MoneyMagpie

Jul 04

8 ways to protect your money this year

Think of the effort you put in to earning your money each month. After all that work, are you happy just giving your cash away? Or would you rather take steps to protect your money?

If you’re not careful, there are plenty of people who would be happy to take your cash off your hands, whether that’s the taxman, crooks, or even your family.

That’s why it’s worth getting to grips with eight key ways to protect your money in 2016 – which will help you keep your hands on your cash.

  1. Don’t make mistakes that incur a fine
  2. Get wise to these scams
  3. Don’t pay unnecessary tax
  4. Plan your inheritance
  5. Deal with family asking for money
  6. Plan for the worst
  7. Fight pension fraudsters
  8. Track down the right savings account

 

1. don’t make mistakes that incur a fine

Avoiding fines might sound obvious, but there are some surprises on the list of things that could land you with a fine.

Here are a few you need to be aware of:

Not updating your driving licence

UK Driving licence and Passport

You are legally required to update your licence and the photo on it every ten years. If you fail to do this, you could be hit with a £1,000 fine. To renew your driving licence there is a £20 charge, and you can do so via the DVLA website. 

 

Late self-assessment tax returns

tax return

If you’re self-employed and doing your tax returns online then the deadline is 31st January each year. If you miss the deadline you’ll be given an instant £100 fine. If your tax return is more than three months late, HMRC will start fining you £10 a day. It means that if you still haven’t submitted a tax return six months after the deadline, you will owe £1,000 in fines.

Find out here how to fill in a self-assessment form the easy way.

 

Getting off the train early

Woman-getting off the train

As odd as it sounds, when you buy an advance train ticket you can get fined if you get off at an earlier station. Make sure you know the terms and conditions before buying a ticket!

Find out here how to get cheap train tickets.

 

Taking your child out of school for a holiday

Family on holiday

If you take your child out of school during term time without the school’s permission you could be fined.

 

2. get wise to these scams

Unfortunately there are fraudsters ready and waiting to con you out of your hard earned cash. It means it’s essential to be aware of the latest scams, so you can protect your money. It’s worth regularly visiting our rip-off Britain section, so you’re one step ahead of the criminals.

Frauds you need to be particularly aware of include:

The ATM card reader 

Woman using ATM cash machine

This scam targets anyone using a cash machine. Criminals fix a contraption over the slot that you put your card into – designed to look like part of the ATM. These read your card details, while a separate tiny camera fitted to the machine films your PIN. After just one use, the criminals have everything they need to empty your account. To stay safe, you should always check the card slot to see if there’s anything unexpected, and shield your PIN with your other hand. If you’re in any doubt about the way the cashpoint looks, don’t use it.

 

The dating fraud

Online dating scam warning on phone

This is a cruel crime, aimed at people who use online dating sites. Fraudsters trawl sites for a victim, usually an older woman who has some cash, and start up an online relationship that can go on for months – enough to earn the trust of the victim. Then they will claim to have a crisis (often related to their family) and will ask the victim to send money. To protect yourself, be very aware when meeting people online and don’t give too much information. If they ask for money, this should start alarm bells ringing.

 

Tourist traps

Man stealing from a woman's bag while she has a drink on holiday

There are several potential frauds waiting for you on holiday, so make sure you go abroad with your eyes open. Things to look out for include pickpockets, waiters taking your card and taxis overcharging. Read our whole article about the 10 top holiday rip-offs so you’re ahead of the scammers.

 

Phone scams

Annoyed woman looking at her phone

These come in a number of guises, including the computer repair scams – where a fraudster rings up pretending to represent Microsoft or Windows and tries to make you download a virus. There are also missed call scams – where you ring back a missed call only to find out it’s a premium number; and identity theft scams – where a fraudster will ring up saying you’ve had your identity stolen and demanding your personal details on the pretext they are trying to help. Don’t be fooled, read our top 10 phone scams and how to avoid them.

Take proactive steps to protect yourself. Make sure your PC and Smartphone have anti-virus software on it, and think about using a credit card to shop online, as it offers additional protection.

Visit our rip-off Britain section so you can hear about all the latest scams as soon as they emerge.

 

3. don’t pay unnecessary tax

Stack of books with tax work on top about to fall on young female student

Tax evasion is illegal and totally wrong, but there are perfectly legal ways to avoid tax and protect your money.

  • First, you should be putting your savings into an ISA, as they are still one of the most effective ways to pay less tax on your savings and investments. As you are probably aware, you can put up to £15,240 into an ISA, and you can split that amount however you like between a Cash ISA and a Stocks and Shares ISA. You don’t have to pay tax on the first £1,000 you get in interest on savings accounts anyway (£500 if you are a higher rate taxpayer), but if you are saving large sums for the long term – or investing in something other than cash – an ISA will cut your tax bill.
  • Second, you can share savings and investments with your spouse. We all have our own income tax and Capital Gains tax thresholds – but if you are married or in a civil partnership you can use them particularly effectively. If you have savings and investments generating interest or income, you can put the majority of them in the name of whichever one of you is the lower taxpayer, as this will reduce your overall tax bill as a couple. If you are generating a lump sum capital gain, you should share the asset between you and use both your allowances.
  • Third, pay into a pension. This is particularly good for those on a higher income, because money you put into the pension will have particularly generous tax relief added to it.
  • Fourth don’t forget to make a will and to make full use of the Inheritance Tax exemptions.
  • Finally, check to see if you are entitled to any tax credits. You don’t have to have children to qualify for tax credits, so it’s worth taking a look at the HMRC website to see if you’re entitled to any.

