From ‘finfluenced’ young investors, to the difference between mortgage and rent costs, and concerns over the UK’s switch to a cashless economy – here are our favourite must know money stories this week to help you get your head around your personal finances.

A fifth of young investors take tips from Instagram

One in five (21%) of investors aged 18-34 get stock tips and market forecasts from Instagram, according to an Opinium survey carried out for Hargreaves Lansdown.

The survey also found 16% young investors use financial advice found on Facebook, 14% on Reddit, and 8% on TikTok. However, for investors aged 55+, these numbers dropped to 0%.

Financial websites are a popular across all investor age ranges, employment status, and geographical regions in the UK. Following that, newspapers and specialised financial publications are a common source – though lesser with younger investors who tend to turn to social media for ideas more frequently.

Source: Hargreaves Lansdown

Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: “The most important factor when looking for investment ideas – regardless of your source – is that they are right for you, and your personal financial plan. Those readying themselves for retirement probably shouldn’t be invested in the same portfolio as a Gen Z investor who is in their first job.”

She added: “While engagement with investing should be applauded at any age, taking tips from unregulated or unverified sources, such as social media, should be done with caution. Always take time to do additional due diligence on any ideas. If you are at a pivotal life event – retirement, marriage, becoming a parent, and you are really short of investment ideas, consider getting professional advice before taking the plunge.”

Buying more expensive than renting for the first time in 13 years

Buying has become more expensive than renting for the first time in 13 years, reports Melissa Lawford for The Telegraph.

Two years ago, a first-time buyer would have saved £245 per month if they purchased a property rather than rented it, according to property website Zoopla.

Now, first-time buyers have to pay an extra £122 per month on a mortgage compared to rent on the same property. In London, where house prices are highest, mortgage is more expensive by £493 per month.

House prices have dropped by the biggest amount in five years, as high mortgage rates ward off potential buyers. Experts said this lower first-time buyer demand would contribute towards further house price falls.

Rupert Simmonds, regional director at estate agents John D Wood & Co, said: “First-time buyers are assessing whether the benefits of owning a property outweigh the financial strain posed by higher monthly mortgage payments, along with the associated costs of property maintenance and upkeep.

“Some are deciding to move further out from city centres to more affordable neighbourhoods where the gap between renting and buying might be narrower. Others are seeking guidance on innovative financing options or entering the market with co-buyers to distribute the financial burden.”

Concerns over the UK’s switch to a cashless society

The UK’s rapid shift to a cashless society is causing concerns to not only the elderly but also to those on lower incomes, tourists, and ones who would like to keep a tight control on spending, reports Shane Hickey for The Guardian.

A Royal Society of Arts report last year found that over 10 million Britons would struggle to live in a cashless society, with many losing control of their finances and seeing debts spiral.

Older people have been prone to isolation in this shift towards a cashless society. They claim they feel left behind as they lose the reliability and straightforwardness that cash offers, and struggle with concerns over technology usage and potential frauds.

Furthermore, recent figures from the banking body, UK Finance, show that newer ways of paying are set to almost completely eclipse cash within a decade, expecting cash to account for only 6% of all payments made in the UK by 2031.

A cash-favouring tourist was frustrated after having to make bank payments despite having cash to pay with – ultimately being charged £73 more in debit card transaction fees. He said: “I was only able to use currency at the restaurants, pubs and taxis. It is indeed a fine way for banks to profit.”

While online payments are increasingly popular, it has its own limitations – making it more important to allow access to cash payments, so that no one is left vulnerable behind.

Photo Credits: Pexels

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From inheritance dependency during retirement to ‘worryingly high’ food prices and a cashless Britain economy – here are our favourite must-know money stories this week to help you get your head around your personal finances. 

A third need an inheritance to pay for retirement  

One in three (34%) of the people who expect to inherit say they need the money to fund their retirement, reveals data from a survey carried out for Hargreaves Lansdown by Opinium this month. 

The survey found that while 38% people either expect an inheritance or have already received one, only 29% of people plan to leave an inheritance – creating a gap that may leave many without their inheritance wishes being materialised.  

At the same time, several aspects such as expensive care, a potential new relationship, the rising cost-of-living, equity release on properties, or a later demise may devour or slow down an inheritance. 

Younger people were found to have higher expectations of inheritance, along with higher earners – 37% of higher rate taxpayers compared to 30% of basic rate taxpayers – owing to their better standard of living. Only 54% people completely ruled out needing an inheritance to fund retirement. 

