Archive for July, 2009

Money saving tips from self made millionaires

July 31, 2009

What is your money-saving tip in the recession?


As I am earning just a fraction more than my Woolworths salary, I only buy what I need. If I want a major purchase, I save up for it. I try to put money aside every month. I don’t do credit cards or store cards. Claire Robertson (Wellworths)


Retain liquidity but, instead of accepting interest rates of 1 per cent on deposit, consider buying a property at the lowest end of the market. You pay capital gains tax of 18 per cent on the ultimate gain instead of 50 per cent income tax on the investment income. We’ve done it as a place to put our money. Digby Jones (CBI)


Change your investment strategy. At the beginning of 2008, my financial gurus and I had a creepy feeling that things were about to go wrong, so we made alterations to my portfolio.

I like to put 10 per cent into physical gold. In the nick of time, we got out of equities almost entirely. Our only mistake was leaving too much in sterling. On the whole, I came through it extremely well.

Over the next few years, you have got to keep awake. Don’t become complacent because the hyper-inflation that is going to hit us might wipe you out! Wilbur Smith (Novelist)


Instead of filling up my car for £75 or £80 every 10 days, I only buy £25 worth of fuel at a time and try and drive as efficiently as possible to make it last near the 10-day mark. Lewis Moody (Rugby player)


Enjoy abstinence. I lived in the US from 1997 to 2000, where I saw incredible levels of food wasted. Since then, I have always bought much less. John Bird (Founder, Big Issue)


We continually review our action plan. We sold quite a lot of property at the right time and the money stayed in the bank, but now it’s time to buy. We will look for either domestic property or a commercial building but it has to be in a desirable and stable area – like Hoylake, where we have a beautiful home right on the beach. Chris Boardman (Cyclist)


You have to be frugal, but it’s worth buying quality because it will last longer. I must have got through £300 in the Jaeger sale but I had saved £500. The point is I will be wearing these clothes in five years’ time.

The same goes for replacing kitchen appliances and electrical goods because there are so many bargains. And stay with the same car. I’ve had my little sports car for eight years.

What is the most you have ever paid for a bottle of fine wine or champagne?

No more than £30 for a bottle of wine in a restaurant. I tend to buy wine through Bibendum, and take their advice. My spend averages out at around £7 a bottle. Dame Joan Bakewell (TV and radio presenter)


Buy a fraction of an aircraft instead of a whole one. By only spending £1m, you are saving £9m! The majority of my customers are entrepreneurs, many of whom are either selling their own aircraft or who will no longer contemplate a full aircraft purchase. Jonathan Breeze, (founder and chief executive officer of Jet Republic)


Think before you spend and consume. In the last 15 to 20 years, we have become reckless, grabbing food, goods and energy without asking a question. Now we have an opportunity to buy more responsibly. Raymond Blanc (Chef and restaurateur)


EasyJet Owner drives a Smart Car

July 29, 2009

The brains behind EasyJet, Sir Stelios Haji-Ioannou, has revealed that in keeping with his brand’s ethos, he drives a modest Smart Car and buys the majority of his clothes on the high street.


“I definitely don’t spend my wealth conspicuously because that would hardly tie in with the ethos of my brand. I had to change my habits when I started easyJet – I watched my wardrobe and what I wore, and I ditched my Porsche because that didn’t look good. I’ve had a Smart Car ever since,” said Stelios in an interview with the Telegraph.


“I don’t need status symbols. I do my best to enjoy as ordinary a day as possible, and I use the Tube,” he adds.


He went on to express his objection to the reckless behaviour of bankers such as Fred Goodwin and emphasised the importance of communicating with your bank manager and reviewing your finances regularly.

Get creative and save a bundle

July 28, 2009

Nowadays we live in such a disposable society that even when money is tight we are replacing and wasting instead of redesigning and mending. Why not save money and the planet by embracing the ideals of old, darning torn clothes or even completely redesigning old garments. If you are not a textiles whiz, taking old clothes to an alterations store will still be cheaper than buying new ones and more ethical. And its not just clothes that can be recycled and reused. Bags have been made from old crisp and sweet wrappers, wallpaper off cuts can be used to decorate home furnishings, cushions and their covers can easily be made out of old material, the possibilities are endless! Have you got any crafty ideas for saving money, eliminating waste and making an impression?

Top private school advises bank of England

July 27, 2009

Scotland’s prestigious George Watson’s college, a £9,000 per year independent school, came 3rd in the Bank of England’s annual Interest Rate Challenge competition in March and is now going on to introduce compulsory lessons in money management.


