Are you looking for a creative way to up your savings this year? I’ve rounded up seven different saving challenges that you could try or use as inspiration for your personal savings goals.  

Ultimately, savings are a fundamental aspect of financial stability and security. And as increased costs of living erode your disposable income, now is the time to make sure you’re working towards a good savings buffer. 

Here are seven savings challenges you can start today to reap the rewards tomorrow. 

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1. 1p challenge 

As the adage goes, “Take care of the pennies, and the pounds will take care of themselves.” This challenge aims to kick off your savings with 1p and increase them by 1p per day. So, on day one you save 1p, on day two you save 2p, and so on until day 365 when you save £3.65.

Completing the year-long challenge will result in a savings pot totalling £667.95. Not too bad for starting from a penny!  

2. +£1 a week challenge 

Like the 1p challenge that increases incrementally, the +£1 a week challenge starts with saving £1 and grows by £1 each week. So, you’ll save £1 in week one, £2 in week two, and continue through to week 52 when you’ll put away £52. Following this challenge, your total savings at the end of a year will be £1,378. 

3. No-spend challenge 

A no-spend option is perfect for those who want to challenge themselves to spend less on non-essentials. There’s no prescribed time frame, so you can decide whether you stick to it for a weekend, a week or a month. You can also decide whether it’s a one-off event or something you do regularly.

The basics are that you’re only allowed to spend money on basic living expenses like utilities, groceries and transport and avoid luxury or impulse purchases. Strictly speaking, you’re not putting anything into savings with this one. So you may want to look at your balance at the end of your no-spend period and decide what amount you can put into your savings pot.  

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4. Save your change challenge

Consider this the digital equivalent of the outdated coin jar or piggy bank. It’s a great way to save without putting in much effort.

The concept for this challenge is that you round up your purchases to the nearest pound and put the change into savings. For example, if you spend £3.49 on something, round up to £4 and put 51p into your savings. If it’s an amount like £13.99, you could choose to round up to the nearest fiver, so you’d put away £1.01 on this purchase.

These days, many bank accounts offer this as an automated service, so you don’t need to think about it.

5. Weather Wednesday challenge 

This challenge is a great one to get the kids involved! The idea is to look up the highest temperature in the country each Wednesday and pop the same value in pounds into your savings.

Let’s say you check the Met Office website and see that the highest UK temperature recorded for the Wednesday in question was a balmy 10.2°C. In this example, you’d then put £10.20 into your savings pot. Naturally, during the summer months, you’ll be adding a pretty penny each week. Winter contributions may be a bit lower, but each contribution adds up. 

6. Coffee break challenge

If we estimate the average takeaway coffee costs £2.75, assume that you work 21 days a month and that coffee is a daily workday ritual, cutting the caffeine stop each day can amount to savings of £57.75 in a month. Buy a travel coffee mug, top-up at home, and you can save a whopping £693 in a year.

You could apply this challenge to any other unnecessary daily spend, such as takeaway lunches or one less pint at the pub.

7. Make your own challenge 

This one is a free-for-all. You decide on the parameters for your challenge and your savings goals. What could you do without, or restrict, and instead put the money you’d spend towards savings?

Perhaps you want to link your savings challenge to your New Year’s resolutions. Are you losing weight? Put a few quid away for each milestone along the journey. Have you given up chocolate? Add £1 to the jar every time you resist the cocoa calling. Pop 50p in each time you hit the gym. The options are literally endless. Define your own savings challenge and savings!

The post Save £1,378 or more this year with one of these 7 money challenges appeared first on The Motley Fool UK.

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As consumers, we’re facing an onslaught of rising living costs. Fuelled by a growing global energy crisis, nothing ‘hits home’, if you’ll excuse the pun, more so than the exorbitant hikes in gas and electricity costs. 

There are long-term strategies to reduce your overall energy costs. Still, these generally come with a high capital outlay, which you may not be able to afford right now. But you still need to do something to bring down the rising monthly electric bill, right?

