Silver Surfers are often living on a Fixed Income – state pension, company / private pension, bank interest, and other investments. Statistics suggest that many are having to survive on just a state pension with no savings. So stretching the budget is rather important! In this article I outline some of the tactics I use to stretch my budget for those Senior Gap Years!
Unfortunately, some people are resistant to change and do not like shopping around for better value services. For example, we are urged to switch Energy companies and save money on fuel costs. Although there has been an increasing uptake in the use of Energy comparison sites, many lack the inertia to get started.
Before looking at energy comparison sites, be aware that Cashback is often complementary to the Energy switching sites. So energy companies that score well on the Energy switching sites often offer cashbacks too! So before committing to an energy switch, register with one of the Cashback sites (such as Topcashback or Quidco), and search for the chosen Energy provider (or a number of potential Energy companies!!) on the cashback site, and click the provided link so that the purchase can be tracked. To illustrate the value of these cashback sites I have earnt over £750 on TopCashBack and somewhat less on Quidco. Then add the Energy saving to that too!
Another recent example, I was looking for a good deal on Landlord Content Insurance. Through TopCashback I found Quoteline. They were able to find a provider who was offering similar coverage but with lower excesses AND the premium was cheaper than the renewal quote from the existing Insurer. EVEN BETTER the premium was just over £45 pa YET the cashback was £47.25!!
In addition to Insurance and Utilities you can substantial cashbacks on Fashion, Electricals, Entertainment & Leisure, Telecoms, and Travel
For a few minutes effort the potential savings on utility bills can run into £100s every year. After switching you are still being provided with the same gas or electricity! Only the billing company has changed. It is true though that some Utility companies have poor customer service, and that might be an important consideration. If this is a concern then uSwitch annually rank Utility companies for their customer service – click here for 2018 rankings
There are many comparison sites to choose from including uSwitch, Gocompare, MoneySupermarket, CompareTheMarket, MoneySavingExpert. There are many more (and Topcashback lists many others PLUS a cashback).This can be a complicated market with fixed deals and various tariffs. At the end of a “deal” you can be put on a more expensive variable rate (although a letter should advise of the cheapest deal from your provider).
I have used these comparison sites for many years, saved lots, but I have found a more convenient solution called Flipper. Flipper saves you time and money by effortlessly switching you onto the best energy deals. Flipper claims tens of thousands of Flipper customers are saving an average of £385/year. I have saved, and it is convenient. No more searching on switching sites, they do all the work. You do pay a yearly subscription fee of £25 but covers all the swaps for a whole year, and they guarantee you will save!
Where to put your savings?
Each year I use up my ISA allowance and invest capital in Stocks and Shares. All dividends are tax free in an ISA. So my share portfolio invests primarily invests in Investment Trusts (IT) with regular dividend payments (typically in excess of 4%) and high dividend UK shares. My portfolio can be seen here. Of course, ITs and share prices can fall but I commiserate with the excellent dividends. iWeb (part of Halifax) offers tremendous value with no drawdown costs and only £5 per purchase or sale of an asset. For safer options read on …
Bank interest rates for savings have been low for many years. In the UK one of the most attractive offers, with a safety net, is Premium Bonds. Each bond costs a £1, and you can purchase up to £50,000 of bonds (as May 2018). Your bonds are entered into a monthly draw with 2 top prizes of £1 million. There is a gamut of other prizes from £100K down to £25. You currently have a 1 in 24.500 chance of winning. So if you invest £24,500 you should statistically win a prize every month! Effectively, the rate of interest is 1.4% (tax free) plus the chance of a BIG prize. I am an investor in this product, and love the excitement at the beginning of each month to see if you have won! Bear in mind the 1.4% interest is lower than the cost of inflation.
Bank accounts offer low rates on savings but your investment is protected (in the UK) by FSCS – Financial Services Compensation Scheme. Since January 2017 deposits in banks, building societies and credit unions are protected up to £85,000 – for full details use the link.
If you are happy to forego the safety basket of the FSCS, then there are many offerings with varying degrees of risk – see article about P2P Phenomenon
Current Account Switching
Be a Bank tart and switch your provider of your current account for cash rewards or other incentives. I keep a main account Barclays Premier Account (I like their free coffee every day, free entry to UK Heritage sites, and savings on restaurant meals plus other perks), and a secondary account which I use to switch about once a year. Many banks cash incentives to move your account. A quick check on MoneySavingExpert will list the best current offers: HSBC offers £200, M&S £185 of vouchers, NatWest £100 + 2% cashback, and Barclays £132 in first year (as May 2018). The switching process is quick and easy since seven-working-day switching began in 2013. Just open a new account, then use the new bank’s switching service and it’ll close your old account and move your money, direct debits, standing orders etc across. Quite painless really and up to £200 in your pocket!
Credit Card Tart
MoneySavingExpert’s Martin Lewis often grandstands on swapping your credit card to get interest free loans effectively. In essence, you move a balance on a credit card to another card provider offering 0% interest for 24 months or even longer. Check that there is no admin fee; Santander currently offer 24 months with no admin fee. Make sure you pay the minimum every month so that you accumulate no interest. At the end of the 0% period move (or tart yourself) to another credit card company. MoneySavingExpert offer a tool to check your likely success of being accepted before applying (too many applications can affect your credit rating).
Personally I like the credit cards that offer rewards – cashback, air miles, vouchers or Nectar points. I have an Amex Platinum card where 5% cashback is available for the first 3 months. After that period the reward drops back to 0.5% or 1% depending on your spend. Another £100 at least to spend!
Holidays / Travel Money
Who does not like a holiday? At least in retirement or as the other half says “Gap Years”, you can take holidays out of the high season. This has a dramatic effect on flight and hotel costs. Before staring out do check the Cashback sites as they offer great cash incentives to use their partners.
Research suggests that booking at least 60 days before departure can save at least 30% on the air fares. My favourite flight comparison site is Skyscanner but others recommend Kayak and Momondo. BA often promote WorldWide sales at great discounts – subscribe to their mailing list for updates. Even their holidays (flights & hotel) can work out cheaper than the normal flight cost – weird!
For stonking Holiday Packages (flights and hotels) try Holiday Pirates. For more upmarket packages there are great savings typically above 33% at Secret Escapes or Voyage Prive. Go on you deserve it!
More Travel Savings: Parking & Currency
Airport Parking can be costly but again early booking through one of the Cashback (TopCashBack or Quidco) sites offers great savings. Great savings on Travel Money can be made if you switch to a new provider such as Revolut. Revolut offer fast, free and secure money transfers to bank accounts in over 120 countries, while saving you up to 8% by using the real exchange rate. More details about Revolut here. With Revolut it is easy to open an account and then transfer funds into this account when you need to use a card abroad (and SAVE).