Protect your future by becoming financially secure

The UK experienced the deepest recession since records began earlier this year because of Covid-19 and the resulting lockdown. This has led to a lot of job insecurity, low interest rates which are impacting savings, and it’s become more difficult to get credit as banks and lenders are tightening their lending criteria. 

It’s understandable to be concerned, but the good news is that it’s possible to improve your ability to weather further disruption with careful planning and budgeting. Focusing on your financial security now is the best way to deal with any money-wobbles that may be waiting for us in the coming months.

However, protecting your financial future isn’t as daunting as it might seem. We’ve broken it down for you into the key areas that need some attention right now.

Get on top of budgeting

We all have our money-missions in life. For some, owning property is the primary goal, for others, it’s increasing day-to-day living standards, but we all need to work on growing our savings over time, separate from our living costs or spending money. 

To save, you first need to know how much money you have to put away each month. To do this you’ll need to understand where your money is going right now. Look at your past expenditure and separate your spending into the following categories. If you want to make this simple, the Bippit iOS app can do this for you.

1. Bills & Essentials
2. ‘Fun money’ – discretionary spending that’s used for leisure, clothing, holidays etc
3. Savings

Once you know where your money is going, you can create a manageable budget, and one of the ways to think about it is to follow the 50/30/20 rule:

• 50% of your earnings on essential outgoings, rent, and bills,
• 30% on discretionary spending (our wants rather than our needs),
• 20% set aside for saving. Move money at the start of the month to a separate account so that you aren’t tempted to dip into it. 

Using these ratios can be tricky in tough times, where incomes might not be as secure, or when living in a big city where rents are high, so you may need to tweak the numbers to suit your circumstances. For example, if there’s no way for you to avoid spending 60% of your budget on essentials, then you could work with a 20% spend on discretionary spending and 20% going to savings.

A tip to create more capacity is to speak to your bill providers and do comparison checks to make sure you’re on the best plans for your essential outgoings. 

Also keep an eye out for areas where you can reduce your spending by cancelling any unused subscriptions – do you really need everything that you’re signed up for? Are there any outgoings that would cause you financial distress if your income were to drop? Anything where you’re locked in for a set period of time or contractually obliged to pay for the full term might need to be addressed, as you can often flip to a different plan or subscription which allows you more flexibility to cancel should the need arise. 

As times are tough you may notice that you are emotionally spending more often, which is understandable, however this could be leading to more instability in the future. By budgeting carefully with the framework above, you’ll be able to identify patterns in your spending, particularly around times of stress and make more informed decisions.

 

Build an emergency fund

A good rule of thumb is to have at least three months’ expenditure in the bank in case of a job loss or an unexpected cost. Having a buffer is critical for tough times, especially ones that are outside of your control. 

Whilst it may be tricky to build your savings during tough times, it’s not impossible. Even having a small amount of savings is better than nothing, so here are some saving tactics to get started or speed things up: 

• Have a separate savings account which doesn’t have a debit card; You won’t be able to dip into it easily.
• Create a standing order or direct debit which moves money automatically when you get paid. 
• Set a goal. Give yourself achievable targets and ‘gamify’ the saving experience. Once you reach your target, create a new goal!
• Use the best saving accounts. Look into ISA’s and investment accounts which give you the best interest rates. Just remember, the money should be easily accessible, so be wary of long drawdown periods.    

 

Manage your debts

The average household debt (not including mortgages) is now £14,540 in the UK, which may  rise due to the knock-on effects of COVID-19. Job losses and a slow economy are certainly making things complicated. 

It may seem obvious, but we should always try to pay off our highest interest debts first, and if you have debts across different credit cards and loans, consider consolidating them into one single personal loan for a fixed term as this may have a lower combined interest rate. 

Don’t forget about making over-repayments where possible. Paying the minimum amount on your debts can mean you pay hundreds (sometimes thousands) more than you need to over time. For example, if you have a credit card with a £5,000 balance (interest rate 18.9%), a regular £200 monthly payment would take about 3 years to pay this off costing £1,410 in interest (i.e. nearly 30% of the total). If you were able to increase your monthly payment to £460 the debt would be paid off in a year saving £880 in interest. 

