The Salary Calculator

Personal finance education in the UK

by Madaline Dunn

Although personal finance is now an educational requirement in the UK, it’s well known the curriculum around this topic is not up to scratch. Many leave school without a real grasp on the ins and outs of personal finance, whether that’s interest rates, mortgages, or managing money, and as a result, research shows this leaves youngsters vulnerable to making harmful decisions around their finances.

Financial literacy empowers people to make informed choices about how, when and where they spend their money, and ensure they’re not left open to unsustainable borrowing, and unwise investments that could lead them down a road of debt.

At The Salary Calculator, we’ll explore why education around personal finances in the UK needs to improve, and the consequences of financial illiteracy.

A lack of financial literacy and its consequences

According to research, we begin to develop “vital money habits and skills” between ages three and seven. Despite this, only around 38% of children and young people receive some form of financial education while in school, and in 2016, half of Brits failed a financial literacy test run by the OECD, placing Britain significantly below France, Norway and Austria.

The consequences of this lack of financial literacy, means that young people are largely unprepared to deal with the different financial situations they are confronted with as they move into adulthood.

Research from Santander UK has even found that two-thirds of young people attribute their debt problems to a lack of financial education. Meanwhile, an inquiry commissioned by the Centre for Social Justice (CSJ) in partnership with Lowell, found that 24 million adults are not confident handling their money on a day to day basis, and one in eight young adults who took on a “buy now, pay later” credit agreement were eventually contacted by a debt collector.

Speaking about what the Santander UK study shows, Mike Regnier, CEO of Santander UK, said that fostering key money management skills at “an early age” will ensure that future generations leave school “equipped with the foundations for financial independence, and the skills to make better financial decisions.”

Meanwhile, John Pears, UK Chief Executive at Lowell, said that now, more than ever, with the cost of living crisis reaching extreme levels, financial literacy would be a “strong barrier.” Pears admitted that as a country “we just aren’t good enough at it,” and outlined that the company’s own customers have outlined how “ill-prepared” they are when facing debt. He added: “The lack of financial literacy and budgeting skills creates spirals of debt that are hard to break and have a long-lasting impact, individually and on our economy.”

Education around personal finance should start at school

The CSJ and Lowell conducted a poll of 4,000 adults and found that 44% of all adults, and two-thirds of those aged 18 to 34, believe that if they had received financial education, for example around basic money skills, they would be more financially prepared for life and its challenges. Yet, in the 2021-22 Young Person’s Money Index report, just 8% of young people said they received most of their financial education at school.

Yet, according to Fintec, when children receive education around finances at school, they’re more likely to handle their finances better, save up frequently, have a bank account and generally feel more confident navigating finances.

Speaking about the advantages of educating children about finances from a young age, Martin Lewis, the founder of MoneySavingExpert.com, said that children are “professionals at learning.” He added: “Teaching children is easier than teaching adults. That’s why, in our education campaigns, we focus on children –  because the job of educating society is so much bigger. If you start with children and keep doing it over 30, 40 years, you’re going to work through [society] better.”

Programs and initiatives to enhance education

Back in 2014, financial education was brought into the secondary school curriculum, as a component of the “citizenship” element of the national curriculum at key stage 3 and 4. This was introduced as a way of providing students with guidance on managing money, and tools to plan for their future financial needs.

However, despite being compulsory, uptake of financial education in schools is actually quite low. According to Russell Winnard, a former teacher and head of programmes and services at Young Money, there is room for improvement in this area. In 2017, he outlined: “It is compulsory in every secondary school, though that does not apply to academies and free schools. Around 35% – 45% of schools were actually delivering financial education in 2014. Two years on and we estimate it’s still only 40% doing so.”

This is something that has been echoed more recently by Martin Lewis who expressed similar sentiments. Speaking to Future Learn, Lewis said: “There is financial literacy on the national curriculum, but it’s guidance rather than compulsory for many schools. It’s only on the curriculum for secondary schools in England. We have a charity called Young Money where we have a free financial education textbook in every school now, and that’s been incredibly successful, but we still have a problem that some schools don’t teach it, aren’t trained to teach it and won’t.”

