Bristol
Financial Resilience
Action Group

Clare Stinton: Thank you for joining the first of our 12 Financial Wellbeing webinars running over the course of 2025. This session, ‘New Year – New Financial You,’ will combine need-to-know details about the next 12 months, with resetting for the year ahead – and January is the perfect time to swap holiday indulgences for healthier habits, including financial ones.

Many of us will be thinking about financial resolutions right now, and this course is here to help you stick to them. Your employers – as members of the Bristol Financial Resilience Action Group – have made this opportunity possible. A 12-month programme packed with practical tips and money hacks to support your financial wellbeing.

I’m Clare Stinton – Head of Workplace Saving Analysis at Hargreaves Lansdown. I steer our financial wellbeing strategy. My role is all about helping people make their money work as hard as they do. With a background in Financial Education, I have seen, first-hand, how the right knowledge can help make life easier by giving people the confidence to manage their finance as well. The Bristol Financial Resilience Action Group is now in its second year – so, welcome back, those of you who joined us for the pilot, and welcome to our new audience. I think it’s worth sharing why we’re providing these webinars – and, essentially, HL believe we have a duty to share our expertise with our Bristol community to make a meaningful impact.

Understanding your finances is the first step to taking control, and this programme is designed to equip you with the skills and confidence to manage your money effectively today and sustain your financial wellbeing well into the future. Before I get started, just a bit of housekeeping – this session will last for around 20 minutes. Any questions – given that this is a recording, please do raise those by getting in touch with us directly, and please remember that everything discussed is purely information and not to be considered financial advice – but I do hope that what I talk through will enable you to go away and make decisions from a more informed position.

Here’s a quick rundown of today’s agenda. As this is the launch, this session will be a little different from future ones – we’ll start with an introduction to HL, the Bristol Resilience Action Group Programme, and the ‘5 to Trive’ framework that underpins this course – as well as tips on making the most of what will be on offer over the next 12 months.

In the second half, we’ll focus on how to kickstart your finances for 2025 – or, as I’ve seen it trending online, ‘2020-thrive.’ After this session, take a moment to reflect on your goals for the year, whether it’s tackling any debt, saving for a holiday, or starting to invest. Clear goals can guide your financial decisions every day – and then we’ll finish up with some expert tips from my HL colleagues – insights that we wish we’d known sooner to help inspire your own financial goals and set you on the path for a stronger financial future.

So, for anyone who might not be familiar with Hargreaves Lansdown (HL) – we are a Bristol-based company with strong local roots. The business started 45 years ago in a Clifton bedroom, founded by Peter Hargreaves and Stephen Lansdown – hence the name! – and then, fast-forward to today, and HL is one of Bristol’s largest employers with over 2,000 team members.

We’ve grown to become the UK’s largest retail investment platform, trusted by more than 1.9 million clients and managing over £155bn-worth of assets. Our mission is simple – we want to help people save and invest with confidence – and, in recent years, we’ve doubled down on creating resources, tools, and education to support people in achieving better financial outcomes.

Let’s start by looking at the nation’s financial resilience and how people feel about money in general. Over the past few years, it’s become clear just how closely financial worries and our overall wellbeing are linked.

Recent data shows that 7½ out of 10 people feel somewhat or very worried about rising costs. It’s about 77% of adults and, interestingly, that number is slightly higher for women, at around 81% compared to 73% of men.

For many of you, financial education may not have been part of your school experience – it certainly wasn’t for me. Even with financial education added to the national curriculum in 2014, access to it still varies dependent on where you lived.

A lot of people I speak to feel like they’ve been left to figure out money on their own, and that’s no surprise. Money is still a taboo topic here in the UK, and being an adult doesn’t mean you automatically have it all figured out. So, if this resonates with you, know you’re not alone – as a nation, we’re still playing catch-up when it comes to financial literacy compared to some of our international peers.

Knowledge is power – it is the key to us managing our money well. Those of us who can’t or perhaps won’t pay for financial advice do need access to tools and expertise in order to make our money work as hard as we do.

So, let me share how HL views financial resilience – it’s all about ‘5 to Thrive.’ So, this blueprint for resilience was developed by speaking with our financial advisors about how they prioritise and work with clients. From there, we’ve created a practical framework and supporting resources that could guide you.

Now, this isn’t just a HL creation – it’s actually been through rigorous peer review and the founding board. That includes experts from Legal & General, the Money and Pensions Service, Department for Work and Pensions among others – so you don’t just have to take our word for it.