A team of sixth form students appeared before the Monetary Policy Committee of the Bank in March to offer their suggestions for pulling the country through the recession. They recommended keeping rates on hold at 0.5 per cent, which the Bank has done since then. Coming third in the competition, the school won £2,000 and has taken the step to introduce money management classes.


Students will be taught weekly on topics such as how to budget properly, bank accounts, student loans and credit cards. The school is also introducing lessons on cookery and healthy eating in response to the growing obesity epidemic.


Surprisingly, the financial awareness classes were actually requested by the pupils, rather than from above, with deputy principal Dr Rodney Mallinson saying that some senior pupils had been “frightened” by how the economic downturn had taken hold and realised they had to get a grip of issues like debt, credit, comparing mortgages and managing a budget. “There has been real demand for lessons on financial awareness and on how to plan a budget,” he said.


Ron Sandler CBE, chairman of Northern Rock and former chairman of Personal Finance Education Group (PFEG), said: “It is never too young to start learning how to handle money. Becoming financially aware – knowing what money is and what it means and how to be comfortable and confident dealing with it – are vital lessons which will stand them in good stead into their adult years.”

Judith Gillespie, policy development officer for the Scottish Parent Teaching Council, welcomed the move, but expressed some reservations:


“Teaching children how to manage money is to be welcomed but it needs to be about how to budget rather than lessons in general finance,” she said. “For example, they need to learn about bank balances and the fact they might not show money they have just spent. Learning about loans and managing store cards is also a good idea.”

Children and money – the facts

July 24, 2009

With borrowing a way of life and financial products offered to our children at younger and younger ages, a degree of financial knowledge is crucial. But financial education is not compulsory in our schools and many young people know next to nothing about some of the most common financial products and do not even keep track of their own spending.


British teenagers have more cash than ever before, with the UK’s 16 year olds earning ££713 million a year and an additional £258 million in pocket money. However, 54% do not keep track of their spending and 46% are unsure of the difference between a credit card and a debit card.


Consequently, many teachers and organisations are attempting to introduce some form of effective money education into schools. Debt Doctors Foundation UK holds regular workshops in schools across the country delivering simple and fun messages about money and finance. Other organisations such as the Personal Finance Education Group (PFEG) conduct research and provide teaching materials to parents and teachers. With 90% of teachers admitting to feeling worried about the level of financial knowledge among their pupils, the work which these charitable organisations do is in high demand.

Kids say the moniest things

July 23, 2009

Money education charity PFEG questioned 9 year olds Grace, Caitlyn, Keyara, Edward, Verity, and Ben about a number of money issues. Their answers are amusing, revealing and interesting. How much do our children know about money? Are they receiving appropriate money education? And, crucially, will they be equipped with the financial knowledge and understanding to avoid slipping into unmanageable debt in the future? Here are their responses to a few questions about finances.


Who receives pocket money?

CAITLYN: If I’m really good I get £5, but if I’m naughty I only get £4.

EDWARD: Because I’m a twin, I get £2 between me and a brother. I spend it on chewing gum.

CAITLYN: I spend it on drinks and bags and shoes…

VERITY: …Make-up, or clothes, or sweets.

KEYARA: If I have a little bit of money, I spend it on books.

BEN: I am saving up because I am going on holiday. I keep it in a bank in my bedroom.

Reporter: You have a bank in your bedroom?

BEN: A mini one. It is a mini machine because you have a code like a password to get in it. You can withdraw money and put notes and coins in it.

CAITLYN: I’ve got a pink one.

BEN: Mine’s black.

CAITLYN: You can put a pretend credit card in it if you have forgotten your code.

VERITY: What happens if someone finds your credit card?

CAITLYN: I put it in a special place.

GRACE: I’ve just got a little duck, and you open a zip on its bottom and put all your change in it.

Is it easy to save money?

EDWARD: It is not brilliantly easy, I keep on spending it. I saved £68 when I had just had my birthday. I’ll probably save it until I’m a grown-up and then spend it on a house, and the bills, and to feed my children.

KEYARA: The things I really want are a lot of money. I like to save up, but sometimes it is hard because the price gets higher and I have to save more.

GRACE: The most I got was probably on Happy New Year’s Day, but I spent it straight away. I bought a bike with it and spent the rest.