Sarah Coles, head of personal finance, Hargreaves Landsdown said: “If you expect inheritance to play a part in your retirement plans, you cannot rely on it. You need to still be able to afford to retire if you get less than expected, it comes later than you initially thought, or you end up without one.” 

Food prices remain ‘worryingly high’  

Food prices continue to surge with food inflation at 19.1% in April, reports Daniel Thomas for BBC News. Inflation figures came down to 8.7% from 10.1% in March, but it doesn’t mean prices are coming down, just rising less quickly. 

The Chancellor Jeremy Hunt said food prices remained “worryingly high” and while the sharp fall is welcome, things underneath the numbers show that the battle is far from over.  

Inflation has dropped overall thanks to stabilising energy prices. However, prices of staples such as sugar (up 47.4%), eggs (37%), milk (33%), bread (18.6%), and fish (18.9%) continue to rise – just slightly less quickly! Imported food prices have fallen considerably, but are not yet reflected on supermarket shelves due to long-term contracts with food producers.  

Rachel Reeves, Labour’s shadow Chancellor said families would be worried with such high food and other essentials prices and asking: “why this Tory government still refuses to properly tackle this cost-of-living crisis, and why they won’t bring in a proper windfall tax on the enormous profits of oil and gas giants.” 

Cashless Britain: a disaster waiting to happen 

Britain is rapidly becoming a cashless society, but who really benefits from shunning notes and coins? Relentlessly marching towards digital payments doesn’t benefit the average consumer, writes Adam Williams in The Telegraph. 

The Bank of England says one in five people consider cash to be their preferred payment method on a daily. However, in a nation with car parks to cafes, and theatres to pubs switching to digital payments ‘only,’ and even some central London banks rejecting cash, several are left behind.  

While the elderly, disabled and those who struggle with technology are the obvious losers, business owners lose out due to sky-high card processing fees, and the rest of us lose our privacy and the right to choose how we pay he says.

Dilip Soman of the University of Toronto published research over twenty years ago warning that card usage encouraged customers to overspend. Beyond a personal finance issue, the decline of cash could quickly even become a national security issue if prone to a hostile banking system attack – essentially closing down our bank-dependent economy.  

Williams concluded: “The survival of cash is about more than what’s in your pocket – our civil liberties are at stake.” 

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Mouthy Money Your Questions Answered panelist Helen Morrissey answers a reader’s question on workplace pension contributions.

Question: I want to opt out of workplace pension because I need the money now, not in 30 years’ time. I understand that everyone says it is beneficial to have a workplace pension and that I will miss out on my employer’s 3% contribution, but my net pay will be reduced by 5%. I will only be able to access my pension in about 30 years too. So is it a good choice to opt out?

Answer: When money is tight it is understandable to look at where you can save money and for some pension contributions can be a casualty.

Saving for a point so far into the future can seem futile when you need the money now, but it is important wherever possible to keep saving for your future. A small reduction in your pay today can make a big difference to your income in years to come.

Find out more: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

Contributing to a workplace pension is an important way of making sure you have enough to live on in retirement. Not only do you make your own contribution to the pension, but your employer will too.

In addition, the government will add to this with tax relief. If you are a basic rate taxpayer for every £80 you pay in the government will add £20. If you are a higher rate taxpayer then for every £60 you pay the government will add £40.

Over time this really mounts up and if you factor in investment growth over the course of a working life it can make a real difference to the income you will receive in retirement.

During difficult times some people do reduce, or even cut their pension contributions. For instance, last year people opted to do this in the face of job uncertainty and reduced wages caused by the pandemic.

If you feel this is your only course of action it is important to re-start contributions as soon as things get better. Making regular contributions throughout your working life is the best way of building a pension that will give you a decent lifestyle in retirement.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown

Have you got a burning money question? Ask your question here

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There are a lot of common money myths that float around among family and friends, on social media, and even on TV, Finance Dee writes.

It is essential to always fact check and do your own research on anything you hear that you’re going to use in your final decision. So what are some of these common money myths floating around?

Well here are just a few I’d like to clear up:   

1. You need a lot of money to be an investor

In the past, it is true that investing was inaccessible to the masses, but now investing is generally accessible to anyone and everyone who has as little as £1 to spare.

Investors are now able to buy fractional shares on many investing platforms, which means less money is required to own a piece (no matter how small that piece is) of a company. If investing is something you are interested in, not having ‘a lot of money’ shouldn’t be a deciding factor.

2. I am too young to worry about retirement savings

This myth is a dangerous one, as pushing off saving for retirement just means that you will have to work extra hard to catch up later on in life. The magic of compound interest works best for those who start saving/investing for retirement earlier in life.

