Author: Peter Kondacs

How to start saving more in 2018: Credit Unions

Everyone likes to save money. We compare our providers before we insure our cars, we shop around for the best mortgages, and we even betray our local supermarket in the hunt for a better deal – all in the effort to save ourselves money.

Spending less money is consistently one of the top New Year resolutions, with 37% of us this year citing it as one of our resolutions (see chart below), suggesting that we still believe there’s more to be done to protect us from ourselves. Whether we’re splurging on nights out, restaurants, new clothes, or takeaway lunches, there’s always somewhere we can trim the fat.


But say we swap that Pret a Manger for the bento box? Research suggests that we could save thousands a year by bringing our own meals, snacks, and drinks instead of buying them on the go, between £2,000 and £4,000 and upwards. £4,000 spread over the year is about £333 per month, or £77 a week: not a figure to overlook when trying to save (and, of course, most of us will save a lot less than that, since savvy spenders are unlikely to be spending £77 a week on a couple of coffees and a meal deal). How we find ways to save money is less important than what we do with those savings.

With dribs and drabs remaining in your bank account, it can be tempting to dip into the leftovers for treats, or, even worse, to forget that it’s money you’ve made an effort to save, then only to spend it without thinking. If you’re looking to put money aside – either to hoard for an emergency or to build up for a larger expenditure (e.g. house, new car, holiday) – then you probably want your money somewhere else where you can’t get dip straight back into it.

“Chipping away at your savings can make them not only disappear quickly but seem as if they were never there in the first place”

The logical step is to separate your savings from your spendings. Out of sight, out of mind, right? 

Transferring the savings you make to another bank account is an easy way of separating your money. Both current and savings accounts can offer interest on your balance, and there are plenty of comparison sites that can show you the best interest rate. Remember, these may vary depending on the balance, and there may also be other limitations, such as a minimum or maximum deposit.

The most convenient thing about theses current and savings accounts is that they offer easy access to your savings if you need them. However, if you have a specific deadline or goal in mind, then this might not be the best option: if you dip in when you “need” to, then you’re unlikely to see your savings pot grow.

Another option is closed access savings, including ISAs. These also have the added benefit of a higher interest rate, so the more you put in, the more you take out. Your rate will also increase with the length of the term you squirrel your money away for: five years will accumulate more interest than money only going away for one year. Most accounts will allow you to withdraw your money early – but this will come with a fee, and is likely to negate all of the interest you’ve earned so far.

Savers may also be subject to other limitations, such as the minimum amount you can place as an initial deposit, and whether you can add to the pot regularly (via standing order or a transfer when you have some extra funds) or if it only allows a one-time payment.

An alternative to traditional “big bank” saving is credit unions. These collectives originally grew out of a way of helping everyone in the same community – whether that be those in the same area, same profession, or working in the same company. Approximately 1.7 million people in the UK belong to a credit union. These are nonprofits, designed to help everyone, regardless of their circumstances, take control of their finances by saving what they can and borrowing only what they can afford to repay.

Whereas traditional banks use your money to create a profit for themselves and their shareholders, credit unions are based upon the mutual benefits for their members. And the fact that credit unions are protected by the FSCS makes them just as secure as banks.

Credit unions repay their members with dividends rather than interest rates, although some larger unions offer an AER (Annual Equivalent Rate). While banks can only take money that is left over from your wage (whether that’s a fixed sum you’ve decided to transfer in immediately after payday, or whatever’s left over just before), credit unions working in partnership with FairQuid can save your money before it’s even hit your bank account. By taking the money straight from your wage, you can budget what’s left over knowing that you’ve already put aside your savings before you begin spending. For more information on an easier, safer way to save click here.

Are employee perks contributing to mental health issues?

Employers do their best to make employees’ jobs fulfilling and appropriately compensated for their time and efforts: a decent wage goes without saying, but employers will often offer additional benefits, such as memberships and discounts.

81% of employers offer these perks to support their employees’ health and well-being, suggesting that employers genuinely care about their workforce outside of the office.

But what if these benefits are having an adverse effect?

With a quarter of the UK population suffering from a mental health issue each year, it’s important to consider best practice to not aggravate these problems. In addition to mental health conditions, all of us will be subjected to some mental strain: depression, stress, and anxieties are almost inevitable, particularly in work, relationships (romantic, friends, and family), and money.