I’ve rounded up six simple strategies that you can apply immediately to start saving on those bills from today.

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1. Switch off plugs at the wall 

Walk around your home and check for any plug sockets that are switched on but the appliances are not currently in use. TVs, computers, toothbrush chargers and lamps are all excellent examples. These will slowly sap away energy and add to your bill unnecessarily. Make a habit of not only switching off the appliance but the plug socket too. 

2. Curb the kettle boiling 

Hands up if you tend to fill the kettle several times a day, only to pour out enough for a single cup of tea? It’s another small waste of energy that can add up over time. Save on energy costs by only boiling the water you need. If you have a flask handy, even better! Boil up a whole kettle in the morning, pour into the flask and use throughout the day at no extra cost. 

3. Dial down the thermostat 

While everyone will have their own comfortable temperature, the ideal room temperature is considered to be between 18-21 degrees during the winter months. Ideally, you should have some way to measure your home’s temperature and use heating sensibly to achieve a steady ambient temperature. Layer up your clothes and drop your thermostat by even one degree to reduce your energy bill.  

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4. Seal up draughts 

There’s no bigger waste of energy when heating your home than a draught bringing in cold air. Check your windows and door frames for any gaps. As an interim measure, you can roll up a towel or sheet and use it to block the draught. Ideally, you should seal draughty frames with a draught excluder or a silicone sealer as appropriate. Keep doors between rooms closed to keep the warm air contained. 

5. Wash full loads 

There’s no denying the convenience of a dishwasher and a washing machine. They’re far more energy-efficient than handwashing, but not when you wash half loads. Be sure to completely fill your dishwasher or washing machine before turning it on to save on energy costs. 

6. Shower if you can 

While there’s nothing more relaxing than unwinding in a bubble bath, running a bath burns through energy. Opting for a shower can save on your bill. The major caveat here is time and the type of shower you have. A ten-minute shower using a power shower is the equivalent of filling a 150-litre tub. As such, you won’t be reducing your energy consumption. A standard shower of four minutes, on the other hand, is far more energy-efficient and will help you save.

Bonus tip: place a bucket in your shower to collect water while it warms up. This water can be used elsewhere, such as for watering plants. 

Final word

The above strategies are quick and easy wins to reduce your energy consumption and costs. Long-term strategies that look to create a more holistic energy-efficient home, such as insulation, installing energy-efficient appliances and double-glazing windows, take more upfront investment but will future-proof you against rising energy costs.

The post 6 simple strategies to slash your soaring energy bills appeared first on The Motley Fool UK.

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Christmas can be a stressful time for those with limited disposable income. The onslaught of advertising and promotional campaigns is specifically designed to get us to part with our pounds. A lot of them! And you may just be feeling a little worse for wear at the costs to celebrate the festive season. 

If this is you, don’t despair! I’ve prepared five fantastic wallet-friendly tips on how to have a merry and joyful Christmas without breaking the bank. Who knows, you may even enjoy creating some new traditions while being able to save some pennies and avoid the woeful Janu-worry. 

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1. Get crafty with DIY Christmas decorations 

Let’s face it: as a nation, Britain goes big when it comes to Christmas decorations. But if you’re looking to cut costs this Christmas, this could be the first aspect to reconsider. Instead of new, store-bought decorations, how about getting the kids involved to create some brilliantly beautiful pieces from recycling or upcycling common household items?

Whether it’s pine cone ornaments, paper stars or toilet roll crackers – with a bit of glue and glitter at the ready and a quick Pinterest search, you can whip up a dazzling display in no time!  

2. Gifting on a budget 

Gifting is probably the most expensive part of Christmas. Why not start a new trend amongst your family and friends? Set a maximum gift price – and stick to it! Or why not try Secret Santa instead?

Another idea is to commit to only pre-loved gifts that you can pick up in charity shops. This way, not only do you save money, but also you cut down on unnecessary plastics and packaging, making Christmas better for the planet too! It’s a double-whammy win!

