But if you have to spend £20 every year on a replacement pair, then over three years that’s £60 spent. It makes more sense to spend that £60 at the start on a pair of shoes that will last three years or more, especially if they are more comfortable and a higher quality.
Your shopping habits have a huge effect on the environment too, and it is certainly suffering for these so-called ‘fast-fashion’ trends. While scooping up a dress for £5 might seem like an exciting bargain, let’s be honest, the price might be more the motivator in the purchase than the style, quality, or comfort. More and more of these clothes just end up being worn once or twice before heading to the bin. In fact, in a survey by Method Home, of 2,000 British shoppers, nearly a fifth admitted to throwing clothes in the bin.
What impact can fast fashion have?
With fashion trends changing faster than ever before, there’s an increasing pressure on consumers to change up their wardrobes faster. But, with our money only stretching so far, many of us are turning to cheaper outlets for our clothing.
Cut-cost fashion must also find somewhere to make savings along the production line. You can’t sell a £5 dress without using cheaper materials and such. This often leads to garments made quickly with non-organic fabrics. Plus, as the Independent reported, the process of dying these clothes is the second largest contributor to water pollution.
While the short-term purchase may be cheaper, the cost to keep replacing the item over the years will add up. If a more expensive version will last a number of years, it could end up being comparatively cheaper.
By its very nature, it is expected that the garment you have purchased will not be kept long, nor will it be expected to last for years. On the flip side, fashion with an emphasis on quality and durability will see you through. This manifests particularly in the threads lost during washing. Cheap clothes tend to shed tiny microfibres when washed, which end up polluting our oceans.
The cost of quality
As Life Hacker rightly states, a high price doesn’t always mean high quality. Here’s some top tips for spotting good quality shoes and clothing:
- Spares for repairs — this is like a calling card from the designer. If the item comes with spare buttons, then the item is expected to last enough for it to require a button mend at some point!
- Check the pattern matches at the seams — it’s the little things that are the biggest giveaway!
- Look for gaps in the stitching — an item that will last will have no gaps between stitches on the seam, and also have more stitches per inch. Take a good look at those stitches!
- Don’t look at the price tag — as mentioned before, this isn’t always an indicator or quality. People can, and will, charge good money for a poor product. Take a look at the item itself.
- For clothes, scrunch them up a bit — take some of the material in your hand and ball it up for a few seconds, then let go. A good quality material will survive and the wrinkles will fall out. Cheap material will stay wrinkled and creased.
Leather ankle boots for example are versatile and can be used for range of occasions, so make sure to buy a quality pair to withstand all those wears! Divide its cost by the amount of times you think you’ll wear it and that will give you the cost per wear. If it’s something you’ll wear every day, definitely check the quality of the item! Remember, the ‘bargain’ comes in how many times you think you’ll wear the item. It’s always recommended to invest a little in timeless staples that can be mixed and matched for a variety of outfits.
Sources: https://theecologist.org/2018/oct/30/fast-fashion-method-madness https://lifehacker.com/cheap-clothes-are-too-expensive-buy-quality-instead-1751019637 https://fashionunited.uk/news/fashion/method-soap-brand-wants-to-clean-waste-in-fashion/2018101239428 http://www.wrap.org.uk/content/love-your-clothes-waste-prevention https://www.independent.co.uk/life-style/fashion/environment-costs-fast-fashion-pollution-waste-sustainability-a8139386.html https://www.itv.com/news/2018-10-31/britains-love-of-fast-fashion-is-harming-marine-life/ https://www.cbc.ca/news/canada/london/like-uber-for-clothes-stmnt-startup-fight-fast-fashion-closet-rentals-1.4902265 https://www.buzzfeed.com/alisoncaporimo/clothing-quality-clues?utm_term=.dewknndvZ#.jdqgLLJQ3 https://www.liveabout.com/how-to-spot-quality-clothing-1387970
But have you ever thought about where these came from, or how each savings initiative has changed over the years? In the following infographic, personal pension specialist True Potential Investor has taken a step through time with this question in mind.
Did you know that the first known building society formed for groups of individuals who were looking to help each other to buy property? Or that the Bank of England was founded towards the end of the 17th century to fund the war effort against France? How about that the Amsterdam Stock Exchange was believed to be the world’s first stock market?