Worst of all, if your employer offers an employer match to top up your retirement savings and you choose to opt-out, you are literally throwing away free money. And who wants to do that?

3. There’s no point of earning more money as it will ALL be taken away by taxes

Oh taxes! It is a tough reality that as you earn more, your rate of tax will increase as you earn over certain thresholds. However, it is important to remember that not all of the additional income made will be taxed.

You will still very much benefit from lining your pockets as your salary increases over time. So feel free to be a go-getter!

4. Carrying a small balance on a credit card is good for your credit score

Carrying a small balance on a credit card is not a factor that positively impacts credit scores. In fact, it is quite the opposite. Lenders like to assess whether someone is able to handle credit appropriately, which means to pay off the full balance of the credit card every month.

Not only does paying off the full balance actually have a positive impact on your credit score, it also can save you a lot of money on interest.

5. Cash is King

Although cash is becoming more obsolete among the many technological advancements, cash of course still has its place. However, let’s be real, cash really isn’t king anymore.

Most retailers happily accept debit and credit cards, and some are even adopting newer technologies such as cryptocurrencies (but we won’t get into that!).

Paying for items with cash offers little to no protection on purchases, whereas debit cards or credit cards offer a host of benefits and protections to their users in case something out of your control (in most circumstances) goes wrong with the purchase.

Photo by Andrea Piacquadio from Pexels

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Three quarters (75%) of Brits still regularly use cash despite businesses increasingly refusing to accept it, according to the UK Cash Supply Alliance (CSA).

The trend of using card-only payments developed during the pandemic, as the UK now faces the possibility of becoming a cashless society.

The UK Cash Supply Alliance (UKCSA) has been formed to campaign for the preservation of cash as a means of exchange and includes organisations such as The Post Office and other “key” industry players.

Is cash cancelled?

Brits used cash for just 17% of all payments in the UK in 2020, down from 56% 10 years prior, according to UK Finance. That means that in 2020, 13.7 million consumers didn’t use cash at all.

Myron Jobson, personal finance campaigner at Interactive Investor says: “A lot of people say that we are heading towards a cashless society. Our behaviours suggest that we prefer to transact using cards over cash, but more so in this day and age, but that doesn’t mean that cash is going away.

“There’s still a great number of businesses that rely on cash, we can talk about market stalls, for example, and although many of them have gotten savvy, and now offer it now, a great many that don’t still don’t use card payments.

“If you’re a small business, for example, and you’ve got cash in hand, you have to deposit cash. And that’s not always easy for businesses to do that.

“Imagine if you’re a one-man band, having to do everything yourself. Not a lot of people had the time to make regular trips to the bank to deposit a large sum of money, and unfortunately, branches are dropping like flies at the moment, because what a lot of banks and building societies are doing is they’re trying to cut costs.”

“The future of cash is at a crossroads”

The government enacted the Financial Services Act 2021 to help the adoption of cashback without a purchase.

It only launched its consultation this summer to set out proposals for further legislation.

Nigel Constable, chair at the CSA, says: “The future of cash is at a crossroads – many organisations publicly support its continued existence but are not driving the new solutions needed to make this a reality.”

The UK Cash Supply Alliance aims to engage with and connect organisations across the cash supply chain with UK government, regulators, trade associations, the retail sector and the public.

“It’s time for a cash fight back,” he says. “We’re currently awaiting a response from the Government Access to Cash consultation and it’s vital that it now gets to grips with the positive solutions needed to protect cash for all.”

“We know that low income, rather than age, is the most accurate indicator for cash dependency. Yet for many, it is also about the freedom to use cash, for personal budgeting, or as a desire to avoid card data being captured and monetarised.

“Those who speak glibly about a cashless society need to be aware that for some, access to legal tender can be the difference between whether they eat or pay for their electricity.”

Photo by Philip Veater on Unsplash

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The past few years have seen huge changes in the way we manage our money, with the adoption of digital only banks and other technologies such as Open Banking.

But what does the future look like, and what kind of innovations can we expect from financial firms?

Revolut is a good example of innovation. According to Wombat’s Kane Harrison, and like many successful FinTechs, they’ve always made things cheaper, easier, simpler and have achieved huge scale – even if they’re not making profits.

“I’d expect them to follow that US, Facebook style model: achieve vast scale and then figure out how to monetise that scale later,” he adds.

Firms that focus on a core product supported by education, are expected to do particularly well.