Naturally, if you have a creative streak, you could also choose to skip the stores completely and make some fabulous homemade gifts. 

3. Free Christmas activities 

While pantos and Christmas fairs may hold a special place in our hearts, ticket costs can add up quickly if you’re looking to fill up the festive season with activities. Fortunately, there’s a host of entirely free or budget-friendly activities you can do, while making wonderful Yuletide memories. We recently published an article with 10 fantastic free Christmas activities, including the likes of taking a walk to count Christmas lights, baking mince pies and putting on a family Christmas play. These activities are equally enjoyable but without the price tag! 

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4. Christmas dinner on a budget 

The traditional Christmas dinner can easily eat into your budget, especially if you succumb to the ‘special deals’ and ‘premium ranges’ in store. (And let’s be straight, it’s damn hard to say no to that limited edition pack of camembert and cranberry crisps, isn’t it?) But if you’re looking to keep the purse strings in check this Christmas, it is possible to still put on a delicious spread for dinner. One of our writers is doing just that for under £50! 

Would you possibly consider serving chicken instead of turkey? If that’s stepping too far away from tradition for you, then perhaps frozen turkey is an option. It costs less per kilo, and with the right amount of time to defrost, will be every bit as scrumptious as a fresh one. 

5. Focus on what’s really important at Christmas 

If there’s anything the last two years should’ve taught us, it’s that life is unpredictable and uncertain, and what really matters is the precious time we have to spend with our loved ones.

Be present as opposed to worrying about the number of presents. This time should be about making memories and traditions. Sing carols, play games and laugh together. Because at the end of the day, aren’t those times the greatest gift of all?

The post 5 wallet-friendly ideas to have a merry Christmas on a tight budget appeared first on The Motley Fool UK.

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Looking at the latest UK property market figures, you’d be forgiven for forgetting that we’re coming out of a pandemic that’s had a severe effect on the economy. For the property market is boomin’, baby! 

Record property sales in 2021

Real estate conglomerate Zoopla has predicted that 2021 will close with 1.5 million home sales concluded – the highest number recorded since before the financial crash of 2007 and five times higher than 2020. 11% of these sales took place in September 2021. The Government’s monthly property transactions report estimates that a total of 165,720 UK residential properties traded hands in September 2021, 67.3% higher than September 2020 and 59.7% higher than August 2021.

When digging into the data, we see that it’s not only the total number of sales that have increased but also the average price seeing an uptick. According to the Office for National Statistics, the average UK house price was £264,000 in August 2021, £25,000 higher than in August 2020.

Interestingly though, if we hone in on specific areas, London property prices are growing at a far slower rate than anywhere else in the country. This hints at the anecdotal evidence that Londoners are fleeing city life, favouring larger properties with bigger grounds and gardens. Properties located between 10 and 25 miles from central London have continued to increase in price.  

So, it’s clear that the property market is experiencing a flurry of activity and growth, but why? What’s the impetus here?

Factors driving a surging property market

Stamp duty tax holiday

First and foremost, we can thank Rishi Sunak and his decision to give stamp duty a holiday as we emerged from the first pandemic lockdown last summer. Stamp duty kicks in when a property is sold for more than £125,000 with various tiers of tax depending on the property price. Initially, Rishi upped the 0% threshold to a generous £500,000, saving buyers up to £15,000 in taxes. In extending the holiday until 1 October 2021, he reduced the exemption to £250,000, but this still offered plenty of incentive for buyers to take advantage. This goes a long way to explain the flurry of sales activity in September!

Rethinking what ‘home’ looks like

During the lockdowns, the ‘stay home’ guidance led to much mulling over what’s desired in a home. With the ‘threat’ of being homebound and potentially even working from home for an extended period, people – especially families – sought out more spacious homes with larger garden areas. There’s also little doubt that spare rooms that doubled as home offices or studies became a primary selling point.