Of course, increasing your monthly repayment may not be an option, but if possible accelerating them can lead to big savings. 

 

Review your investments

If you’re already investing, then it’s worth checking if there are notice periods to withdraw the money. You might need to take the money at short notice, but not every saving or investment account allows you to do this (sometimes there is a penalty attached). If you do have to request a redemption of your money and wait a while before you can get your hands on it, you shouldn’t class this as an emergency fund.

You may also need to clarify the terms of your savings and investment accounts to see what happens if you have a drop in income. Is there a minimum that needs to be paid every month? What’s the notice period (if you want to stop saving)? Are there any early exit fees? Give yourself a clear view of what will happen if you need to reduce the amount you are saving or investing. 

You could also consider reducing your pension contributions if available to you – but make sure you understand the consequences that lowering any investment payments may have on your overall financial and life plan. 

 

Consider protection

Protecting your income doesn’t always need to come from having a cash saving buffer. You can also get covered for income loss via an insurance plan. It’s particularly useful (and a good idea) if you have a mortgage, are raising a family, or don’t have an emergency fund. Should anything go wrong and you lose your job you can use your insurance to help cover the essential costs so that you are not left in a difficult situation.

Income protection usually covers 60-65% of you P60 income for:

• Accidents: injuries that mean you can’t return to work
• Unemployment: if you are made redundant, not if you leave your job
• Sickness: if you get diagnosed with an illness that means you cannot work

Some providers have a deferred payment system, which means you have to wait before they pay out the premium, and longer deferred periods are often cheaper, but you need to factor in when your emergency funds or other savings will run out, to cover the waiting period. 

It’s good to note that any money you receive from an income protection plan will be tax free. Although receiving 65% of your income might seem like a sharp drop, without the tax being deducted, it likely won’t be far off your usual paycheck.

Life insurance can also be crucial if you have a family or loved ones that would struggle to stay afloat if your income was to disappear. If you should fall ill (or worse) you’ll have the peace of mind to know that your family won’t be saddled with a mortgage or other debts that they would find hard to clear. In some policies, your children’s education will also be looked after, as well as their home. 

Like income protection insurance, life insurance payouts are tax free, however, when they are added to the rest of your assets, they may be subject to inheritance tax. 

However, taking on the extra costs of an insurance policy at the moment may not be possible,  so it’s important to look into any workplace benefits you might not be claiming. Many companies offer their employees various in-work insurance policies, healthcare and other plans that will make it more affordable for you.

 

Know your tax situation

Do you know if you’re using all the tax allowances available to you? For instance, are you using a tax-efficient savings account, or claiming the Marriage Allowance? Many people take advantage of an ISA, and try to put as much of their savings in there as they can. There are four different types of ISA’s:

• Cash ISA
  This is a simple and straightforward savings account with a maximum contribution of £20k each year. There are different types of Cash ISA’s including fixed-rate, instant access and regular savers, and they all have various benefits, so it’s worth doing a little investigating to find the best one for you. 
• Stocks and Shares ISA
  These have the same maximum contribution, but let you invest your money in a fund (which is a selection of shares or bonds from different companies). These ISA’s are usually managed by a company which will charge you a monthly fee to make investments. You may also be charged on any transfers you make to withdraw or transfer money. There’s no tax to pay on any profits, interest earned from bonds, or dividend income inside the ISA, but it does come with an element of risk – investments can go down, as well as up!
• Innovative Finance ISA
  This includes Peer-to-peer lending, lending to businesses, and crowdfunding. This is a type of investing, and may come with even higher risks.
• Lifetime ISA (also known as a LISA)
  The government introduced the LISA in recent years to get people planning more long term with their money. You can only save up to £4000 per year in this type of ISA which needs to go towards your first home or your retirement, but the government will give you a bonus top-up of 25%. If you were to open an account at 18 and saved the full £4k a year, you’d receive a total of £33,000 bonus by the time you are 50. 

Our advisors are ready and waiting to chat to you about  ISA’s – so send them a message in the Advisor Mail area to get started.