To tackle the financial education gap, a number of recommendations have been made by CSJ. Some of these recommendations include:

• Introducing a new legal requirement for students to receive “at least three ‘experiential’ financial learning lessons” over the course of their school career;
• A new ‘whole-family’ approach to financial education. According to the report, this would involve bringing in parents and carers into the equation, and introducing what the CSJ called community infrastructure like Family Hubs;
• Bringing in funding for care leavers and disadvantaged young adults to attend ‘just-in-time’ financial education programmes to reduce cases of rent-arrear driven homelessness;
• Introducing adult financial education as part of the Government’s £560 million adult numeracy scheme, ‘Multiply’;
• Completing of the welfare reforms initiated in 2012 by rolling out ‘Universal Support’ to provide vulnerable people with digital and financial skills;
• Promoting the ‘Help to Save’ scheme to increase uptake among those who are eligible.

Commenting on the changes that need to be implemented, Robert Halfon MP, Education Select Committee Chair, said: “We must be bolder – critically, by adding financial education to the curriculum in primary school in PHSE lessons where money management remains absent in England. Adults of all ages also need opportunities to develop critical financial skills throughout their life, whether that be in the workplace, further education or via the welfare system.

Tags: Economy, Finances, Financial education, Managing money, Personal finance

Coping with financial challenges: Ways to save money in 2022

by Madaline Dunn

These days, almost everyone is feeling the pinch. According to recent research from the Food Standards Agency (FSA), more and more people view affording food as a concern and over three-quarters of UK consumers (76%) have voiced their unease.

Likewise, BritainThinks also found that the cost of living is now the dominant concern for UK households, with rising prices being a major concern for 90% of people. Shawbrook Bank even found that around 18% are already losing sleep over their concerns around money, and a quarter of those surveyed cited managing their finances as the primary cause of their stress.

At The Salary Calculator we understand how difficult it can be to cope with the cost of living crisis, and have compiled a list of ways to save money when faced with financial challenges:

• Access to food banks 
• Free sanitary products and contraceptives
• Baby food & formula
• Toys & Books

Access to food banks

Recent research has shown that over 22% of people surveyed by the FSA, as a result of financial struggles, have been forced to either miss a meal or reduce the size of their meals. It will come as little surprise then that people’s use of food banks has risen dramatically, with the number of those turning to food banks increasing from around one in 10 in March 2021, to almost one in six this March. 

Speaking about this, Prof Susan Jebb, chair of the agency, said: “In the face of the immediate pressures on people struggling to buy food, food banks are playing a vital role in our communities.” That said, you may be in the dark about how to go about accessing a food bank, but don’t worry, we’ll explain. To begin with, you’ll need a referral – you can start the ball rolling through accessing your local Citizens Advice. Once there, you’ll be asked about your personal circumstances and they will determine whether you’re eligible. That said, if you’re unable to get a referral this way, you can ask an organisation/body that you’re receiving support from, this could be a social worker, school staff, or GP.

Once you’ve received a referral, you’ll be given food vouchers for a food parcel containing three days’ worth of non-perishable food. Alongside the food parcel, you’ll also be offered advice on finance, debt, and government support. 

Sanitary products & contraceptives

Period poverty in the UK is alarmingly widespread. A recent survey in the UK uncovered that one in four girls and women aged 14-21 (28%) are struggling to afford sanitary products and almost one in five (19%) have been unable to afford these at all since the beginning of 2022.

With a lack of access to sanitary products, these women and girls have been forced to use substitutes such as ​​toilet paper (80%), socks (12%), newspaper/paper (10%), or another kind of fabric (7%). 

Commenting about the horrific situation many women and girls are facing, Rose Caldwell, CEO of Plan International UK, called the findings “devastating.” She said: “As we look to an uncertain future, many more families will face tough financial choices, and more young women than ever are likely to face issues affording the products they need,” she said. “Period products are a necessity, not a luxury, and they need to be treated as such.”