Low-deposit mortgages make a comeback

After a hiatus coinciding with more prudent lending through the pandemic, low-deposit mortgages especially appealing to first-time homebuyers made a reappearance from April 2021. Many were able to take advantage of both the low-deposit mortgages alongside the stamp duty holiday.

So, while those factors have helped prop up the property market throughout pandemic times, where to next?

Are we headed for a property market bust in 2022?

Against the backdrop of a buoyant property market in 2021, there are several factors that, when combined, have the potential to trigger a notable market bust in the coming year.

1. The end of the furlough scheme means that swathes of employees may face redundancy if businesses can’t bring them back at full salaries.
2. Rampant inflation rates are increasing living costs, pushing up food and energy bills, and eating away at disposable income.
3. Growing concerns about an imminent interest rate hike, and likely further increases in 2022, will directly impact mortgage costs.
4. The 1.25% increase in National Insurance contributions kicks in from April 2022, meaning that the average employee will be paying an additional £255 a year in taxes.
5. Anticipated increases in council tax add to rising living costs and dwindling disposable income.

Experts are predicting that it’ll become increasingly difficult for first-time buyers in particular to get on the property ladder in the coming year. As a result, we’ll likely see a slowdown in the property market, with both the numbers of transactions and increases in prices easing off. That said, there’s still a massive surplus of demand compared to demand, and estate agents are desperate for suitable stock for keen buyers.

Securing a mortgage

If you’re still looking to secure a mortgage for your next home purchase, the time to act is now!

Our handy debt-to-income ratio calculator is an excellent place to start to understand the state of your finances from the lenders’ perspective. A healthy debt-to-income ratio will put you in a better position to secure a mortgage.

Meanwhile, our mortgage calculator will give you an indication of how much you can afford to borrow.

The post Property market booming in 2021, but are we heading for a 2022 bust? appeared first on The Motley Fool UK.

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£3,734: The average amount a British adult owes in unsecured debt such as credit, personal loans or overdraft is £3,734, of which £1,067 is credit card balances.

24 years and nine months: The amount of time it would take to pay off the average credit card debt, making minimum monthly payments of monthly interest plus 1%.

These are the insights from the latest release of The Money Statistics from Money Charity.

And if the imminent interest rate hike goes ahead as expected, you can be assured that both those figures will increase.

BoE expected to raise the interest rate from ultimate, all-time low

The Bank of England has kept the base level interest rate at an all-time low of 0.1% in the hope of encouraging sustained economic activity through the unprecedented pandemic years. The inevitable result of such a low interest rate, though, is that inflation starts to creep upwards. This is exasperated when combined with other factors such as the soaring energy costs like the UK is currently experiencing. 

One monetary policy lever that the Bank of England uses to reduce inflation is to increase the base interest rate, which is the rate that the commercial banks pay when borrowing from the central bank.

And this is precisely what is expected to happen at the next Monetary Policy Committee meeting on 4 November.

Market watchers are predicting a potential hike to 0.25%, bringing the rate back to pre-pandemic levels, with a warning that we should expect more increases to come in the new year too.

Interest rate hike to hit debtors where it hurts

Banks will usually pass on the interest rate increase to their customers. While this is great news for savers who’ll earn more interest on their nest eggs, those with personal, unsecured debt are set for a gut punch.

Mortgages or secured personal loans are less affected as often these agreements come with fixed-rate terms. But for those with credit card debt, loans or overdrafts, it means higher monthly, or weekly interest will be applied to balances. If you’re already stretched in terms of your debt repayment commitments, this could bring about an extra level of pressure.

So, how do you brace or prepare for an inevitable interest rate increase if you’re already in debt?

3 strategies to cope with debt ahead of the interest rate increase

• Move credit card balances: There are a number of credit cards that offer 0% balance transfers, with around 3% balance transfer fee. Offers will be dependent on your credit score. You’ll be able to move your balance from a higher interest-bearing card to one with a 0% interest introductory period, giving you time to pay off the initial debt without loading on more interest payments. If you qualify, this option is a quick-win ahead of interest rate increases.