Discover even more fascinating facts by browsing through the full infographic below…
Below Finance Monthly hears from Jeannie Boyle, Director & Chartered Financial Planner at EQ Investors, who provides 5 top financial planning tips to help you on the right path to a financially sound 2019.
1. Set goals for the life you actually want
Work out what you want from life and make your money work towards that, rather than vice versa. Your priorities will naturally change over time, so taking the time to differentiate your short, medium and long term goals will help keep you focused and on track through the inevitable bumps in the road.
2. Make the most of your tax-free allowances
With tax allowances, it’s a case of use them or lose them. Ensure you and your partner are using all available allowances; personal, savings and dividends. If you haven’t taken advantage of this year’s Isa, junior Isa, lifetime Isa or annual pension allowance, the 5 April is your last opportunity to do so in the 2018-19 tax year.
3. Get pension savvy
An increasing number of individuals will be affected by taper annual allowance as carry forward is used. For those with taxable incomes of over £100,000 per ann
m, it’s worth having a review to check employer and employee contributions remain appropriate. From April, the pensions ‘automatic enrolment’ regime will see the minimum amount paid in rise from 5% to 8%.
The Lifetime Allowance increases with CPI inflation from £1,030,000 to £1,055,000. Also make sure that your expressions of wish for pensions are regularly updated.
4. Build a picture of your current and future finances
Financial planning is all about anticipating the consequences of different choices and situations. By looking at your income, outgoings, savings and other assets, you can crunch the numbers to create a long-term projection of your finances. Identifying trends (positive or negative) can help to give you the best chance of achieving your goals and have a huge impact on how in control of your finances you are.
We’ve designed our free online health check to help you measure your financial fitness, and to see what your finances might look like in the future.
5. Peace of mind
One person in the UK develops dementia every three minutes, so stay in control and plan ahead by setting up a Lasting Power of Attorney (LPA) and allow powers for discretionary management. Every adult with assets should look at getting an LPA, otherwise your loved ones will need to apply through court. And don’t keep putting off getting or updating a will.
With a world that increasingly relies on the individuality of society, transformation towards bespoke platforms and mechanisms is inevitable. Here David Orme, Senior Vice President of IDEX Biometrics, discusses the growing benefits of biometrics in the world of money, a world which for consumers is deemed one of the most private and personal to each of us.
Sadly, our relationship with money and purchases is not as personal as it used to be. Gone are the days when people would visit their local banks, queue up at the kiosk and request to withdraw cash from their account via the bank clerk.
Modern technology has positively shaped personal finance in many ways by providing convenience and security through areas such as online banking and payment cards. As a result however, our personal relationships with our money is quickly deteriorating.
After all, we live in a world of personalised experiences. Amazon offers us individual recommendations, Spotify suggests great new songs based on our listening, and Netflix knows what we’ll love to watch. We now expect everything to be unique and tailored to us and our personal preferences. It puts us in control and validates that we are each individuals with our own specific likes and needs; that in a world of 7.6 billion people, we have a voice.
This taps into an innate love of the personal... Something that reflects who we are: from a monogrammed shirt, a personalised number plate, a tailored itinerary for your holiday to simply how you like your coffee.
Yet there are some things in life that have resisted being personalised: credit and debit cards are one such example. They’re all the same. All dull and functional. Generally, the only way to personalise cards currently is to use a PIN with significance such as a birthday, as insecure as that may be.
But as the protagonist from the 60s TV show, The Prisoner, famously shouted “I’m not a number!” None of us are numbers. We are all unique. And what is more unique than our fingerprints?
Biometric intervention
Our society has become increasingly security conscious, in a landscape characterised by the rising skill levels of cyber criminals. With biometric technology already implemented as a security measure in airports, and even on the latest smartphone devices, the idea of fingerprint recognition should not be a foreign concept. Instead, due to it already being a consumer habit, biometric payment cards will be easily adoptable, thus paving the way for a smooth transition.
Traditional methods of authentication such as the Personal Identification Number (PIN) are becoming more and more outdated. Failing to combat fraud, the PIN has seen millions lost to scams ranging from shoulder surfing to lost and stolen, even to opportunist criminals discovering PIN codes written down.