However, while we wait to catch up with Scotland, which is now the first in the world to have made period products free, there is assistance for those facing period poverty. Food banks now stock sanitary products, and you can find your local food bank through the Trussell Trust website which contains a directory of nationwide food banks. In some cases, you won’t need a referral. The supermarket Morrisons has a scheme where those in need can get free sanitary products by asking for a package for Sandy. Bloody Good Period, Period Poverty, Freedom4Girls and Hey Girls can also provide help.

When it comes to contraceptives, you can access them for free from the following: 

• Contraception clinics
• Sexual health or GUM (genitourinary medicine) clinics
• Some GP surgeries
• Some young people’s services
• Pharmacies

It’s also important to note that contraception services are free and confidential, even for those who are under the age of 16.

Baby food & formula

If you’re facing financial hardship and you are pregnant or have a child under four years of age, you may be eligible for assistance buying food and milk. This can be accessed through the NHS’s Healthy Start program,  where and if eligible, you will be sent a Healthy Start card with money on it, which is updated with funds every four weeks, so you can use it to buy:

• Plain cow’s milk
• Infant formula milk (based on cow’s milk)
• Healthy Start vitamins
• Vitamin drops 
• Fresh, frozen, and tinned fruit and vegetables
• Fresh, dried, and tinned pulses

There are also specialist “baby banks” which are run by local organisations and charities dotted across the UK. Through baby banks, you can access nappies, wipes, baby food, clothes, toiletries, toys, cots, sterilisers, baby baths, and medication. Some active baby banks include London-based organisation Little Village, Baby Basics, and The Nappy Project. 

To find out where your local baby bank is, reach out to Citizens Advice and Trussell Trust, or use Little Village’s interactive baby bank tool.

Toys & Books

While there are a fair few options available for food, drink and sanitary products, you may be wondering if there are organisations, charities, or schemes that can help you access toys and books for your youngsters. After all, a Gingerbread survey found that when looking to make cuts to spending, toys, books and games are often cut out first to make ends meet (52%).

When it comes to accessing books, BookTrust is the UK’s largest children’s reading charity, and entitles every child in England and Wales to a free Bookstart pack before they are 12 months old and again aged 3-4 years ( or 27 months old in Wales).

Likewise, for access to toys, you may find it helpful to look into toy libraries, which are exactly what you’d expect them to be, libraries where instead of borrowing books, children can borrow toys. There are more than 1,000 toy libraries around the UK, and yearly membership is low, costing as little as £3 per family for a year pass. Typically, toys can be borrowed for up to two to three weeks.

Tags: cost of living crisis, Economy, Finances, food banks, Personal finances

The great resignation: What is it and what does it mean for you?

by Madaline Dunn

The great resignation is the hot topic on everyone’s lips, with millions either leaving behind their old roles, or looking to in the near future. Much like the pandemic, it was unprecedented but bound to happen eventually.

This movement of people leaving their jobs en masse includes individuals from every demographic, too, reflecting a widespread frustration with traditional work and labour models.

At The Salary Calculator, we’ll walk you through:

• What the great resignation is
• What’s driving the great resignation
• The pros and cons of the great resignation
• How it will affect you and your work

What is the great resignation?

The great resignation, a term coined by business and management professor Dr Anthony Klotz in May 2021, refers to the current mass exodus from the workforce.

A study by recruitment firm Randstad UK recently conducted a survey of 6,000 workers and found that 24% of those polled were planning a job change within the next three to six months, 69% of which felt confident about their decision. Meanwhile, 16% felt anxious or concerned about finding a new role.

Employment Hero found that young people aged between 25 and 34 are those most looking towards a change, with a whopping 77% actively looking to leave their jobs within the next year. 74% of those aged 18-24 expressed similar sentiments. These were also the demographics that reported the most’ burn-out.’ Moreover, data published in i, showed one-third of millennials will seek out new employment if forced to return to the office full-time after the pandemic.