• Cancel credit cards: If the banks decide to pass on the increase to their customers (which we absolutely expect them to), they have to provide notice. Credit cards allow you to reject their proposed new interest rate, cancel the account, and pay off the outstanding balances within 60 days at the existing interest rate. Naturally, this is only feasible if you have the funds available to settle the balance within the given window, but in doing so, you’ll save a pocket of pounds in increased interest payments over time.

• Budget carefully to reallocate funds: Make sure you know the interest rates of each of your debts and, if necessary, reallocate budget to the highest interest accounts first, and work your way down the list. I wouldn’t make less than the minimum payment though, and wherever possible, make additional payments to the highest interest accounts first.

The post The lowdown on what the interest rate hike means for debt-strapped Brits appeared first on The Motley Fool UK.

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On 20 October, the Government will reveal the latest inflation rate figures. And for those of you keeping a tab on what it means for your State Pension, it could mean an incremental rise not seen in recent years, as those in the know predict the inflation rate to be as high as 4%.

But is this a good thing? And will you be able to afford a comfortable retirement?

Data suggests not necessarily.

First, let’s look at the basics.

How much is a State Pension?

The current full State Pension is £179.60 per week, which is £9,339.20 per year. But that’s not what everyone gets. Your actual rate is based on the number of years you’ve contributed to National Insurance, and you’ll need to have paid 35 years’ worth for the full rate. That’s a whopping 420 monthly payments!

The official age to qualify for State Pension is 66, but thanks to longer life expectancy, this is set to be upped to 68 in the near future.

Now that we’ve got that squared away, let’s turn our attention to costs in retirement.

The cost of a comfortable retirement

The Pensions & Lifetime Savings Association recently published a report detailing the costs of various levels of retirement, covering the minimum of humble living to more opulent golden years.

According to the study, a singleton requires an annual income of £34,000 for a comfortable retirement. For couples, this equates to £50,000 per year.

But what constitutes a comfortable retirement?

Living standards are subjective depending on one’s means and motivations. We could say, one man’s brussels paté is another’s foie gras.

A comfortable retirement is one where you’re able to be more spontaneous with your finances. You’d have at least one streaming subscription, regular beauty treatments, and two holidays abroad per year.

For a singleton, this includes:

• A weekly shop of £59;
• Annual clothing and footwear budget of £1,200;
• Birthday gift allowance of £50;
• 3 weeks in Europe;
• A 2-year-old car, replaced every five years; and
• Replace the bathroom and kitchen every 10 – 15 years.

It’s estimated that only one in six UK employees can afford this level of retirement.

Comparatively, a moderate and minimum retirement looks something like this:

Mind the gap … between the income and the lifestyle

The grave concern with this data is the evident gap between the costs of retirement and what is provided as a State Pension. At best, on a full State Pension, you’re looking at a £1,600 shortfall at the minimum level and around £25,000 shy at the comfortable level.

When we throw ballooning inflation rates into the mix, not even an equal increase in the Pension rate will offset the ‘real’ rising costs of living.

Your golden years should be a time to unwind and relax; a time to have the (financial) resources for the things that bring you joy.

However, there are actions you can take right now to address any financial shortfalls.

How to boost your income for retirement

• Check your National Insurance record for gaps, and if necessary or possible, make voluntary lump-sum contributions
• Make sure you’re receiving all National Insurance credits you qualify for
• Consider your current savings balances and whether you can afford to put even a few more pounds away a month
• Evaluate your investments and whether they’re forecasted to give you the payouts needed in the long term. If necessary, re-think your strategy or speak to a financial advisor who can offer guidance

The post State Pension set to rise with inflation. But you need to act now for a comfortable retirement! appeared first on The Motley Fool UK.

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