The framework has five key pillars – ‘Control your debt,’ ‘Protect yourself and your family,’ ‘Save a penny for a rainy day,’ ‘Plan for later life,’ and ‘Invest to grow your money.’ You don’t have to work through these in a strict order, but pillar 5 – ‘Investing’ – typically is towards the end of that ‘cause you make sure that you’ve built your financial wall of defence first – so think of it as laying the solid foundations. You’re building a house... you wouldn’t start with the walls – you need strong flooring to ensure that everything stays stable. So, perhaps without an emergency fund, for example, you could find yourself in a bit of difficulty if you didn’t have emergency cash to tap into if life threw you an unexpected curveball.

If you invest money that you might need for that unexpected expense, then you might be forced to rely on credit or withdraw your investment at the wrong time, potentially at a loss. That can leave you worse off than when you started, so it can be a case of one step forward, two steps back. But we’ll unpack that in more detail as we move forward.

We didn’t stop there – so, as well as create a framework for information delivery, we’ve gone one step further and built out a way to measure nationwide household financial resilience. The HL Savings & Resilience Barometer is essentially a huge, robust data tool that enables us to see how the nation’s finances are faring based on those five pillars that we just looked at. But, behind the scenes, there’s a huge amount of science that goes into it. Put simply, the methodology enables us to score household financial resilience out of 100. The higher the score, the better the household financial resilience.

It turns out that nationwide financial resilience has actually gotten better since before the pandemic in 2019. Pre-pandemic, the average household score was about 57.2 out of 100. The improvements that we saw during the pandemic – so people being able to squirrel money away due to less ability to spend on things like eating out, socialising, or holidays... they helped offset some of the issues which were caused by the cost-of-living crisis – so left us with a score in 2024 of 61.1 out of 100. It’s actually 3.9 points higher than it was back before the pandemic.

A significant part of that increase comes from people being able to save more during the pandemic – because of those lockdowns, it was tough to spend money and go out – but, behind that good news, there’s a concerning trend, and that’s that there is a gap in the financial resilience between low and high-income households – and that is growing.

The pandemic and cost-of-living crisis did not affect everyone equally. Essential items, such as food and energy, rose higher in cost than non-essential items – and that meant, for low-income households, with little wriggle room in their budget... they faced tough choices – and trends also show that borrowing within this period also increased, with some households borrowing money to fund the essentials, put the heating on, and put food on the table.

People are having to make savvy decisions with their money today. The reality is that life has got more expensive – and, at the same time, many are feeling the weight of a heavier tax burden. We’re all feeling the squeeze, but the effects vary for each person and household – so very much like what we saw during the pandemic, and figuring out how to manage your money wisely has never been more important.

I won’t dwell on this slide too much, but I want to highlight the role employers play in supporting financial resilience. Your employers have shown their commitment to your wellbeing by joining the Bristol Financial Resilience Action Group Initiative (BFRAG), by putting you – their people – at the heart of the programme.

Research shows that the type and size of your employer can have a big impact on financial resilience. For instance, around 44% of households – where the main earner works for a large private sector company – report having great financial resilience – compared to just 28% of those in small to medium-sized enterprises.

The self-employed predictably face greater challenges, with only 14% having strong financial resilience – and one in two of those households, where the main earner is self-employed, falling into ‘Poor’ or ‘Very poor’ categories from our Barometer data.

So, do check about the benefits that your employer offers. From life assurance to pension contributions, to gym discounts, or local perks... what’s on offer can really help plug gaps in your financial safety net without you having to dip into your own pocket. At a time when life has got more expensive, that’s incredibly valuable. One simple step you could take is to explore what is available and ensure you’re making the most of what’s on offer.

So, now that I’ve set the scene with the background to the Bristol Financial Resilience Action Group – and the bigger picture of how the nation’s finances are faring – we’re gonna shift gears and talk about how the financial education programme will work.

The 12 modules in this course are built around the ‘5 to Thrive’ framework which I introduced earlier. It’s a holistic approach, designed to strengthen financial resilience no matter your age, background, occupation, or current level of financial knowledge.

What’s great about this framework is its versatility. It is something you can return to at any stage of your life for guidance and direction – and one of the most important messages is that financial security isn’t just about one aspect of your finances. It is a puzzle – there are multiple pieces and they need to fit together to give you that financial wall of defence.

By looking at your finances as a whole, you can identify and address any potential vulnerabilities that could threaten your financial resilience. So, this framework really encourages a well-rounded approach, so that no part of your financial wellbeing is overlooked.

As an example – through our research – some individuals may be paying a healthy amount into their pension, but actually have no money tucked away for a rainy day – and that can leave them vulnerable to an unexpected expense.

