Furloughed? It need not affect firm share plan

How life after furlough can boost your finances

What has dipped in price this week?

✤ Fridges – 11 per cent cheaper on average than last week

✤ Pressure Washers – 22 per cent cheaper on average than last week ✤ Facial Care – 13 per cent cheaper on average than last week

✤ Hair Care – 18 per cent cheaper on average than last week

✤ Weights – 24 per cent cheaper on average than last week

✤ TVs – 23 per cent cheaper on average than last week

✤ Electric Screwdrivers – 12 per cent cheaper than last week

This is a good week to think about buying…

Idealo’s historical pricing data reveals that June is the cheapest month to buy a gaming headset. A great gift idea for any gamers in your household, especially if you can’t bear the thought of listening to another minute of FIFA ....

If you want to make more of an effort than just dragging a comb through your hair, then now is a good time to invest in a new hairdryer as they are as much as 34 per cent cheaper now than other months.

This week, Idealo reckon UK consumers will be buying…

This week, the UK Government has introduced the allowance of certain people forming “support bubbles” as a first step to reuniting families.

However, since this is only allowed in certain circumstances, the majority of the population is still required to meet their friends and family only in public spaces or their back garden.

With a couple of weeks of dodgy weather behind us, Idealo think many consumers will be looking to invest in garden gazebos to catch up with friends and family while sticking to the rules, in any weather.

Kids can’t yet return to their local swings and playgrounds.

Idealo thinks there will be plenty of parents with kids suffering lockdown boredom who can see the long summer holidays stretching ahead of them. They may decide now is a good time to buy play equipment. Idealo expect slides, swings and climbing frames to be popular, but also tents for those wanting to create an at-home camping experience.

Data provided by the price comparison site.

Furlough finances point to savings strategies

Amid the doom and gloom of the last few months, something positive: £7.4billion of consumer credit was repaid during April, the highest monthly total since the Bank of England records began in 1993. An incredible £5billion was paid off on credit cards alone, music to my ears – the typical month sees around £300m cleared.

While being furloughed has been tough on our finances, it’s also led to big changes in spending habits.

We may have spent more at Amazon and on alcohol, but we’ve been net savers overall.

So imagine if you continued to live on 80 per cent of your income when you return to work. What could the other 20 per cent do for you?

THE NUMBERS

If you earn the average full-time UK salary of around £30,000 per year, then 20 per cent of your income is about £400 a month after tax.

If you were to put that 20 per cent you’ve been living without on furlough into a pension, it would soon add up. After 20 years at 6 per cent annually (a fair rate for a long-term investment), you could have more than £270,000 extra in your retirement pot.

Given that you’ll need almost £450,000 to retire with an average annual salary if you live to 100, that’s a considerable chunk.

Put simply, most of us don’t have enough saved for our retirement. The average pension pot currently stands at around £50,000 according to Aegon.

THE TIMING

If you put £50 each month into your pension from age 20 to age 40 and then stopped contributing, retiring at 60, it could give you around £111,268.

If instead you waited until you were 40 and played catch-up by saving double, £100 a month, until you retired at 60, you could give yourself around £69,388. That’s 37 per cent less, and you paid in twice as much.

Compound interest means the earlier you save, the better – and the difference is huge. There’s a link at www.warrenshute.com to explain my assumptions.

THE REALITY

You might say that you’ve found it easier to spend less during lockdown without commuting, buying lunch out and other costs associated with going out to work every day.

But when circumstances are forced upon us, we make changes. We adapt to our new reality. Many people on furlough have been surviving on 80 per cent of their previous income.

As we return to work, I urge you to continue to reserve part of your income for your retirement, while you’re in the habit.

Even if 20 per cent is more than you’ll manage (I suggest a minimum of 12.5 per cent in my book The Money Plan, which is the first hour of each working day), do what you can now because it will make a HUGE difference to your future.

Keep making lunch at home. Buy a thermos for your coffee.

And remember those months when 80 per cent was enough for you. Your future self will thank you.

There’s new guidance if you’ve been furloughed while in an employee share save scheme. Around two million in the UK are members of work share schemes. Save As You Earn

You can still contribute on furlough, or use a payment holiday for a longer period of time, without penalty. Be aware that postponing payments will put back your maturity date. Share Incentive Plan

SIP contributions can continue to be deducted from furlough wages. As before, you can pause these deductions but you can’t make up any missed payments during furlough. Company Share Option Plans

If you were granted options before the pandemic, those are still valid as long as you’re an employee or a full-time director. Enterprise Management Incentive

HMRC is still exploring issues, but says 90-day valuation agreement letters can be extended 30 days.

I claimed my selfemployment grant with £34,116 net profit. HMRC calculated my 80 per cent payment at £2,275, my total grant for three months. I believe it’s wrong and asked for a review. WARREN: HMRC add profits for the past three years and divide by three. If your profits over all three totalled £34,116, the figure looks right. But, if that was only your profit from last year, give them the previous two years too.

With interest on savings so low, I’m thinking of stocks and shares. How would I get started? WARREN: Only invest if you are keeping your money there for at least 5-7 years, allowing time to ride out ups and downs. Look at a low-fee global index fund, which splits your money between many companies, reducing your risk. Consider sites like Lexo.co.uk or Vanguard.co.uk to get started.

Idealo.co.uk