 

Check your entitlement

It’s also worth checking if you’re entitled to receive any state benefits. With any change in circumstances, you might be able to access new support, or supplement your earnings by claiming Universal Credit. You can check your eligibility here, and find out what you might be able to claim. How much you receive is dependent on many different factors, including if and how many dependent children you have, if you are disabled, and of course how much you’re earning. 

If you have a family, remember to update your Child Benefit entitlement, and if you and your partner now earn less than £50,000 per year you can claim full Child Benefit rates. 

 

Seek out support

A simple way to get started is to try the Bippit Healthcheck, which takes just a couple of minutes, and gives you a clear idea of what needs the most attention, and you can even send the results over to your dedicated advisor to have a more in-depth discussion.  

As you can see, there are many ways to get yourself prepared for what the future may hold, without necessarily needing to increase your earnings. If you want to know more about anything we’ve mentioned above, remember you can get in touch with your advisor on Bippit and ask them about what you’ve read. They’ll be able to give you guidance about your financial position and goals, while you use the rest of the platform to set your budget and track your spending.

5 Wellbeing questions as employees return to work

 

Businesses in the UK have faced unprecedented challenges throughout the COVID-19 pandemic.

Managing the initial lockdown and furlough of employees was a huge challenge, and now the complexity of returning to the office needs to be dealt with. 

There are currently over 9.6 million employees on furlough in the UK, and the number of us who are working from home is almost too high to count. Of course, getting everyone back into the office safely is being encouraged by the government (furlough has cost them £25 billion so far), but it comes with significant wellbeing challenges.

The role of HR has always been to champion the health and happiness of our employees, so it’s vital that they feel protected in their working environment, and supported by the business.

After speaking with all the HR professionals that we work with, we’ve set-out the five questions that we all need to consider as employees return to the office. 

1) Overall Wellbeing

Do your employees need to come back right now?

It’s important to ask yourself if it’s actually essential that all employees return to the workplace straight away, or whether they can continue to work from home so long as they have access to the right support? Consider your employees ability to work remotely. If they are coping well, and you’re confident that productivity is at the right level (many companies have seen increases during lockdown!) does it make sense to stagger their return to the office? It’s also important to consider whether they have a desire to stay at home during the ongoing health crisis? Happier employees are proven to be more productive.  In fact, some surveys have found that 60% of employees have stated they would like to work from home more often than they did pre-coronavirus, allowing them to save more money, and improve their work/life balance. 

 

2) Physical Health

Do employees feel safe returning to the office?

Making sure that the office environment is as safe as possible can be complicated, but it will ease the worries of your staff. This includes making plans for a gradual return to work that doesn’t include everyone coming in at once, ensuring some level of social distancing is possible, and that the right PPE materials and barriers are in place. Also consider how your staff travel to work – do you have a bike parking, lessening the need for public transport? What about your vulnerable employees – how will you manage their return to work? The government has released a Working Safely During Coronavirus guide that explains what you need to do to protect your staff as they return.

 

3) Mental Health

Do your employees feel supported and listened to?

Speaking with your staff about coping during coronavirus, is essential to understand their ideas, concerns, or worries they have about returning to the workplace. How can you be more flexible or accommodating to alleviate their fears?

As well as getting their feedback, be sure to let them know all the steps that you’re taking as a business to protect them. For some employees, the office environment was a key part of their wellbeing, and if your company is looking to continue working from home, how will this impact the people who were looking forward to going back into the office? For others, working from home gives them the time and space to improve their mental wellbeing and they may be anxious to come back into a physical location. 

 

4) Financial Health

Do you know how your employees are coping? 

Think about the past few months – many people have been struggling with a great deal of stress and anxiety about what the future holds for their finances. Can you support them in more meaningful ways with coaching and guidance while facilitating a smooth return to work? During coronavirus we have seen the household income for many employees fall and the amount of unpaid bills increase. Even if your staff have not been impacted directly, their family members may have, affecting the financial security of the entire household.

Financial wellbeing impacts both individuals and businesses, with 94% of employees saying they worry about money, and three quarters admitting it impacts their work. This means that c.15% of a company’s payroll costs can be lost due to the effects on productivity, engagement, and retention from poor financial health. If you’re interested to find out more about this issue, we’ve written a guide about it here.