Broadly, we can split the five pillars into two sections: ‘Protect you and your family’ and ‘Save a penny for a rainy day.’ Pillars 2 and 3 are ways to reduce risk – that is both everyday risk as well as the tragic, disastrous type of risk that we all hope to avoid. The remaining three pillars – ‘Control your debts,’ ‘Plan for later life,’ and ‘Invest to make more of your money’... they are all about building a better financial future – unlocking new opportunities.

Striking a balance between immediate financial needs and your long-term financial needs is vital for your financial stability over the course of your lifetime. People need to have a safety net for the present and a strategy for the future. So, put simply, it is risk management that will give you peace of mind. And central to achieving that financial resilience is people understanding their optimal asset and vehicle for their goal and time horizon – and that’s all about knowing when is the right time to opt for cash and when investments will best serve your objective and your timeline in terms of your savings goal. We’ll explore that in a lot more detail over the course.

For example, a 20-year-old going to university may prioritise building an emergency cash safety net when it comes to reducing risk, but they may feel more comfortable erring on the ‘Less is more.’ So, when it comes to putting money aside for an emergency cash safety net, we usually say 3-6 months’ worth of essential expenditure... they might feel comfortable erring more on the three-month side of things – or perhaps less – because they know that their parents can support them financially, if needed, if they were to get into any financial difficulty.

However, a 50-year-old breadwinner with two children will need to ensure that their family is cared for, should the worst happen – or should their income fluctuate – and they might look for financial insurance as a priority as well as building that emergency money. And, being the breadwinner, they might look to put more money aside to err on the six-month side of things to ensure that they are covered for any unexpected events.

Priorities will flex and change as you age – and as life events and milestones occur – so it is important to constantly review these aspects.

Here’s some practical info – so each webinar will take place on the second Thursday of the month at midday. The presentation will last between 20-30 minutes, depending on the topic – some are more in-depth than others. I won’t always be hosting – we’ll mix things up with different speakers. Next month, my colleague, Jack – one of our Financial Wellbeing Specialists – will lead the session on ‘Taking control of debt.’

These webinars are optional – and, whilst not every session might apply to you, just picking up a few pieces of useful info can make a big difference. So, for instance, you might think that retirement isn’t relevant at 30, but what you may learn could come in handy later on in life, or it could help someone in your life at the moment. If you are 30 and attend that session, you’ll also learn that the earlier you start planning, and prioritising, and engaging with your retirement plan, the better – because of the power of compound growth over the long-term – and getting that money in earlier means it has a much longer timescale to grow.

Now, knowledge is power – it is also the antidote to uncertainty. The more you learn, the better you can handle life’s financial challenges – like buying a home or dealing with unexpected costs. It is all about breaking down big goals into smaller, bite-sized, manageable steps.

To get the most out of the course, stay curious, make time for each session – the webinars are only 45 minutes, so you can easily fit those into any lunch hours – or you can catch up on demand – all of them will be recorded.

Feel free to ask questions, and share what you learn with your network, and start those important conversations about money with your friends and family.

Every webinar will be recorded and made available on the financial resilience hub for you to watch at your convenience. The web address is displayed on-screen, and you can also scan the QR code with your phone to access the hub. Typically, the webinars will be available on demand within 7-10 days after the live session – and that’s because our compliance team need to review and approve the video, and we also need to create a transcript.

Once available, you’ll have access to the session and can explore more educational resources and valuable insights – all available via the Hargreaves Lansdown website.

Our final segment for today – to get you thinking about financial goals ahead of the first module in February. So, 6 in 10 people will make a financial resolution for the New Year. Women are more likely to make financial resolutions than men – so 64% versus 55%. Spending less, getting on top of finances, shopping around, paying down debts, paying into a pension, and making a will appear on the list of popular resolutions, but saving is top of the list. Less than 10% of people that make a resolution will stick to it for 12 months or more.

It’s important to recognise that money is a tool, it’s not the goal – it is the tool to help you achieve your goals. Money is often seen as the end goal – that people are focusing on a figure – but, in reality, it’s gonna help you achieve the things which really matter in life. So, whether it’s building security, supporting your family, or living a life that aligns with your values. Money should be viewed as a means to an end – not the end, itself.

By understanding how to manage and use money effectively, you will gain the freedom to make decisions that improve your overall wellbeing and create a future that reflects your personal goals. For example, Sarah – a single parent – initially worked just to pay the bills and put food on the table. She wanted to earn more money and she was thinking of ways to boost her income, but that wasn’t because she wanted to see more zeros in her bank account. Her motive was providing more for her children – so money is the tool that enables her to send her children to a good school, create a safe home, make memories on family vacations. So, Sarah controlling her money wasn’t necessarily about accumulating wealth, but it was about using money to build the life that she wanted for her family.