KEYARA: I think it is hard to save up money, because you have to be good and that is really complicated for me. I have to make my bed, wash up and all that, but sometimes I can’t be bothered so I don’t get any money.

Who knows how a bank account works?

EDWARD: Do you put some money in it and every month or so they add a bit more onto it and it keeps on going like that?

GRACE: It is so you can save up and keep it private, if people try to break in.

BEN: I went in a bank and it was really busy. My mum wanted to get some money out of her bank – I don’t know what it was for. She had to put in her Pin and she was brought some money.

GRACE: A Pin is a code that you put into a hole in the wall. You put your credit card in and then you get your money out.

Rep: What happens if you’ve got no money in there?

All: I don’t know.

CAITLYN: Then you have to work until you’ve got a lot of money.

How much does a house cost?

VERITY: £1,256.

EDWARD: £20,000.

KEYARA: £50,000.

CAITLYN: I would pay £3,000 for a big house, £2,000 for a middle-size house, and £1,000 for a bungalow.

GRACE: I would spend £55,365.01.

EDWARD: The 1p is vital

BEN: It is about £2,500 for a house.

Rep: Do you know an average house costs about £150,000?

GRACE: Now I know why my mum keeps on saying that we are poor!

How are we going to raise all that money?

VERITY: Work, or get two jobs.

EDWARD: Leave it to my dad.

GRACE: Ask your mum and dad, but they might be retired…

CAITLYN: …Will they get money?

GRACE: Yes, the taxes you pay go to the retired people to live.

CAITLYN: My nanny and grandad love me because when they look after us they get about £20 a night.

Rep: Who else can we ask for money for our house?

BEN: If you have a credit card, can you withdraw it from the credit card?

Rep: If I borrow money on my credit card, what happens?

KEYARA: It comes out as a bill. My uncle said one day that he would teach me to be a lady who uses her money properly, so he asked for £1 and said he would give it back, but with a bit more.

GRACE: If I borrow money off my mum, I wait so long that she forgets about it. But when they borrow money off me, I never forget.

EDWARD: I’m on exactly the same track. I keep quiet about owing my mum.

VERITY: How much does a manager of a supermarket get? In Sainsbury’s, I think Mr Sainsbury’s gets all the money?

KEYARA: But he’s dead?

All: Is he?

VERITY: There is also Mr Tesco…

GRACE: …And Mr Budgens.

EDWARD: I’ve heard of Mr Bean.

If we borrow £150,000 from a bank, what will happen?

CAITLYN: You’ve got to pay back more.

Rep: When?

VERITY: Every month.

KEYARA: Not every year? Because then you could save more.

Does anybody know who the chancellor is?

EDWARD: What’s the chancellor?

BEN: Is he the boss of the banks?

VERITY: He is something to do with money, and the President’s friend.

EDWARD: Is he…

VERITY: …or she…

EDWARD: …In charge of all the banks?

Rep: He’s called Alistair Darling, have you heard of him?

EDWARD: If it was Darwin then I have heard of him – he’s a famous scientist.

Do you know about taxes?

GRACE: You pay something to the council or government and they give it to retired people.

EDWARD: It is called a pension.

KEYARA: How come you don’t pay for a hospital to go to see a doctor, how do they get money?

VERITY: From taxes.

CAITLYN: If it is an emergency you can’t just say: “Here’s some money before I have my injection.”

EDWARD: You do have to pay. You’ve got to pay for the car park.

If you had £1m, what would you do with it?

BEN: I would buy a new house in a hot country.

CAITLYN: I would drive to London, earn another £1m, then I would pay the Queen for her house. She can live in my old house.

KEYARA: I would spend it on a house and some pet snakes for my worst enemies.

EDWARD: I’d spread it around 10 different churches and give £10,000 to the local hospital… Then I would buy a mansion.

VERITY: I would buy Tescos, or I might buy Sainsbury’s instead.

If you had children but not enough money to feed them, what would you do?

VERITY: Go to my parents, or an older brother or sister, or a good friend.

EDWARD: I would first of all start begging on the streets, secondly start praying, and thirdly, ask my friends for some money.

GRACE: I’d make sure I looked good so I could get a very rich husband who could pay for things.

Cedarwood Primary School took part in My Money Week – a schools event designed to raise the standard of financial education for young people. More than 6,200 primary school teachers and 3,200 secondary schools teachers were sent packs designed to bring more financial knowledge to the classroom.

The programme, organised by the Personal Finance Education Group, was part of an £11.5m project from the Treasury and the Financial Services Authority to help people handle their finances better.