That said, those in more senior positions have also joined the great resignation. Executive outplacement firm Challenger, Gray & Christmas, found that in December, 106 CEOs said goodbye to their senior roles, and in the final quarter of 2021, this was up 16% on a year-over-year basis

It comes as no surprise then, that in the UK in July, job vacancies were at an all-time high, crossing the threshold of one million for the first time.

What’s driving the great resignation?

The great resignation has a number of different causes. One aspect is that following nationwide government-sanctioned lockdowns; remote working became the norm for many people. This life readjustment gave people time for reflection, and when compared with office work, many found they were able to spend less time commuting and more time with their family.

Remote working is also a good move for the wallet, with fewer expenses such as travel and eating out. Likewise, many are also quitting in search of better work opportunities and higher pay. There has also been a rise in the number of people deciding to be their own boss, and go self-employed.

It’s also important to note that certain industries are seeing more workers leave than others. Specifically, leisure and hospitality, retail and healthcare are the industries that have seen the biggest departures.

Should you join the great resignation?

Of course, when mulling over whether or not to leave your job, there are many factors to consider, and as with anything, there will be pros and cons.

Leaving your job and seeking out new employment or a different kind of employment can help you access greater flexibility, secure a more healthy work-life balance, and enjoy the benefits of a bigger salary. Likewise, those looking to leave their job may have come to the realisation that their work is no longer fulfilling or aligning with their values. As such, finding a company that shares similar guiding principles can mean much more job satisfaction.

That said, quitting one’s job is not necessarily an option for everyone. When thinking about quitting, it’s important to assess key questions such as:

• Am I in a financial situation to do so?
• Do I know what you want to do next?
• Do I require further training or education?
• Am I looking to join a new field?
• What are my family obligations?

How will the great resignation affect you?

The great resignation is very much a workers revolution, and many are arguing that employees are now in the driver’s seat. That said, it’s important to note that it’s still competitive out there, and in order to succeed, you need to be able to sell yourself, negotiate and network. Keeping your Linkedin fresh, making sure your resume is updated and conducting deep job searches will help you make the most of this opportunity.

However, not everyone is quite ready to jump ship just yet. For those who are comfortable in their position, you may have questions about how the great resignation will affect you at work. Well, a study recently conducted by the Society of Human Resource Management in the US found that out of those employees who decided to stay on when their co-workers left, 52% had taken on more responsibilities, and 30% found themselves struggling to get “necessary” work done. As a result, 55% are now questioning their salary, and whether it’s enough.

So, it’s fair to say that workers are feeling the knock-on effect of their co-workers joining the revolution. However, it’s not all doom and gloom for those who wish to stay in their current job, it’s important to be assertive if you’re struggling.

Speaking to The Guardian, Rahaf Harfoush, a digital anthropologist and the author of Hustle and Float, says in the aftermath of coworkers leaving, you should: “Look at your original role,” and assess how much you’ve taken on, then spell it out: “Here’s what I was hired to do; here’s how my time is allocated now. So either we need to reprioritise or we need to reallocate.”

Moreover, during this time, negotiating power is in the hands of employees, so it could be the right time to ask for a pay rise or a loyalty bonus.

 

Tags: Employed and Self Employed, Finances, Jobs, self employed, The great resignation

Self-employment: The challenges and how to overcome them

by Madaline Dunn

In the UK, there are over five million self-employed people. This figure has risen dramatically since the 1970s when only a small fraction of the workforce (8%) were self-employed. 

Of course, the trend towards self-employment stems from increased flexibility, greater creative freedom and the ability to be one’s “own boss”. However, that’s not to say that there aren’t challenges that come with the decision to break away from “traditional employment”.

At The Salary Calculator, we’ll guide you through the challenges and potential pitfalls of self-employment and how to overcome them.

This article will explain:

• The additional responsibilities that come with self-employment
• The differences in maternity pay and parental rights 
• How to manage finances 
• The importance of good time management

What are the additional responsibilities of self-employment?