Next-up is ‘Your money mindset.’ This is a unique set of beliefs and attitudes that you have towards money that impact the way you manage your money – so it’s a lens through which you make financial decisions. It recognises that we make our financial decisions often from a place of emotion rather than logic. So, you could have practical solutions, but, if you don’t understand your emotional triggers with money, then your financial habits are unlikely to change. So, it’s this consciousness and awareness of your behaviours that will enable you to implement better habits.

As an example, if you are likely to impulse-spend during an evening – and you’re scrolling and Internet-shopping online – then enforce a time-delay. Ask yourself if you still want whatever is in your basket within 24 or 48 hours’ time, and the chances are that you won’t go through with the purchase.

There is something in your brain called the reticular activating system – and it’s essentially a filtering system for your brain – so, when you tell it something, it will go out and look for it – reinforce it. So, that’s why, when you say, ‘I’d like a new car – a yellow Mini,’ you see them everywhere because you’ve primed your brain to look for what you’re saying – and it works in the same way when you tell yourself something... it will go out and look for it, and try and evidence and reinforce what you’re saying. So, if you tell yourself that you are bad at saving, your brain will look for ways to prove that – and it becomes a self-fulfilling prophecy. It’s really important that you understand your emotional links to money and your behaviours, but also that you reframe your mindset for success – so you tell yourself that you’re a saver, and you hold yourself accountable.

In Summary, take time to focus on your financial wellbeing – be honest with yourself about your priorities, set achievable goals that you can track. Establish good financial habits by setting aside time each month to review your plans and check progress – a monthly money date. If something isn’t working, don’t hesitate to adjust – it’s better to tweak your approach than to let it slip completely – it’s a learning curve and it has to work for you.

We’re more responsible than ever for our financial futures, so consider listening to a financial podcast, attending these webinars, reading books to expand your knowledge – just ensure that you’re using a trusted expert source.

Time to share some of the tips that the HL team wish that they had known sooner. One strategy that I find effective is keeping my savings in a separate account to my current account – that way, I’m far less likely to dip into them by mistake. I’ll set up a direct debit on payday to automatically move the money over into my savings account, and that way it’s out of sight, out of mind. Also, by moving it on payday means that I am paying myself first and I’ve built that saving into my budget. If I waited ‘til the end of the month – and saved what was left over – then there would be far less. So, do build saving into your budget and move that out on payday to build that consistent, healthy habit.

Rohan wishes he’d discovered the power of compounding earlier, so we’ll dive deeper into this in the Investment modules, but it’s often called ‘The Eighth Wonder of the Word,’ by Einstein. Essentially, it’s the ability to earn return on your past returns as well as your initial sum invested – and that means the longer that you invest, the more powerful the effect and the potential growth.

Nick – an Investment Specialist – wishes he’d engaged with investing earlier in life. If your savings are in good shape, consider investing your money – particularly if you’re leaving that money or your savings goal and objective is five years or more... investing will give you the chance to out-pace inflation and grow your wealth – and the longer you invest, the better the potential return. So, Nick’s also referring to that compound growth that we mentioned with Rohan.

Katie recommends starting an emergency fund as soon as possible – it’s that cash safety net for life’s surprises. So, a good target is 3-6 months worth of essential expenses – this is very much the ‘Needs,’ not the ‘Wants.’ Starting small is better than not starting – so, even if you’re able to just put £20 or £50 a month away, then that’s a great start, and it could prevent you from relying on credit cards when you’re in a pinch.

Next tip is from James. He really values actually creating a budget – so taking the time to write everything down in black and white, understand what you’ve got coming in and what’s going out – and, ‘Where are you spending that money?’ So, this is really around mindful spending – making sure that you’re spending on those things that you prioritise, rather than wondering where your money has gone. And, by doing that, you can often identify areas of waste – and then that ‘Where you can claw back some money’ can go towards your financial goals.

And then, lastly, a tip from Matt. Matt’s tip is something called ‘The Lifetime ISA.’ So, from age 18, you can open a Lifetime ISA – that’s an account that’s designed to help people buy their first property or it becomes a pension hybrid. So, with that account, you can put in up to £4,000 per year and the Government will give you a 25% bonus – so up to £1,000 available in bonus every year.