By introducing a biometric payment card, consumers will be far more protected from fraud, which will eventually bring an end to the PIN. By storing a fingerprint sensor directly onto the payment card, as opposed to a central database, there is nobody else in the world that will be able to connect with the card to issue a transaction other than the owners themselves. Thus, creating a far more accurate method of authentication and the ultimate personal relationship between consumers and their cards. With everything else now seemingly moving towards a digital platform, this is the last piece of physical interaction in payments and therefore a much-needed opportunity to build a personal connection and better security to combat fraud head-on.
Specifically, the reference fingerprint can easily be uploaded to the card by the user, at home, and once that is done they can use the card via existing secure payment infrastructures — including both chip and ID and contactless card readers — in the usual way.
Once it is registered and in use, the resolution of the sensor and the quality of image handling is so great that it can recognise prints from wet or dry fingers and knows the difference between the fingerprint and image ‘noise’ (smears, smudging etc.), that is often found alongside fingerprints. The result is a very flexible, durable sensor that provides fast and accurate authentication.
Fingerprint recognition will provide a clearer means to distinguish an individual from everyone else on the planet. This technology will not only assist the financial sector, instead, its benefits will transcend into a range of areas, from bolstering national identification which will help address healthcare and social fraud, assisting financial inclusion and maintaining access to controlled spaces such as government buildings.
How soon is now?
Fortunately, the long-held ambition to add biometrics to cashless transactions has now been achieved. The production and trials of an extremely thin, flexible and durable fingerprint sensor, suitable for use with payment cards, is underway in countries such as Bulgaria, the US, Mexico, Cyprus, Japan, the Middle East and South Africa.
However, we anticipate that each banking customer may deploy as many as 100,000 biometric cards to their account holders by the end of 2018 and that biometric bank card adoption will go into many millions from 2019. Paving the way for payments to become personal once again.
Personal relationships are a key part of life, they offer us a sense of importance and happiness. The time is now for this to extend to our payment cards. Biometric payment cards will create a unique connection, with transactions exclusive to the owner, shunning anyone else on the planet trying to access the sensor. Not only is this integral to creating a personal relationship between the card user and their bank, but the security benefits are therefore more profound as the challenge of forging fingerprints is a far more complex one for criminals
Though biometric technology is already in-place across our society, its potential within payments has yet to be truly discovered. Before this can be achieved, banks need to gain consumer trust and promote the value of biometric technology before its benefits can be realised by us all.
Post holiday blues could hit hard for British holidaymakers this year as independent research recently released by CYBG’s digital banking service B reveals 33% of people experience challenges when they return home due to spending more than they can afford.
With the peak summer holiday season only a week away, B’s research predicts British tourists will spend an average of £1,175 per person on their getaway plus an additional £118 on pre-trip purchases. The bulk of pre-holiday spending goes on a holiday wardrobe, followed by toiletries such as sun cream. But British consumers are in a ‘spend now worry later’ mindset with the majority (57%) admitting they’re putting their holiday on a credit card, and a tenth saying they have no idea when they will be able to pay off the bill. More than half (53%) of those polled say they don’t save for flights while just under half reveal they don’t save for accommodation costs (47%) or spending money (48%).
Louise Hodges, Head of Consumer Communications at B says, “Holidays are something people find very hard to give up and that’s understandable. The benefit of time away from the office or home is well documented, so getting away should be encouraged. What should be kept in mind however is the importance of sticking to a budget and not ignoring the reality of how to pay for that break. If, as our research shows some people are relying on credit to afford household bills due to blowing the budget, there is a risk that all that unwinding on holiday could soon be undone when normal life resumes.”
Jane Anderson, Editor at Family Traveller says: “Holidays are one of the highest value purchases people make, but it is entirely possible to book two weeks in the sun without spending a fortune. All-inclusive holidays continue to grow in popularity - largely because it’s easy to retain control of spending with this option. In recent years there has been a real trend for luxury resorts and hotels to start offering all-inclusive which has widened the appeal”
“Destination-wise the Costa Brava in Spain is affordable this year – flights to Gerona airport are the best value. After falling out of favour for several years we are starting to see consumer confidence return in Egypt and Tunisia as holiday options – prices are still very competitive as the destinations continue to work hard to attract the British tourist.”