Pre pay holiday money

July 22, 2009

Withdrawing money abroad can be a costly business, with most cash machines charging a flat withdrawal fee in addition to a loading fee. Together, these fees can cost you up to 5% of the amount you have withdrawn.


In many cases, it may actually be cheaper to simply pay with your card in a hotel or restaurant, rather than withdrawing cash and paying with cash.


To avoid being hit with unnecessary expenses when paying for things abroad, you could take out a pre paid credit card.


You can pre load these with a currency of your choice and make purchases abroad with no extra charges. In addition, you are protected from spending more money than you have as there is no credit facility. What’s more, if your card is stolen, there is much less at stake than if your main credit card is stolen.

Financial education authority to be created

July 21, 2009

Chancellor of the exchequer Alistair Darling has announced plans to create a financial education authority to educate consumers about financial products.

 The authority will be independent from the government and will be funded by banks and insurance companies who will have to pay a levy to support the new financial education authority.

 The current system is rather complex, with no one body entirely responsible for financial education for consumers. The move has been welcomed by consumer groups as it is expected to provide more coherent and direct support and education for consumers than is currently available.

 In the report, entitled Reforming Financial Markets, a number of measures designed to protect consumers were outlined. Plans to create a network of money advice centres across the country to support consumers when they make decisions about financial products were mentioned and ministers said that they plan to provide collective redress for victims of financial mis-selling. This would take the form of a strengthened financial compensation scheme and a compulsory traffic light system for mortgages and pensions-similar to the colour coding system for packaged food.

 The charity Citizens Advice Bureau said: “Investing in financial education is one way in which the impact of the recession on communities can be lessened. Sessions with tips how to budget, borrow and save creates more savvy consumers and helps people to help themselves. The commitment to greater resources in this area by levying consumer credit firms, and the anticipated roll-out of a national money guidance service are both positive steps.

 “CAB evidence shows how practices that are unfair and detrimental to consumers can become ingrained, where regulatory standards are non-existent, weak or poorly enforced . It’s therefore encouraging that the white paper outlines a range of ideas to support and protect consumers more effectively.”

The Financial Inclusion Centre, which lobbies on behalf of low-income consumers, also supported the move, saying it represented “some very powerful consumer protection measures”. However, the centre said: “More than 2.7 million people do not have access to a transactional bank account. Yet the government will rely on self-regulation by the banks to tackle financial exclusion.”

24% of young people depressed about money

July 20, 2009

 New figures from counselling charity Relate have revealed that almost a quarter of young people are feeling depressed as a result of worries about money.

While most of the focus is on the adult world, credit card debts, job losses and repossessions, the emotional health of the next generation is being put at serious risk by the current financial turmoil.

Some are feeling the pressure of their parent’s financial troubles. With arguments about money frequent in many homes, family relationships become strained, with the children often suffering silently.

17% say that as a direct result of this their studies have suffered and their behaviour at school or college has noticeably deteriorated. One 16 year old says that his mum can no longer afford to support him, meaning that he is having to enter into the extremely tough job market at a young age with few qualifications and little experience. His prospects do not look good.

“I’m actually having to move out this year, because my mum can’t afford to have me live there. I’m worried I won’t find a house for quite a while,” he said.

Another boy, aged 17, said that when his dad lost his job, the family went into freefall and he was anxious about what the future held.

“Cards were put on the table, options and that. One of them was we were going to have to move, probably to a different town. I’ve never moved in my life so it was going to be a big thing,” he said.

Many others are concerned about their finances, with children as young as 15 worried that they will not be able to get a job when they finish school. This belief can lead children to see their studies as futile and some are studying less as a result.

One 21 year old said that her money problems drove her to self harm. Having been unemployed for 3 years, she was became so frustrated that she turned to self harming as a way to cope.

“A lot of the time I feel suicidal. I do actually self-harm sometimes, although I’ve stopped it now. It wasn’t because of the fact that I was depressed over other things, it was because I was depressed about money,” she said.

With the recession affecting the mental health of our youngsters, it is vital that support is offered. Debt Doctors Foundation UK is a money education charity which offers advice and counselling as well as educating young people about money and finance.

By going into schools teaching children about money management from an early age, we equip them with the skills to understand and handle money wisely in the future. By helping young people to understand and deal with the implications of the global credit crisis, we can help them to avoid feelings of desperation and confusion surrounding money matters.