Lendwise co-founder and chief executive Rishi Zaveri says: “We enable access to higher education with a complete approach to assessing creditworthiness and we did it through a peer-to-peer funding model.

“Now we’re speaking to institutions. And all this progress has the benefit of attracting more customers – which makes us more competitive.”

But as the sector gets more crowded, differentiation becomes more challenging. OpenMoney’s Anthony Morrow argues that FinTechs typically tend to be incremental improvements of what’s been before, adding that: “The main thing they bring to the table in, say, banking is a better user experience – so it’s hard to say they’ve moved the model forward dramatically.”

A question of perspective

However, the question then arises whether incremental improvement is innovation. PensionBee’s Jonathan Lister Parsons believes it is.

“If you were a bank executive five years ago you’d be astonished by the rise of the new banks – on mobile phones and with no branches. We shouldn’t underestimate how radical FinTech has been, as we move to better services.”

And within this incremental improvement, perhaps something that an incumbent bank might class as a gimmick is itself the key to engagement.

Kane Harrison believes so: “We hired a 23-year-old content specialist to help us create a platform that didn’t sound financey, hardcore and formal. We wanted something fun that talked directly to the customer – and be gender neutral.

“Is this gimmicky? All I know is that you can do anything to get people to engage with your brand but the proof is the long-term value the brand delivers to the client.”

There’s also good precedent for the way in which FinTech is innovating – thanks to the big tech firms.

As Seaton points out: “If you look at the way Google maps has changed the experience of getting from A to B it’s really profound. Again, is this incremental or radical?

“These things sneak up on us and consumer expectations are way ahead of what we can deliver – in financial services as much as anywhere – but I think we’re so close to the detail that it’s sometimes hard to see how far we’ve come.

What’s clear is that UK FinTech has significantly moved the customer experience on – irrespective of what might be classed gimmicks, and in more ways than perhaps some might realise – but there’s significantly more innovation to come.

Seaton adds: “There’s every possibility that change will be dramatic. Open banking came about to try and break the hold the CMA 9 and credit bureaus had on the sector. But over time I expect it will actually get rid of retail banks and only the institutional banks will survive.

“In 10 years’ time I’ll probably option my mortgage – I don’t care who runs the product – as it’s the institutional lenders who really matter. We need to think more outside the box –what can we do to entertain, make people safe, or save them time and money. Thinking about how we automate these three areas is key.

“Banks have had all this data for years and done nothing with it. One of my data scientists told me the other day that people who shop at Sainsbury’s and get their hair cut regularly are not good at budgeting.

“Insights like these can help us understand how to get someone ready to go on a journey to become better off. The better FinTechs will be excellent at this, while the banks are likely to stay poor.”

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Expert deals finder Will Pointing explains how this could be your year to side hustle, a new paid hobby that could make you happier and richer.

A recent study by the research by 118 118 Money found that 68% of employed UK adults currently have a secondary source of income, earning them an extra £5,000 a year on average.

Nearly a third (31%) started their side hustle in 2020, during the coronavirus pandemic, showing that not everyone was just watching Netflix and chomping on takeaways.

The data indicates podcasting as the most profitable secondary source of income overall, paying people an average of £954 extra a month (or a whopping £11,448 a year). Renting out a room or space is another good earner, pulling in £657 a month or (£7,884 a year) on average.

If you haven’t got an original podcast idea or are not fortunate enough to have a spare room to rent out, below are some ideas to get you started on a new side hustle:

Sell your things online

The easiest to make a quick buck is to sell items online. This could range from old computer games or laptops to things you’ve made yourself. Crafting items have proved very popular this year, with handmade candles topping the leader board in the 118 118 survey.

Selling old clothes is also a good way of earning some extra cash. The main tip is to take some high quality photos and upload them on to an online platform to sell from, such as eBay, Depop, Facebook Marketplace or Etsy. Social media posts are also a very good way to advertise what you’re selling.

Host an experience

Have you picked up a new expertise during lock down? If you think people would pay for this, consider hosting an AirBnB Experience in your local area. You could host a guided walk in a tourist hot spot or teach people to cook, sing or even draw.

Big rumour crushed, you do not need to host your home on Airbnb, in order to host an experience. If you are not keen on AirBnB Experiences, create a listing on withlocals.com, a similar free hosting platform.

Get paid to give your opinion

If you’ve got strong opinions, get paid for them. Brands will pay you give your opinion on goods and services through focus groups. They simply ask you your views about a particular brand’s new product, advertisement or service.

Focus groups tend to pay around £50-60 per hour & even more for longer home-based projects. I’d recommend simply to search “Focus groups in your area” to find out about upcoming work to apply for.