Be aware, that £4,000 does eat into your wider £20,000 ISA allowance – and, once the money is in that account... if you don’t use it for a first-house purchase, it’s after age 60 that the withdrawals are tax-free. If you take the money out for any other reason other than a first-house purchase – or before age 60 – then there is a 25% penalty, and that means you could get back less than you invest. So, worth doing a bit of research on the Lifetime ISA, and you can find that information on our website.

So, to stay on track with your financial goals throughout this course, here’s five tips:

1) Be specific – instead of vague goals like, ‘Be better with money,’ clarify what that means for you. As an example, rather than save more, you’d have saved £200 a month for an emergency fund – or attend 50% of live webinars this year. That way you know exactly what you’re working towards and you can hold yourself accountable.

2) Keep it simple – don’t overwhelm yourself with complicated plans. Focus on a few achievable goals that really matter and then build from there.

3) Be realistic – set goals that are challenging but doable. Don’t set yourself up for failure by making them too ambitious because it’s really demoralising.

4) Deal with the root problem – if you’re constantly struggling with debt, work on the underlying issue instead of just the symptom. So, think about that money-mindset and think about the emotional triggers for the spend.

5) Automate where you can. Life gets busy, so make things easier by automating tasks like savings or bill payments. Automation will help you stay consistent – and consistency is really key to achieving financial goals.

I’m going to leave you with this final thought – which is, if you imagine that you are in a relationship with money, what would happen if you ignore it? Just like any important relationship, neglecting it would lead to challenges – difficulties – but, if you take the time to nurture it, understand it, learn about it, and put effort into managing it well, it will start working for you, and support your goals, and you’ll be able to build a better financial future.

That brings this session to a close. Please take a couple of minutes to read through the important investment notes on-screen. They reiterate that everything discussed today was purely information and not to be considered financial advice.

Jack Stevenson: Hi, everyone – thank you for coming today to this ‘Take Control of Your Debts’ webinar. My name is Jack, and I’m Financial Wellbeing Specialist here at Hargreaves Lansdown. In terms of what my role is – and the role that I share with my colleagues – is to host webinars such as this, to help develop your financial education in a range of different areas.

In terms of today’s presentation, it’s really important to highlight anything in it is for information purposes only – isn’t to be seen as personal financial advice. If financial advice is something that you do need, this is something that we can offer here at Hargreaves Lansdown at an additional fee. Please feel free to get in touch with us if that’s what you’re looking at doing.

In terms of this presentation, tends to be between 25 to 30 minutes, and there will be a time for some questions at the end of this presentation as well.

To start off with – in terms of having a look at agenda – in terms of what I feel we could get best use out of today. To start off with, we’ll have a look at the national picture – in terms of what is becoming a real issue – then look at good debt versus bad debt – and then move onto some debt management strategies in terms of how we can try help with our debts. Then, we’ll move onto looking at our credit scores – what they mean and what we could do to try and make those that bit better. And, finally, we’ll look at some sources of further information that we can use to support ourselves and our wider financial wellbeing.

To start off with, let’s have a quick look at the national picture.

When we look at our lives – when it comes to money – over the past few years, a perfect storm has been brewing. It’s easy for us all to see that our lives are getting more expensive. Not only to add to that, due to the rise of cost of living and the COVID-19 pandemic, this has caused household incomes to fall in real terms since 2020. This has certainly helped in resulting in our lives becoming more expensive.

When we take into account the rising cost of living, we look at things such as our weekly shop has become more expensive. Things such as heating our homes on those cold, wintry nights has become more expensive too – so there’s been a lead to more debt management issues becoming a bit of a problem in the UK.

As statistics certainly back up those points as well – those here – that 1,227 debt issues are dealt with on a daily basis by Citizens Advice.

So, let’s continue to look at that nationwide picture.

What we’ve seen are periods of forced saving for many during the pandemic – and during lockdowns – and UK personal debt bubble shrank for the first time since 2013. But then, the cost-of-living crisis began and life got more expensive – therefore, we’ve witnessed a U-turn on that.

The debt held by UK consumers has steadily increased in the last few years. As you can see, between September 2023 to September 2024, there’s been an increase in the amount borrowed within the UK.

What we’re seeing is increased credit and debt being fuelled by the cost-of-living crisis – so people are borrowing to fund their daily essentials. Now, for the lower-income households, those essentials do make up a large percentage of their take-home pay.

Debt was a cause for concern for some, pre-cost of living – but, in this tough economic climate, money anxieties are growing as people feel the pinch on their purse. Research by the ONS found that 9 in 10 adults report their cost of living has increased.

The most common reasons reported for increased costs were price of food dropping and energy bills going up. Our money simply isn’t going as far – it just isn’t buying us as much as it used to, previously. As a result, shoppers are changing their behaviour.