The Strain of Money

For most people, income is often a fixed amount – a wage after taxes – and this needs to be stretched to meet a variety of needs. Bills and rent or a mortgage will take up a sizeable chunk, and then there are other necessities such as food, and travel costs, which are likely to vary, as well as unexpected costs.

And this is only when you have yourself to consider: raising a family, with each child estimated to cost £600 a month. When you consider that people are trying to juggle expenses with saving and enjoying the lives they work so hard for, it’s understandable that money can play an important role in mental illness. As part of a survey by Money and Mental Health, 72% of respondents said that their finances suffered because of their mental health issues, and 86% said that their mental health problems were made worse by their financial situation.

Offering Discounts as Benefits

Discounts with various stores and retail brands as part of an employee benefits scheme might, therefore, seem like a sensible option. If employees are going to spend money, discounts will save them money.

However, discounts, sales, and special offers are vendor tactics to increase sales rather than to save the consumer money. These can encourage existing customers to spend more or draw in new customers that haven’t purchased from there before (if an employee receives a discount code, they may feel that they might as well use it). These perceived benefits can trigger negative purchasing behaviour, particularly in those who suffer from mental health issues. For example, splurging can be a symptom of stress, anxiety and other hidden mental health issues.

Online Traps

Online shoppers are particularly vulnerable to over-spending. Internet shopping makes the process much easier: it can be done from the comfort of home, it’s fast, and our card details can be saved so that making a purchase is as quick as clicking Buy Now. Online retailers also offer additional incentives, such as free delivery when ordering over a certain amount, or so much off once the total is high enough, all of which encourages browsers to keep spending.

Mental Health Affecting Spending, and Vice Versa

When a person is feeling low because of mental health issues compounded by the stresses of everyday life, they are more likely to spend erratically, and sometimes in excess of their means.

According to Money and Mental Health, “93% of people with mental health issues spend more when they’re unwell.” The lure of new products can promote a sense of feeling good, euphoria in the purchasing and acquiring of an item that will make them happier; but even if the sale does deliver on its implied promises, these are short-lived – and the cost that has been incurred is much more enduring.

Over 8.8 million people in the UK are currently caught in “serious” debt, with Brits’ total personal debt, including mortgages and loans, having risen to £1.43 trillion. An estimated 50% of those with debts too difficult to manage are also suffering from a mental health issue. It is therefore worth considering whether offering discounts as a benefit is legitimately an advantage, or are in fact only an incentive to spend more, particularly to those already suffering from a mental health issue.

Healthier Alternatives to Discount Benefits

These benefits can be of some use to certain employees, but they may also enable those with mental health issues to spend more than they intended, or more than they can afford to. And although a benefits package is still considered an important aspect of attracting and retaining staff, it’s vital to balance the benefits offered with how best to support your team’s mental health.

Even when discount benefits are used to save money on an intended purchase, employees are unlikely to see any long-term benefits. The few pounds they save will probably remain in their bank account to be spent on something else, and discount benefits can encourage unreasonable spending and even lead to, or exacerbate, debt.

These need to be packaged and provided in conjunction with actionable tools by offering employees a safe, reliable method of putting money aside. Saving with a FairQuid employee wellbeing credit union partner ensures that members can set aside an amount they feel comfortable with every paycheck, and, to resist the temptation to spend it, the money is taken directly from their wage.
An alternative to traditional “big bank” saving is credit unions. These collectives originally grew out of a way of helping everyone in the same community – whether that be those in the same area, same profession, or working in the same company. Approximately 1.7 million people in the UK belong to a credit union.

Whereas traditional banks use your money to create a profit for themselves and their shareholders, credit unions are based upon the mutual benefits for their members. And the fact that credit unions are protected by the FSCS makes them just as secure as banks.

Credit unions repay their members with dividends rather than interest rates, although some larger unions offer an AER (Annual Equivalent Rate). Credit unions working in partnership with FairQuid can save your money before it’s even hit your bank account. By taking the money straight from your wage, you can budget what’s left over knowing that you’ve already put aside your savings before you begin spending. Please click here for more information on an easier, safer way to save.