The cost of living crisis: have you panicked a little? ‍

This month, we’re talking about how FinTech is responding to the cost of living crisis, what you can do to manage yourself better given said crisis, and some money favourites for April.

“Protect your portfolio from inflation!”

A common piece of advice but…what does this even mean?

Protect: prevent the things you own that have monetary value (see below) from losing value over time

Your portfolio: your cash, your investments, anything of monetary value that you have in your name that can be affected by an outside factor—like how badly the economy is looking right now

Inflation: the cost of anything and everything increasing (some more specific than others) while also getting less for your money (the purchasing power of your money reducing)

And as with all money related public terror, there are a million questions running through our heads…

Do you have to re-assess your budget? Maybe, have a look at what spending really doesn’t need to be spent.

Do you have to cut costs? Again – maybe, there might be ‘dead spending’ and costs that aren’t relevant. Are there any pure conveniences you’re paying for?

Do you have to find a side hustle? Not really. Increasing your income is a great way to be financially healthier, but nailing habits and money mindset at every income level is more important than aimlessly trying to earn more.

One thing that I want you to take away from reading this is the bigger picture: (depending on your economic status) you might not be able to afford as much, but it’s now going to cost you more to:

  • have cash sitting around (as this will be eaten up by inflation faster)
  • think long and hard about whether or not you’ll start investing (time is the most important factor when it comes to investing)
  • not be strategic with your finances (if you’re not budgeting, and don’t know where your money comes and goes, it’s now time to start)

So if you’re lucky enough to have the cost of living crisis affect your savings and ‘investing strategy’ (or lack thereof—that’s totally okay to admit) instead of having it affect your choice between shelter, food or hygiene, make it your goal this bank holiday weekend to listen to a podcast about investing or research whether your current account is cutting it right now.

Do FinTechs care?

The cost of living crisis and rising inflation will hit those with a low income the hardest. That’s the unfortunate reality of economic hardship: those who will struggle to warm their homes, keep their homes, eat food everyday, and maintain basic human hygiene are the ones who have to decide between or limit these elements of human dignity and survival.

It’s because of this that since the start of the pandemic, use of Buy Now Pay Later (BNPL) schemes have actually increased more than standard borrowing (mortgages, loans and credit cards.

Those on low incomes relied on BNPL schemes to pay for clothing, food and other elements of basic day-to-day living.

Reportedly, even when missing payments for BNPL amounts borrowed, these companies still bombarded people who used them with more offers to borrow more money.

And herein lies the catch 22. Those who utilise different FinTechs—money management apps, or WealthTech—are probably giving a certain amount of data to these apps.

In order for their artificial technology to comb through your transactions, bank statements and/or savings to find subscriptions you could cancel, or amounts you’d be better off saving, you have to open up your financial data to them first.

And this is where there’s a lot of trust involved: how are you 100% sure that the cost of allowing FinTechs to have your data won’t be a more personalised and hard-to-say-no-to ad? Where do FinTechs draw the line between a relationship that benefits them more than their consumer?

Moneyhub is a great app that make it clear what they do with your data. I’ve mentioned them in a video before. They charge a flat rate to utilise their money management service and the rate is essentially your cost, as the consumer, to protect your data.

April Money Favourites

  1. A number of switching bonuses available with major high street banks
  2. Savings accounts with interest are also increasing a little bit, however this is still a rate much, much lower than inflation. This is why you should only keep emergency funds in these kind of accounts so your wealth isn’t being eaten up.

‘The Great British Rail Sale’ has started this month. If you book by the 2nd of May, you can nab some decent discounts of popular lines. Perfect for a UK staycation!

  1. If you’re a train regular, it’s worth investing into a Railcard. Use the code 33YESPLEASE to get 33% off.

Dobbies Club! Yes, I’m plugging a gardening centre. Why? Ever since becoming a member, I’ve been able to get my 10k steps in going to and back from my local Dobbies, and treat myself to a small plant every now and then.

For 2 free hot drinks a month, this is a membership that’s really wholesome and doesn’t cost the bank.

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