In terms of how British tourists prioritise holiday spending, the top outgoings this year are 1) dining out (28%) 2) drinking in bars/restaurants (21%) 3) activities i.e. day trips/ excursions and 4) food and drink to self-cater (18%). Just 13% of holidaymakers say they set a daily budget and don’t exceed it.
When asked if they could make savings/cutbacks to reduce the overall cost of their holiday, more than half (56%) say they could, but a quarter admit they won’t bother - either because they don’t care about the cost or they don’t want to make cutbacks whilst relaxing.
Louise added: “Reducing holiday spend doesn’t mean reducing holiday fun. Simple savvy habits like not getting currency at the airport (as it is invariably more expensive) and making sure your credit card doesn’t charge you on foreign transactions, lead to money-saving with zero impact on the holiday experience. B’s credit card has a 0% non-Sterling transaction fee and a low rate of 9.9% (variable) on purchases and balance transfers. It also links to the B app so users can tag credit card spending and see instantly where the money is being spent. We built our credit card to help people to get more summer for their spending.”
(Source: CYBG PLC)
According to the latest YouGov debt research commissioned by Equifax, 15% of UK adults have missed a payment on a credit card or short term loan at some point. Almost a third (32%) of UK adults with a credit card admit that, in a typical month, they don’t pay off their credit cards debts in full, with over half (52%) of these saying it’s because they can’t afford the full monthly balance. With the net lending to individuals in the UK increasing by £9.68 million a day in March 2018 and an average debt to income ratio per adult in the UK at 114.4% as of May 2018 , Equifax asks the question: is all debt bad?
Household debt has been on the increase over the past few years, fuelled by squeezed wages and rising inflation. Last year alone the total credit card debt of households across the UK stood at £70 billon by November – equating to an average debt of £2574.00 per household. Whilst using credit can be useful for various reasons, there is a tipping point where the borrowing can turn into unmanageable debt. If someone can no longer afford to repay their debt they may have to opt for an Individual Voluntary Arrangement (IVA) or even declare themselves bankrupt.
Lisa Hardstaff, consumer credit expert at Equifax, comments: “According to our YouGov research, 40% use credit cards for day-to-day spending, which isn’t strictly a ‘good’ or ‘bad’ thing. But 13% of respondents have gone into their overdraft limit without approval from the lender, which could mean incurring extra charges and fees. Our infographic aims to help consumers see the different kinds of debt and recognise the risks, whilst outlining steps they can take to regain control of their finances.
“Not all debt is bad. If it’s managed properly and paid off, loans and credit cards can help people make plans and deal with unexpected events and emergencies. However, it’s vital that people understand the basics of budgeting, otherwise borrowing can spiral out of control. The first step to budgeting is understanding what’s coming in in terms of wages, benefits and other income. Individuals also need to take stock of their outgoings, including bills, pensions, loans and daily purchases, such as coffee or clothes. By subtracting their total spending from their total income, individuals will be able to see if there’s a shortfall and make positive changes.”
(Source: Equifax)
Nine out of ten workers are ‘financially sleepwalking’ into retirement, reveals new research.
Carried out by deVere Group, the research finds that 89% of all new, working age clients did not realise how much money they would need in order to fulfil their own retirement ambitions before they began working with an independent financial adviser.
More than 750 new and potential clients in the UK, the US, Australia, South Africa, Hong Kong, Spain, Qatar, France, Germany, and the United Arab Emirates participated.
Of the findings, Nigel Green, founder and CEO of deVere Group comments: “It is very alarming indeed that nine out of ten workers are financially sleepwalking into their retirement.
“The poll concludes that the overwhelming majority simply do not know just how much they will need to save during their working lives to fund the retirement they desire. Not knowing how much they will need for something as important as funding their retirement is worrying.”
He continues: “It’s particularly concerning in this day and age because we’re all living longer meaning the money we save has to last longer. Also, because governments are unlikely to offer the same level of support as they have done for generations before due to an ageing population and shrinking workforces; because living, health and care costs will increase significantly; and because company pensions are less generous, if they exist at all.”
How much people need to be putting aside now, and in the years to come, in order to be able to enjoy the retirement they want for themselves and their families does vary from person to person, of course.
