Thursday July 02 2020



Village Features

Five ways to improve your spending habits

Posted on December 19 2019 at 10:33:15



Spend wisely and save more with these top tips, says Martin Pryor.

At a time of year even more focused on spending than usual, there are a few habits you can develop to help you keep a rein on your resources.

Retailers understand the psychological cues that encourage us to spend, and deploy them online, in their store layout, advertising and marketing campaigns. Multi-buy offers, or short-term sales such as Black Friday, can create a sense of urgency and encourage impulse buying. It can be hard to resist, even in straitened times.

Shrewd shoppers can deploy some simple strategies to help them spend wisely and save more.

Prioritise saving: Move money into your savings account or ISA before you have time to spend it. A simple direct debit going out on pay day is a great first step towards adjusting your spending habits. Set a budget on spending and stick to it.

Pay in cash: Leave your debit and credit cards at home and take cash instead. Studies have shown paying in plastic reduces the “pain” of paying, because it feels less like “real” money.

Contactless payments can make spending even more “painless”. Brain scans have shown the “pleasure” regions of the brain are associated with purchases made on plastic, but both “pleasure” and “pain” light up for those paying in cash.

Don’t shop until you drop: Avoid hitting the shops when you’re tired, which reduces your ability to focus and make logical decisions.

Long shopping trips, or hours browsing online, just add to this fatigue, and undermine your willpower when trying to make sensible purchasing decisions.

Take your time: Do you really want or need that item? When shopping online, simple steps, like disabling ‘one-click’ purchasing and deleting saved cards details on your computer can create useful delay.

Better still, keep your wallet in another room when browsing. Even small hurdles like this can nudge us away from an online purchase.

Waiting at least 24 hours – or better still a week – before buying also gives you time to shop around on price.

Clear out “cookies”: Delete these regularly to avoid being bombarded with ads for items you’ve been browsing online. These constant reminders can wear down the resolve of even the most careful shoppers.

Once you get into the habit, it’ll be easier to keep that New Year’s resolution to save more and spend less…

All change on company car tax

If you are changing your company car soon you need to get on top of the new tax rules.

CO2 emissions have been the basis of company car taxation for over 15 years, with each new tax year usually seeing a nudge up in the scale charge for most emission levels.

However, from 6 April 2020, the tax scales undergo a more radical set of changes:

* For newly registered cars, the “real world” WLTP measure of CO2 emissions will replace the existing and largely discredited NDEC basis (which will still stand for older vehicles).

WLTP emission results are on average 20%–25% higher than NDEC figures.

* For all hybrid cars with CO2 emissions of 1–50g/km, the scale charge will take account of the electric-only range.

* The scale charge for zero-emissions cars will itself be nil in 2020/21, rising by 1% a year in the next two tax years.

From January 2021, all newly registered diesel cars must meet the RDE2 emissions standard, which exempts them from the current 4% diesel surcharge.

The government has already published revised company car tax scales for the next three tax years (2020/21 – 2022/23), which take account of the reforms.

In 2020/21, most of the scales will begin 2% lower than originally legislated for because of the sharper-than-anticipated increases in emissions under WLTP.

Tax laws can change. The Financial Conduct Authority does not regulate tax advice. This article is for general information purposes only. For specific tax advice refer to a tax specialist

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