For more information read these five easy ways to pay less tax.

 

4. plan your inheritance

3 generations (mother, daughter and grandaughter)

Almost 30 million people in Britain don’t have a will, including more than third of people over 55.

Without a will, you cannot protect your money or your family, because your assets will be allocated according to strict rules after your death – so may not go to the people you intend. You will also miss any opportunity to reduce the tax burden on your loved ones.

See our easy guide to making a will here.

 

5. deal with family asking for money

Daughter asking father for money

It’s rarely talked about, but family demands for money can be hugely damaging both to your relationship and your bank balance.

Of course it’s your money and how much you give to your family is your choice. However, if you’re in a position where your family are asking you for money that you cannot afford or do not want to give, then you’ll need to stand firm.

You must have the confidence to say no, to know when you can really help and when it’s either beyond your means or enabling a poor behaviour, and to judge the situation logically.

It’s not about being cold or selfish, it’s about protecting both yourself and your family.

Should you give money to a family member, or indeed a friend, it’s far better to give it as a gift than a loan. Asking for repayments is awkward and uncomfortable for both people, so it’s better to call it a gift and be done with it.

If you have to do it as a loan (and this does often happen), create a document that you both sign (and both have copies of) where you set out the terms of the loan. It should include:

  • Date of the loan
  • Interest terms (if you are charging interest)
  • Payment terms – i.e. how much will be paid back and when
  • Non-payment terms – what will happen if they don’t pay. Sadly you might need this for some family members. Something like them giving you possessions in lies is the norm.
  • Ideally have the signatures witnessed so that they can’t get out of it.

It’s a shame to do it but even with this document some friends and family don’t pay (Jasmine has had that experience).

Ultimately, tell yourself that you will only lend money that you can afford to lose. That way it won’t be too bad if they don’t end up paying.

 

6. plan for the worst

Why use a health insurance broker?

Imagine if you found yourself ill and unable to work for several months due to sickness or injury. What would you do?

Many of us would be dependent upon the generosity of our employer (who is not obliged to pay you), our family or our savings. But it really could be disastrous if you’re unable to pay your bills or your mortgage.

That is why for many people it is a good idea to take out income protection insurance. With this cover, if you fall ill and cannot work, you will receive payouts until you are able to return to work or retire.

The payouts are a maximum percentage of your earnings, usually 50-70% tax-free. How much it will cost will depend on your age, gender, occupation and general health.

For more information read our article Do you need income protection insurance?

 

savings safety net

Savings Safety net graphic

Actually, if you are able to create a really good ‘savings safety net’ for yourself, you will be protected from the majority of financial shocks that tend to hit people.

As you can see in our article here about having a savings safety net, if you have put aside enough money to cover your basic living costs for six months, that will help you get through financial shocks like losing your job, getting divorced or being bereaved.

It usually takes up to six months for people to recover from these events, but while you’re in it you might have to find money from somewhere to pay the bills. If you have a stash of cash in a savings account (that you don’t touch unless you have problems) then you will be covered until the money comes in again.

Take a look at how to set up a savings safety net.

 

7. fight pension fraudsters

Senior couple doing finances on a laptop

Since April 2015, people over the age of 55 have been able to withdraw as much money as they like from their pension at any time – subject to tax.

For some retirees this has brought huge benefits but, for others, it means having access to a large amount of money without necessarily having the experience or skills to know exactly what to do with it.

In this confusion (and make no mistake about it, pensions can be confusing) scammers have been taking advantage.

One common approach is to cold call people, and offer them a pension review. During this process they are encouraged to withdraw their money and invest it in a way that will benefit the scammer. In the month after pension freedoms were introduced, losses from these scams more than trebled.

To protect your money, if you’re looking to get a financial adviser then make sure you’re absolutely certain that they’re FCA-registered. Visiting the citizens advice website is a good place to begin your search for a financial adviser.

 

8. track down the right savings account

Magnifying glass and different size piggy banks

You might think that storing your money away in a savings account is a good way to protect it. However, if your investments are not keeping up with, or beating, inflation then in real terms you’re actually losing money.

That is why we at MoneyMagpie often recommend putting your money into a stocks and shares ISA. This is just like putting money in any stock market investment, but you’re ‘wrapping it in a tax saving bag’ which means you won’t have to pay tax.

Admittedly, if you’re planning to invest, you need a fair chunk of cash to put away for the long term (at least 10 years). And if you have no idea where to start when it comes to investing then visit our investing section and find out everything you need to know.

 

Have you lost any money to fraudsters, fines or family members?

What ways do you plan to use to protect your money?

Let us know in the comments section below.

 

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