While self-employment can provide workers with a lot more freedom, there are additional responsibilities that individuals must fulfil when they go solo.

One particularly important responsibility is registering as self-employed with HMRC. Following this, self-employed professionals (whether sole trader, limited company or partnership) must complete a yearly Self-Assessment tax return and pay National Insurance (NI) contributions and income tax on profits earned. Additionally, self-employed individuals must still pay income tax and NI contributions even if they make a loss.  For help with calculating how much you owe HMRC, head over here.

Another responsibility for those who are self-employed is setting up a pension pot in preparation for your golden years. While employers must provide eligible employees with a workplace pension scheme and make contributions, self-employed people must choose their own pension plan. That said, only 31% of self-employed individuals are currently saving into a pension!

Most self-employed people opt for personal pensions, and there are few different types. These are:

• Ordinary personal pensions
• Stakeholder pensions
• Self-invested personal pensions 

Some self-employed people are even eligible to use NEST (National Employment Savings Trust).

Of course, if a self-employed professional makes at least 30 years of NI contributions, they are entitled to a state pension. However, this is only £179.60 per week.

Setting up business insurance is also another factor that self-employed individuals should consider. Professional indemnity insurance and public liability insurance are the most common types chosen by self-employed people.

What are the differences between maternity pay and parental rights?

Maternity pay and parental rights work slightly differently for self-employed people. Unfortunately, when self-employed, you aren’t eligible for maternity leave or typical maternity pay.

That said, instead, you may be eligible for Maternity Allowance (MA). Eligibility depends on whether you can fulfil the following criteria in the 66 weeks before your baby’s due date:

• You have been self-employed for at least 26 weeks
• You have earned (at least £30 a week in at least 13 weeks – not necessarily in succession

The total amount that a self-employed mother can earn is £151.20 per week, which is reduced to £27 a week for 39 weeks if there are insufficient Class 2 NI contributions.

Unfortunately, there’s no equivalent for fathers and partners who want to take time off.

Managing finances 

Unfortunately, when it comes to self-employment, there are financial challenges that you will face that other workers do not have to worry about. When you’re self-employed, you are in charge of your finances, so this means you’re responsible for:

• Creating a business budget
• Establishing a business bank account
• Reviewing your finances
• Consulting an accountant (if you feel the need to do so)

It’s also essential to check what you can claim in allowable expenses because this can save you a lot of money. Equally, due to self-employment being a bit more financially precarious than traditional employment, it’s wise to have some contingency money saved up.

By making sure you tick all of the above boxes, you’ll have less chance of facing financial struggles and avoid a lot of potential stress! 

It’s also important to note that it’s not the end of the world if you do come into financial difficulties. For example, if a client or customer fails to pay for the services you’ve delivered, there are steps in place for you to follow.

With late payments, you should immediately send a collection request. If this goes unheard, it’s a good idea to send a “statement of account” to the accounting department. This should include:

• The invoice date and number
• The amount owed
• The work completed for which the owed

Often, late payments are just a mistake, but if no payment arrives within 30 days of the due date, the Late Payment of Commercial Debts Act has your back. This piece of legislation outlines that self-employed workers can claim interest and debt recovery costs set at the Bank of England base rate, plus 8%.

The importance of good time management 

In order to ensure business success, self-employed workers must ensure that they have top-notch time management skills. To achieve this, there are a few helpful hints and tips you should follow.

Schedule your time well. Whether that’s selecting a time to deal with admin, plan contingency periods, or even free time, carefully planning your time will help you avoid stress and multitasking. 

Additionally, while it’s important to have a business email and a personal email, it’s also crucial to have set times to review your emails. Time-tracking can be helpful here, and there are plenty of apps out there that can help you with this.

Another way of achieving good time management is through outsourcing. Delegating tasks that you don’t have the time to complete can boost productivity and give you time to focus on tasks you have prioritised.

 

Tags: Employed and Self Employed, Finances, maternity pay, Pensions, Self Assessment, self employment