For example, I’ve noticed over the last few years – when doing my weekly shop – more families are going up and down the aisles with their phone calculators out – some even telling the assistant at the checkout to stop at a certain monetary amount ‘cause that’s the specific budget they’ve set out for that weekly shop.

To put this in a bit more context, this next slide perfectly sums up in terms of that rise of cost of living. What we can see here is three different years between 1993, 2008, and 2023. As we can see here, in 2023, there’s been a steep increase in terms of the cost of a mortgage, almost making up 50% of the average household expenditure.

When we look at other things, such as the increase of energy going up as well – make up a large percentage of the household income going on those two fundamental aspects.

As you can see, since the last few years, the price of food has slightly decreased, but it still makes up quite a large percentage of that – leaving us with potentially a little bit of money left over to look at those long-term savings to put away for those rainy day funds – so to cover for those potential emergencies that might happen later down the line.

In terms of debt though, it can affect all ages and can be a real cause of anxiety if it’s not under control – particularly in this current climate. Because of higher interest rates, debt could be becoming more costly. The reason we’re seeing increased interest rates since 2021 is because raising rates is a key tool to the Bank of England that they have at their disposal to try dampen inflation.

By increasing interest rates, people are encouraged to save and spend less. This can lead to less demand for goods – which, in turn, can encourage lower prices. For example, rates were only cut twice during 2024.

People are using more credit at a time when borrowing is becoming more costly. Borrowing was a lot cheaper, if you look back to 2021 and early 2022. The Bank of England hiked the base rate interest rate 14 consecutive times in the last few years – the fastest pace for 27 years. Gone are the days of the 0.1% – it hovered at levels of 5% from May 2023 last year. This is the highest rate since the financial crisis in 2008. Although it has dropped to 4.5% – start of this year – it’s slowly starting to come below that 5%.

How the effects felt will differ depending on whether you’re a saver or a spender. Average interest rates on credit cards are at record high – the average APR being around 36%.

Higher interest rates generally make saving more attractive, so it’s good news for our cash savers – they’ll be getting a better interest rate passed on from the banks. Unfortunately, banks often take longer to pass on the increase. If you have savings what rates of interest you’re receiving – is it anywhere close to that 4% or 5%?

You often need to look further than the high street banks to make sure you’re getting the best possible rate, ensuring your money is working as hard as possible.

In terms of increase to the base rate, how could it potentially affect our debt?

Firstly, when we look at credit cards, balances on those credit cards tend to become a bit more costly. A really good way in terms of what we can do to analyse this as well... by looking at our mortgages.

Now, I’m sure there’ll be people here today who have that mortgage – and, potentially, if you’ve remortgaged as well – or you’re a first-time buyer – you might have seen those sharp increases from those previous rates that they used to be in around January 2022. What we can see here – between 2022, 2025 – borrowing the same amount of money over a same period of time... those costs have certainly gone up by almost £500 more.

It’s not only the people with mortgages who this would be affecting. If you’re out renting a property, you might have seen an effect to yourself with this as well – by your landlord increasing those rental payments that you pay. This may be because they’ve still got that mortgage to pay off on those rental properties – they might have remortgaged as well – having to be at the higher rate – which means the mortgage repayments they will be having have also increased – therefore, they might have to increase those rental payments to cover those increases within that mortgage payment.

Now, moving on from that nationwide picture, what we’re gonna be doing now is how we can take control of our debt – tips and tricks in terms of what we can be doing to aid that.

So, what is the cost of borrowing? Simple terms is interest rates on the cost of borrowing. There’s also what’s known as APR – which is the Additional Percentage Rate that takes into account interest and any additional charges be added on top of the money that you borrow.

In terms of debts, this can come in all different shapes and sizes in costs – so we’re going to be taking a look at a few of those now.

First of those is mortgages. Mortgage rates are currently between 4%-6%. It’s quite often that people think, because it’s the largest sum of money borrowed, it’ll be more expensive to borrow that money, but this isn’t always necessarily the case.

When we look at an overdraft, overdraft let you borrow money through your current account. So, you go into your overdraft, any purchases you make take you below the £0 in your bank account, but you’ll likely be charged for this – and this can be between 35%-40%, which could be considered quite an expensive rate.

As well as that, we also have the ability to get credit cards. Credit cards average around about 35.95% APR, but sometimes these can be much higher. When taking out a loan or credit, you’ll see the APR – this is the Annual Percentage Rate. Let’s say that the APR is 35% - the interest you’re charged over 12 months is equal to roughly 35% of your balance. The cost of borrowing – for example, if you were to borrow £1,000, the interest rate on that would be £350 – so your total cost would be £1,350.