Create a blog

Although it is not a quick way of making income, blogging can be lucrative in the long term. To make a blog work you need patience, a monetisation plan (from Sponsored posts, affiliate marketing or allowing adverts on your site), lots of incoming traffic and engaging content

Tip: Try to pick a niche – it could be about home aquariums or even money saving tips – check out my site GreatDealsMadeEasy for ideas.

Make 2021, “the year of the side hustle”. You never know, your passion project may take off and you can leave the 9-5 office world behind you for fame and fortune or at least enough to get you on a warm holiday.

Photo by Alaur Rahman from Pexels

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Stuck at home and bored during lockdown? Spending too much money on Amazon knick-knacks you don’t need? Expert deal finder Will Pointing says this could be the best time to start an online side hustle

We’re in our fifth month of lockdown in the last 12 months. Millions are stuck at home and many are unable to work, or pick up extra cash that they might normally earn outside the home.

But it is possible to make extra money on top of your day job salary or furlough money, all in the comfort of your own home.

Here are seven top home side hustles you can try to keep your bank balance healthy while we go through yet another lockdown.

1. Flip your old items

Most of us have so much clutter around. Households typically have hundreds – or even thousands – of pounds of stuff they don’t want, need or even use.

Now is a great time to list and sell them online. Selling clothes with sites like Vinted and Depop is very straightforward. For other items such as old electronics or books, check out free listings websites like Facebook Marketplace and the app Next Door. Still no luck? Try eBay, although be aware it does charge fees.

Remember to spend time on good photos and an accurate description that highlights the benefits of the item.

2. Take part in online focus groups

Online focus groups (via Zoom) are a great way to earn money. Normally, you have to apply via email for the focus group, spending five minutes answering their suitability questions. Once completed, there is a good chance of being selected.

Start with trying a Google search for “focus groups” and add your area to find sessions near you. Once selected, just turn up and be chatty and opinionated. Focus groups can earn between £40 and £200 depending on how specific the requirements are and whether you meet them.

3. Start blogging

Blogging can be a lucrative way to make money, but do not expect instant success. Firstly, pick a niche (from cooking to films, travel or even personal finance!), pick a URL, build a site and start writing content. Good platforms for building a blog include WordPress, Squarespace and Wix, but these will have different costs associated with them so choose carefully.

How can you make money? Through sponsored posts, affiliate marketing (being rewarded a commission by selling another company’s product/service) or charging advertising tenancies (banner advertisements).

4. Rent out your spare spaces

Got lots of spare space at home? Consider renting it out. This can range from a renting out a spare parking space, an empty garage or a deserted storage room.

If you don’t mind people staying with you, consider also renting your spare room out. Another big idea is adding your apartment or house as a listing on a TV filming location websites such as ukfilmlocation.com or film-locations.co.uk.  You can make anywhere between £500 and several thousands of pounds, by allowing a film crew to use your place as a filming location, from films, TV commercials to music videos.

Remember though during the current lockdown some of these activities may carry restrictions. You should at least make sure your living space is secure if people are coming in from elsewhere, and that the activity is in accordance with the current laws.

5. Write and self-publish an eBook

You may find yourself with more time on your hands in lockdown, so this might be the best moment to finally write a book you have always thought about.

If you’re articulate with your words, you can try writing and self-publishing an online book. Take advantage of free sites such as Amazon Kindle Direct Publishing (KDP) to get started. These free e-publishing sites allow you to publish your eBook without paying a single penny to a publisher.

6. Host an online event

Since the pandemic, people may be social distancing, but they still want social activities to pass the time at home. Bring people together with your own online event and charge for it.

This could range from a comedy event, a cooking course, a yoga class or even an online magic show. Platforms you can advertise on include Designmynight and Airbnb Experience to name a few.

They’re also very easy to set up – just launch the event on Zoom and send out the event details to the paid attendees. Just be aware of any costs a video meeting platform like Zoom might have, and restrictions (such as time) they might have on the free versions.

7. Become an Online Tutor

Do you have a talent for English, maths, business or any other academic field? Even if you are not an ‘expert’ in your field, there is the opportunity to cover topics at an entry-level or as part of an introductory curriculum to children or adults studying the subject.

Google “online tutor in your area” to find a company that might need tutors to cover specific areas.

Do you have any side hustles that have worked for you? Please share below. Hopefully the above ideas get you thinking about how you can make money from a new side hustle. If you take a leap of faith and start earning, this could become your main source of income in the future.

Photo by Taryn Elliott from Pexels

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