but these often more agile organisations demand a better digital approach, and according to Kyle Ferguson, CEO of Fraedom, a personal touch is what’s needed.
Thanks to technological advances within retail banking, the way we bank in our personal lives has changed dramatically. No longer do we wait for bank statements to arrive at the end of each month to get an idea of our spending; instead, we are able to do this whenever we want, and often in real-time, via an app on our phone. This evolution of banking in our personal lives has fuelled a change in expectation among SMEs who are demanding the same experiences and offerings within the world of business banking. As a result of this change in expectations, SMEs are demanding a better digital approach as reflected by 57% of SMEs that now want to move to an online/mobile banking business environment.
However, banks are currently struggling to meet the demands of SMEs and deliver the more personalised service and consumer-focused offering the majority desire. Yet, with a combined annual turnover of £2.0 trillion and accounting for 52% of all private sector turnover in the UK in 2018, SMEs are a highly lucrative market that banks can’t afford to ignore. So, where should banks start and how can they begin to attract SMEs?
Developing a digital offering
According to a survey conducted by Fraedom, 95% of commercial clients who bank digitally in their personal lives, expect to do so at work as well. Ultimately, SMEs want the same digital capabilities, such as apps and online platforms, they get as personal customers. Yet, just 43% of SMEs claim to have near real-time control over business spend. Similarly, almost a third of respondents feel they have very little visibility on a day-to-day basis and nearly a quarter confessing to having to regularly spend significant time and money investigating who spent what. Furthermore, over half of UK respondents said that on average they were personally spending more than two hours a week on expense or financial management tasks. The need to regularly go back and interrogate audit trails can be a further drag on a business’ efficiency and productivity.
Just 43% of SMEs claim to have near real-time control over business spend.
In our personal lives, we now have seamless mobile transactions, highly responsive customer service and fast transaction times. Yet, although personal bank statements typically update in real time and can be viewed on a mobile device, reconciliation of work-based expenditures can take days, if not weeks to process. It is therefore unsurprising that SMEs are left frustrated by the lack of innovation offered by banks and are demanding banks provide the same tools, level of service and personalised experience we have become so used to in our personal lives.
Gaining an understanding of SMEs
Banks’ engagement levels with SME customers have also been revealed by Fraedom to leave a lot to be desired with just 12% of UK SMEs saying they thought that banks their organisation had dealt with over the past year fully understood their needs as a business. It is therefore vital that banks work to understand the needs of SMEs and also learn to speak the same language.
This understanding of SMEs also extends to ways in which they want to interact with banks. For instance, the 2018 FIS Performance Against Customer Expectations (PACE) found that almost half of UK SMEs prefer to contact their bank through digital methods via a tablet or mobile, for example. Banks need to keep this in mind and offer preferred methods of communication if they are to really tap into this lucrative market.
The SME sector is a truly lucrative market for banks, and ignoring their pleas for a more digital, personalised approach would be a mistake.
Moving forward together
The SME sector is a truly lucrative market for banks, and ignoring their pleas for a more digital, personalised approach would be a mistake. It is vital that banks begin to innovate to answer this demand with partnering with fintechs often being the most effective way of doing this. Through fintech partnerships, banks will be able to not only implement the right technology but also to get a better understanding of their SME client-base. As a result, banks will be better able to understand the consumerisation of business processes and technologies; the eagerness of SMEs to adopt these to achieve enhanced agility; and the frustration they feel if they sense that banks are effectively not speaking their language.
This tailored service will allow banks to build lasting, more trust-based relationships with SME customers, while SMEs will gain greater business agility, streamlined efficiencies and increased visibility of expenditure.
The concept of sharing is so far ingrained in our everyday that most of us couldn’t imagine living in a world where we can’t share a ride, couch-surf or leave our dog with a stranger at the tap of a screen. The advancement of the sharing economy, defined by Google as an economic system in which assets or services are shared between individuals, is a prime example of this.
In fact, per the Innovation Report 2018 published by Lloyds, the global sharing economy is expected to grow to $335 billion (approximately £261 billion) by 2025. That’s considerable growth in comparison to 2014, when the estimated size of the global sharing economy was circa $15 billion (approximately £12 billion.)
This isn’t surprising when in theory the sharing economy is supposed to save resources, strengthen regional and local communities, cut costs, enable consumption for lower income groups, increase investments and provide new jobs. However, while there is a plethora of benefits to the sharing of assets and services, there is also countless risks.
In analysing Lloyd’s innovation report, British marketplace OnBuy.com wanted to share how American and British consumers feel toward the sharing economy and what they believe the risks and benefits are.
To achieve this, OnBuy designed graphics to showcase data collated by Lloyds from more than 3,000 US and UK consumers as well as representatives from 30 sharing economy companies.
In terms of benefits, both American and UK consumers believe ‘it can be cheaper for users’ - the number one benefit to the share economy, at 60% and 58% respectively.
Thereafter, it is clear American consumers are more enthused with other benefits, such as ‘it is more convenient for users’ and ‘it provides more flexibility for users’ at 52% apiece.