In terms of personal loans, the repayments on this can be a bit dependent in terms of how much you borrow and for the length of time you borrow – and in terms of what your credit score is as well.

Costs of personal loans could be around 4%-12% – as we mentioned, that is gonna be dependent in terms of the length and the amount you borrow.

There’s also payday loans. In terms of a payday loan – short-term loan designed to tide you over until you get paid. Although often easier to be accepted – with less stringent debts – your repayments are expensive, are often used as a last resort.

And, finally, there’s borrowing from family. In terms of this, it’s normally dependent in terms of how you speak to those people on the build-up to asking them, a few weeks before, if you could borrow some of that money and to help with any of those issues you’re having.

What we’re gonna be looking at here is how much money you’re gonna be paying back if you were to be borrowing £5,000 over a three and five-year period. What we can see here is that, even borrowing the same amount over that three and five-year period – at the same APR... the three-year period, the monthly repayments are gonna be higher than those if we were to repay it over a five-year period. However, what we can really start to see here is, over that longer period, we are gonna be paying back a substantial more amount than what we would have borrowed. Therefore, it would be a good idea to analyse this in the long run... although I may be having to forgo a bit more money for a few years, ultimately, over a long period of time, I’m gonna be paying back a lesser amount. It’s always important to familiarise yourself with those key differences there.

Now, in terms of ways that we can lend money... there’s certain areas of ‘Buy now and pay later’ instances. I’m sure you’ve all seen these companies on screen now that you’ll see on quite a few websites. For example, I noticed the other week – that, when I was buying a takeaway, you can even get these on delivery in Uber Eats. They are everywhere – in terms of those apps that we use to buy those things.

Companies like this – loaning money – typically don’t carry out the affordability assessments on you – and falling behind on these payments will likely mean late fees, which can have a negative effect in terms of your credit score and, therefore, your impact on future borrowing.

A few things to ask yourself before you are looking to buy these things – at each company – is, ‘Is this a real necessary purchase?’ – to have that purchase, for example. If you didn’t have the option of ‘Buy now, pay later,’ would you buy that item? Could you save up for it instead – so could you save up for it – savings account – to buy later down the line? And, finally, are you sure you’re able to meet those repayments with your other outgoings? Are you sure that you can meet those repayments without falling behind and incurring late fees that could potentially have a negative effect to your credit score?

As you might already be aware, debt isn’t necessarily a bad thing – it’s the spiralling that can have the biggest impact. Living within your means, not spending more than you earn. If not careful, little overspends can add up to big debts. This is where budgeting can help – which we do have some sessions through Hargreaves Lansdown on. It’s always worth keeping an eye out for those and doing that research to help you with that.

One thing that we want to distinguish here is the difference between long-term and short-term debts as well as saving. The Annual Percentage Rate – the cost we pay each year to borrow that money, including fees expressed as a percentage.

Long-term debt – such as mortgage loans – tend to have much lower APR than short-term loans. The APR is a broader measure of the cost of borrowing money simply reflect not only the interest rate, but also the fees that you have to pay to get the loan. The higher the APR, the more you have to pay back over the life term of that loan.

A secured loan is where you put up some kind of security – such as your home – when taking out a loan. The most important aspect – if you’re unable to repay – the lender can apply for a court order to sell your home to get back any money it’s owed. Typically, easier to get and allow you to borrow more – and over a longer period. However, if you get into financial difficulty, you may potentially lose that secured asset.

Compound investment growth makes your money grow faster each year. The compounding of debt... the value of your debt reduces over time as inflation rises.

Compare the interest rate on the loan to a realistic return on savings – whilst understanding affordability – can be key as well. We’ll, therefore, use this next example to give us a bit more of an idea in terms of what that could look like.

As already discussed, short-term debt is usually the most expensive. Prioritise the cost of this debt prior to savings, short-term debt is anything payable in less than a year – such as credit card debts or unsecured loans.

Scenarios will differ, but let’s take an individual paying £1,000 into the savings – perhaps putting some money away for those emergencies that might happen. If they achieve 3% interest in a year, then this will earn them £30 – bringing a grand total, £1030.

If they, instead, had used that £1,000 to pay off a loan that had 16% annual interest, they would have saved themselves £160 – therefore, you could see this a bit of a no-brainer.

Managing your debts is a no-brainer, but the place to start. Whilst staying on top of all your debts will avoid late payment fees, avoid compounding interest charges – check your credit score, which you may need if you continue to need credit.