Implementing a financial wellbeing benefit can provide the tools your employees need to deal with the aftermath of coronavirus, but also prepare them for financial uncertainty in future. Having the tools to budget better, set financial goals, understand financial protection (e.g. life insurance, income protection), and get 1:1 support from an expert, can have a huge impact on their wellbeing. Indeed, this kind of support can give them the confidence to get on with their work knowing they’re financially prepared for whatever the future may hold.

 

5) Finally

What has your wellbeing engagement been like over the past 5 months? 

The ongoing disruption, to your business and the lives of your employees, makes it a good time to review how your mental, physical, and financial wellbeing benefits (where you have them) have been supporting your employees. Have your existing products and benefits done a good job at assisting your employees or have they fallen short? Take a look at employee usage and get feedback from your employees. If it’s not hitting the mark, now may be a good time to improve what you have in place. 

If you don’t have anything in place, many companies have found that COVID-19 has been a catalyst to fast-track new wellbeing initiatives. There may be no better time to deliver new solutions to your employees to support them when their needs are the most acute.

 Despite all the uncertainty about what work will look like in the future, and not knowing exactly when or if we will all be back in the office, planning strategically now is the best way to ensure that when the time comes, your company is ready. If you’re a HR manager or part of the leadership team, then you can shape what returning to work looks like. It’s been a truly unprecedented and complicated time in recent months, but finding the right ways to support the wellbeing of your employees at this moment could be the difference between those companies that thrive and those that falter.

Financial wellbeing with Bippit: Recent research from PwC found that 1 in 3 employees say access to an unbiased financial coach is the No.1 program they want to see introduced. If you want to learn more about Bippit’s services and how we deliver the best financial care to your employees, you can find out more here.  

Welcome to Bippit! 💸

 

We’re set on shaking up financial wellbeing and making expert financial guidance available to everyone whatever your income level, life stage, or financial situation. After conducting hundreds of 1-to-1 interviews, and months of research and testing, we started building a platform that connects you to a finance professional where you can ask any questions that you like and get some clarity for your financial life. Bippit is a benefit that your employer provides – so for you, there’s no cost to use our platform. 

We’ve dedicated ourselves to creating the best financial care available,  which includes access to a dedicated expert to make managing personal finances simple. You can forget having to make time-consuming appointments, Bippit is yours to use wherever you are, 24/7. You also won’t have to spend weeks trying to find the right person to speak to. Bippit connects you with an impartial finance professional who is perfectly matched to suit your experience and needs, so you can start improving your financial future with confidence.

Our mission might seem ambitious – building a service to manage your entire financial life, and making a dedicated expert available to everyone, but it’s essential we succeed. Poor financial wellbeing is having a huge impact on us as individuals – it’s the number one cause of stress in the UK, and a major factor in depression and anxiety issues. It’s also costly for business – around 15% of payroll is lost each year as a result of poor financial wellbeing –  that’s about £250k for every 50 members of staff. With access to the right financial support, at the time you need it most, everyone one of us could be up to £50k wealthier over ten years. That benefit should not be restricted to the wealthiest in society – so we’re democratising the world of financial guidance for the benefit of all. 

The idea to build a platform that solves the problem of poor financial wellbeing came from the experiences of our founders, where they mismanaged their finances because of a lack of financial education and resources when they were growing up. This is their story…

Sam Lathey, Co-Founder & CEO

You could say that the journey to Bippit’s creation started many years ago for Sam, when he was fresh out of university and working as a self-employed musician. Like a lot of us in our early 20’s, Sam wasn’t very clued up when it came to managing money. After struggling for some time with budgeting, and amassing some debts, Sam decided to make a change. He wanted to break the cycle of debt and remove the stress that came with the money troubles, and so he had to make a tough decision to move on from being a musician to try to get in a stronger financial position.  