However, as Nigel Green observes, there is a consistent theme: “Before they have an initial meeting with an adviser, the vast majority of people underestimate how much they need to be putting aside for their retirement. This is the case across all incomes, working age brackets and nationalities.”
He adds: “People are typically shocked when it is revealed how much they should be saving now to realise their own retirement ambitions later on. They have usually considerably underestimated the money they will need.”
The deVere CEO concludes: “Despite the shocking poll, there are always methods to plan and maximise retirement savings at every stage of your working life.
“But it cannot be stressed enough that the earlier you start your retirement planning strategy, the easier the journey to hitting your goals will typically be. I would urge people to take their heads out of the sand and get informed.
“By putting in place a clear, workable plan, you’re laying the foundations to have a comfortable and financially secure retirement.”
(Source: deVere Group)
Sharing confidential information is a data protection issue with more and more red tape every day. With more and more apps differentiating encryption methods, this becomes even harder to manage for authorities. Below Finance Monthly hears about the potential for banking fraud via apps such as WhatsApp from Neil Swift, Partner, and Nicholas Querée, Associate, at Peters & Peters LLP.
As ever greater quantities of sensitive personal data are shared electronically, software developers have been quick to capitalise on concerns about how susceptible confidential information may be to interference by hackers, internet services providers, and in some cases, governmental agencies. The result has been an explosion in messaging apps with sophisticated end-to end encryption functionality. Although ostensibly designed for day to day personal interactions, commonplace services such as WhatsApp and Apple’s iMessage use end-to-end encryption to transmit data, and more specialised apps offer their users even greater protection. Signal, for example, allows for its already highly encrypted messages to self-destruct from the user’s phone after they have been read.
The widespread availability of sophisticated and largely impregnable messaging services has led to a raft of novel challenges for law enforcement. The UK government, in particular, has been outspoken in its criticism of the way in which end-to-end encryption offers “safe spaces” for the dissemination of terrorist ideology.
Financial regulators are becoming increasingly conscious of the opportunity that these messaging services present to those minded to circumvent applicable rules, and avoid compliance oversight. 2017 saw Christopher Niehaus, a former managing director at Jeffries, fined £37,198 by the Financial Conduct Authority for sharing confidential client information with friends and colleagues via WhatsApp. Whilst the FCA accepted that none of the recipients needed or used the information, and the disclosure was simply boasting on Neihaus’ part, it was only his cooperation with the regulator that saved him from an even more substantial fine.
That same year saw Daniel Rivas, an IT worker for Bank of America, investigated by the US Securities and Exchange Commission and plead guilty to disclosing price sensitive non-public information to friends and relatives who used that information. One of the means of communication was to use Signal’s self-destructing messaging services. Rivas’ prosecution saw parallels with the 2016 conviction of Australian banker Oliver Curtis, an equities dealer, for using non-public information that he received from an insider via encrypted Blackberry messages.
These examples are likely to prove only the tip of an iceberg; given that encrypted exchanges are by definition clandestine, understanding the true scale of the issue, outside resorting simply to anecdote, is itself an unenviable task for regulators and compliance departments. Whilst those responsible for economic wrongdoing have often been at pains to cover their tracks – perhaps by using ‘pay as you go’ mobile phones, and internet drop boxes to communicate – access to untraceable and secure communication is now ubiquitous. It is difficult to imagine that future regulatory agencies will have access to the material of the same volume and colour that was obtained as part of the worldwide investigations into alleged LIBOR and FX manipulation.
How then can regulators respond? And how are firms to discharge their obligations both to record staff business communications, and monitor those communications for signs of possible misconduct? Many firms already ban the use of mobile phones on the trading floor, but such edicts – even where rigorously enforced – will only go so far. Neither Mr Rivas, nor Mr Neihaus, would have been caught by such a prohibition.
There may be technological solutions to technological problems. Analysing what unencrypted messaging data exists to see which traders are notably absent from regulated systems, or looking for perhaps tell-tale references to other means of communication (“check your mobile”), may present both investigators and firms with vital intelligence. Existing analysis of suspicious trading data may assist in identifying prospective leads, although prosecutors may need to become more comfortable in building inferential cases.