Comparably, just 39% of British consumers believe ‘you can earn money from your assets when you aren’t using them’. While 43% of American consumers would say the same.
In terms of risks, American consumers believe ‘there’s a risk to personal safety interacting with strangers’ which is cited as the number one risk to the share economy, at 60%.
While British consumers are caught between ‘there’s a risk to personal safety interacting with strangers’ (44%) and ‘there is no guarantee of the quality of the service or facilities (44%) in sharing their opinions on the number one risk.
Other risk factors to consider include ‘people sharing their assets could have them damaged’ (American 46%; UK 42%) and ‘people sharing their assets could have them stolen’ (American 43%; UK 41%.)
Lastly, 37% of American consumers and 33% of British consumers agree ‘there aren’t sufficient safeguards or protections in place for users’ in the sharing economy.
Cas Paton, Managing Director of OnBuy.com, comments: “If the sharing economy is to reach the proposed $335 billion mark in 2025, the industry needs to thoroughly consider the opinions of consumers. Today, the way people spend money and interact with the everyday is changing. Companies need to match this change with innovative products which meet the needs and expectations of their customers.
To combat risk, Lloyds recommends sharing economy companies partner with insurers to enhance credibility, instil confidence and build trust to drive business growth and gain a competitive advantage. I truly believe this is the way forward. Especially considering 58% of American and UK consumers currently believe the risks outweigh the benefits of using sharing economy services.”
(Source: OnBuy.com)
Martin Lewis, founder of moneysavingexpert.com says: “Everyone should take time to manage and boost their credit score. It's no longer just about whether you can get mortgages, credit cards and loans, it can also affect mobile phone contracts, monthly car insurance, bank accounts and more.”
However, what happens when applicants realise that their credit score is at the lower end of the rating scale?
How do you improve it and how long will this take?
First, what could be impacting your credit score?
Several factors impact credit scores, each contributing to the score credit reference agencies provide applicants.
Not being on the electoral roll
It's pretty easy to rectify if you are not on the electoral register - all you have to do is register with your local council. Lenders like when applicants have an address that confirms where they are. So if you are not on the register, do so as soon as possible.
Taking out too much credit at once
If applicants make several credit applications simultaneously, this does not look great to credit lenders, almost appearing as desperate, suggesting to lenders that you’re relying heavily on credit to manage your finances.
Using too much of your available credit
For some credit lenders, their preference is for borrowers to not use more than 25% of their total credit limit at any one time. For example, if an existing borrower has a credit limit of £2,000, they should not have more than a £500 spend on the account.
Borrowers who wish to improve their credit scores will need to repay some of the used credit limits to sit under the 25% spend. This is not an exact science as other factors still come in to play yet those who adopt this approach, will see their credit score rise.
Having too much available credit
This may sound weird, yet having lots of empty credit cards can adversely impact a score. Newer lenders worry that if they lend to you, you could still take on more credit with your other empty credit cards, thus making it riskier for you to repay them.
The point here is, do you need all that available credit? Keep the ones you use to spend and repay on time regularly, and ditch the ones you no longer use at all. Old balance transfer credit cards are an obvious target for closure.
Having the ‘wrong’ credit
Whilst this may be controversial, those with loans and credit from high-interest payday loan lenders like Wonga, or whopping interest-rate APRs on so-called credit builder credit cards could see their credit scores take a plummet. Lenders see these as the only credit you can receive rather than traditional borrowing like from a bank.
No or little credit history
Again, this may sound counter-productive, yet those who have lower scores are also those that have never used or only borrowed a long time ago. For lenders, this means that they have little credit history of you as a borrower - and thus whether you are actually able to repay in the present.
You will need to demonstrate that you can manage credit over a few months before seeing any improvement. A tip is to get a small balance credit card and pay it off each month.
Debt, Bankruptcy's & County Court Judgements
Debt, bankruptcy's and CCJs will linger on your credit report for six years. There is definitely no short-term fix here - the only option is to ensure that in these six years you remain debt-free and maintain an excellent financial position. Finally, this will be reflected in your credit score, yet it won't happen until the six years are up.
Being financially linked to another person
Being financially tied to someone – something that usually occurs when you share a financial account, like a joint saving or current account, or even a mortgage; will impact your credit score.
Sadly it is a fact, many couples separate or divorce, and if their score is terrible, this will still impact yours. The tip here is to contact each credit reference agency and ask for this link to be removed. Next time your credit report is refreshed - the link should be removed.
How long will my credit score take to improve?
Each bank, building society, online lender, local authority and other relevant organisations have their own timescales for updating credit reference agencies with the latest information. It could be several weeks before applicants notice any changes in their credit report.
Improving credit scores is about ensuring that you make smart choices about your financial situation, and having the determination to see it through.
So, first, check what is impacting your score, and then ensure that you update every credit reference agency. Sadly, there’s no overnight fix but having a good credit score is worth the effort and will set you up for a stable financial future.