Now, with over ten years of experience as a Wealth Manager and Financial Advisor, managing almost a billion pounds of investments, Sam has worked with a wide variety of clients advising them on how to manage their money best. But he still remembers how it felt to be a struggling musician with ever-increasing debts, “I felt like I couldn’t speak with my friends as there was so much stigma attached to poor finances, and I didn’t want to worry my family. The problem was that I didn’t have anyone impartial to ask for help or advice.” 

You could say that his ‘behavioural baggage’ from harder times mean that Sam has a deeper understanding of the importance of accessible financial support. Having seen the benefit of receiving good advice first hand, Sam set out to create a service that brings those benefits to as broad an audience as possible. “We want Bippit to be available to every employee in the UK. We know how important financial wellbeing is to your happiness, and the effect poor finances can have on your mental health, getting non-judgemental support can make a huge difference.”

Although Bippit is a fast-growing startup, Sam already has big plans for its future. “I want everyone, regardless of their wealth or status, to be able to avoid dangerous money pitfalls and improve their financial situation, to ultimately achieve their full potential and get the most out of life. Bippit is there to take the guesswork out of managing our finances, so we can all build a better future.”

Erich Schudt, Co-Founder & CTO

Erich is our master Technologist. He’s a computer scientist with an extensive background in software engineering and built many systems for enterprises while at Accenture. What he doesn’t know about Tech isn’t worth knowing! Erich saw what was happening in the fintech industry right from the beginning, and had a deep ambition to bring his software engineering skills to help more people, not just large businesses. 

He decided to join the London based fintech Curve, which he was instrumental in growing from just 10,000 users to over 400,000 at the time of his departure. Erich is passionate about Open Banking and states “[Open banking] is key to secure data management. It’s what Bippit is built on. It’s trustworthy too, so it means we can do more to push innovative boundaries, modernise the financial wellness industry and help more people than ever before.”

Erich has ensured that Bippit’s platform is not just safe and secure; it’s intuitively designed to make using its features as straightforward as possible. “Bippit needed to be accessible for everyone to use, no matter their lifestyle or financial literacy level. I knew it had to be packed with useful features, like the Advisor Mail, and Goal tracking, but it also needed to be cost-effective for the end-user. We’ve managed to hit all those targets, plus more to make it free for employees.”

Now Erich uses Bippit to manage his own finances, “just like if you’re unwell you go to the Doctor, if you need financial guidance you come to Bippit! I use it to manage my saving goals and to keep me on track. Being able to ask my advisor about anything that I see on the news that I think might affect my goals is a huge advantage!”

Grace Tolley-Smith, Co-Founder & CPO

Grace is our superstar Head of Product. Similarly to Sam’s background, Grace grew up in a household where money wasn’t openly discussed. It was just one of those things that if you had, you could spend it on enjoying yourself. So that’s what she did. It’s a familiar story:  despite having a well-paying job in Asset Management and Investment Consulting, Grace’s expenditure outstripped her saving. Her lack of financial awareness at a young age led her into bad spending habits, and it wasn’t that she didn’t know how about finance; it’s more that she fell into a wrong pattern and didn’t have anyone to guide her to better financial wellness.

She reached a point in her life where she wanted to shift away from short-term enjoyment and move towards long-term security. “I knew I wanted to break my bad habits and needed to set goals for my future, like buying a house and starting a family, but I wasn’t entirely sure of how to pay off my debts and get in a much better financial situation. Speaking with an advisor changed all of that for the better.”

Deciding to help build Bippit was more than just a career move for Grace. Having had some regrets about her spending in the past, she wanted to help create a platform that would stop other people from making the same mistakes, and allow everyone to get in better financial shape for their futures. She notes “it’s been great to get impartial and non-judgemental advice and speak freely about my money, and saving goals. I want to make sure as many people as possible can access that expert advice too.”

As you can see, Bippit was created to plug a very real gap in the market. The need for everyone to be able to discuss their money, confidentially with an expert in a safe space, and to become more financially secure.

We’re building a future where you can get guidance on your entire financial life, on-demand, whenever you need it. Where your pension contributions, saving, investing, ISA subscriptions, credit card payments and everything in between can all be optimised, leaving you to get on with the fun things in life!

Speak to us about getting Bippit for your team, today!