Fundamentally, however, such responses are likely to be both reactive, and piecemeal. Unless the ongoing wider debate as to the social utility of freely available end-to-end encryption prompts some fundamental rethink, the need to effectively regulate those who participate in financial markets – and thus the regulation of those markets themselves – may prove increasingly challenging.
Personal finance should be included as a standalone subject in UK schools, affirms Nigel Green, founder and CEO of deVere Group.
Mr Green is speaking out days after the leader of the Church of England, the Archbishop of Canterbury, said that learning about finances is as important as learning about sex and relationships.
The Archbishop, Justin Welby, said: “Research has shown that habits and attitudes to money are already being formed at the age of seven.” He added, “We would like to see financial education receive parity with sex and relationships education.”
Mr Green states: “I fully support the view that we need greater and more robust personal finance education in schools.
“Currently, financial education is not a standalone subject, but is instead included within other subjects, such as mathematics.
“It’s a step in the right direction, does not go nearly far enough. It should be a defined subject, alongside more traditional subjects such as English and science.”
He continues: “Financial literacy is a fundamental life skill for successfully participating in modern society, yet it is consistently overlooked or not given the credence it deserves.
“Today’s world is increasingly complex and children need to be taught how to manage their own financial futures by learning how to budget, make sensible decisions for everyday matters, how to effectively save, how to avoid taking on unnecessary and/or avoidable debt, how to analyse and compare financial products, and make provision for their healthcare and old age.
“Contributing to the complexities are monumental technological advances, economic shifts and developments in transactions and communications.”
He goes on to add: “Low levels of financial literacy can have a far-reaching impact on individuals, their families and wider society. Indeed, it was one of the factors that many experts believe help exacerbate the global financial crisis that began in 2008. It is also often connected to greater reliance on state support, and lower standards of living.
The deVere CEO concludes: “Financial literacy can equip young people with the confidence, skills and know-how to obtain future financial freedom for themselves and their families – and this is why we should all support the growing calls for personal finance to be a standalone subject in schools.”
(Source: deVere Group)
Financial technology start-ups such as Ratesetter and Lendable pose a significant threat to the dominance of established banks in the UK’s £200bn personal loans market, according to new research.
In the ‘Battling for Buyers’ report, behavioural science experts Decision Technology (Dectech) explore consumer openness to fintech providers across a range of banking products, such as loans, current accounts, and mortgages. The experiments found consumers are more open to considering fintechs for personal loans than for other products.
Nearly half (43%) of consumers are happy to choose a fintech provider for a personal loan. This compares to one in three (33%) being open to having their current account with a fintech and only one in four (26%) considering a fintech for a savings account.
The research shows that one of the biggest barriers to fintechs is low brand recognition. The most recognised fintech brand, online investment manager Nutmeg, was only recognised by one in four (26%) consumers, compared with five out of six (83%)recognising Virgin Money, the least recognised big bank. Few fintech firms were found to have name recognition in double figures.
According to Dectech, behavioural science may provide the answer to why consumers are willing to consider a fintech provider for some banking products more than others. The report explains that loss aversion – people’s tendency to be more sensitive to potential losses than potential gains – means customers are more willing to trust unrecognised brands when borrowing money than when saving.
In addition, the research found consumers on average change personal loan provider once every three years, versus once every 12 years for a current account. Due to the higher churn rate and greater openness to new competitors for personal loans and other borrowing products, Dectech recommends that banks focus their efforts on these markets.
The report suggests established banks emphasise the trust that comes from being an established brand to hold onto customers in savings markets, while ensuring their offer remains competitive for lending products, where established banks are more liable to be outcompeted on price and speed in lending by newcomer brands with lower overheads.
Dr Henry Stott, Director of Decision Technology, said: “These findings are a stark warning to incumbent banks. There is considerable consumer appetite for fintech providers already, especially when buying products based on price rather than brand trust. As name recognition for challenger brands increases, the threat they will pose will do likewise, and we’d expect them to start taking market share across a wider range of products.
“Established banks should pick their battles, leveraging trust in their brand for savings products where customers are more focused on reliability and aiming to stay competitive on price and speed for lending products where customers are most open to newcomers.”
(Source: Decision Technology)