The opportunity to potentially have an interest on savings – or to use the potential surplus income to pay off any existing debts or loans... best way is by looking at the cost of that debt and what that is.

We can see this in the example – the trade-off of earning 3% in a savings account versus paying off a loan with 16% interest being charged. For example, shorter-term debts, such as credit cards and overdrafts, could be extremely costly. Should absolutely prioritise paying off any expensive debt – these are usually in order of interest levels. For example, overdrafts – as we’ve already seen, banks can charge up to 40% for an overdraft facility. Credit cards – the average APR for a credit card is around 37%.

Now, what we can do here is look at some ways in terms of how we can reduce some of those debts that we might have. One of those might be consolidating all our personal loans that we have to cover all of our existing debts. Another way which we can do – if you are able, in some instances, to balance transfer credit cards.

This may often give you lower interest rates for those new introductory periods – potentially give you less money that you’re spending on those interest rates with those previous credit cards. There are useful resources on the Internet that allow you to compare and contrast those credit cards – it’s always worth having a look at those as well. And then, finally, avoiding those payday loans – those really high, expensive loans that potentially really damage your credit rating – as well as if you pay back those late.

I also mentioned, quite a bit today, that credit score. So, what is that credit score? As you’ve already seen, debt can have a ripple effect across your financial life – and that can really affect your credit score as well.

Your credit score is an assessment of how good you are at managing debt and it’s what lenders use to assess the risk of lending to you. Information held on your credit file and your credit application form might be used to decide whether to lend to you – how much they might let you borrow and how much interest they’ll charge you. It’s a way of lenders calculating the risk of lending money – and the higher score, the better chance of acceptance and more favourable interest rate, because they see you as less of a risk in terms of repaying that money.

For those of you who may not know your score, check it for free with one of these three agencies: Equifax, Experian, or TransUnion.

Every money contract that you enter also includes a critical search – but they also can include when you open a bank account with an overdraft facility. It is really important to highlight which loans do not affect your credit score.

Now, some of you are probably gonna be asking as well, ‘With that credit score, what can I be doing to try improve that?’ One of the ways in terms of what we can do to try and improve that credit score is register for the Electoral Roll – making sure we’re on that. Checking the mistakes – so making sure your full name’s on there and your date of birth’s correct.

Making sure we’re paying our bills on time – so making sure they’re all going out on time. Checking if you’re financially linked to another person, as their credit score can affect yours – it’s always worth looking at things such as that. And, finally, clearing any existing debt and cancelling any unused credit cards.

In terms of today, I thought it would be really useful to give you some key takeaway points for your next steps. So, firstly, reviewing your budget – are there areas where you could cut costs? We mentioned previously, living within your means and not spending more than what you take home each month. Are there ways to earn more money to pay down debt? So, for example, looking at savings accounts – prioritising those other debts. And then, finally, address debt, starting with the most expensive.

So, taking into account all the debts that you may have, doing the research into all the repayments that you have on those, and analysing which ones of those are the most expensive to you – and, therefore, prioritising those ones.

Do appreciate that debts can be quite a tricky subject and can be quite a problematic area. Luckily, there are some really useful resources out there that can help us with that. Firstly, there’s what’s known as ‘StepChange,’ who offer a wide range of debt solutions – help everyone no matter what they’re dealing with. They include things such as debt management plans, and they act as quickly as possible, and don’t ignore a potential problem.

Debt will need to be broken down into priority rank based on consequences if they’re all not met. This can mean unsecured personal loans are not focused on despite costs. Direct and concerned clients... the National Debt Charity and Association.

And then, there’s also what’s known as ‘MoneyHelper,’ which is another useful government website. Here, they have specialist help required as normal debt management may not be appropriate.

Resources are available to help people with problematic debt. This also includes things such as the Money Advice Service, Citizens Advice Bureau, and the Debt Advice Foundation. So, it always is really useful to go and look at these websites and find that help that you might need.

It is also useful to note that these won’t offer you any financial advice – it will be information and guidance, and if you do need that financial advice, it’s always worth seeking that as well.

I will just leave on the screen some important investment notes. This reiterates the points we mentioned earlier in this presentation – that everything is for information purposes only – and it isn’t being that personal financial advice.

Hopefully, everyone’s had enough time to read those now. I will go forward to some questions – also just leave on the screen the QR code to our next available session – so please follow that QR code to sign up to the next session next month, where we’ll be looking at how to be a smart spender.

Thank you, everyone, for listening today. If you have any questions after this presentation, please don’t hesitate to get in contact with us – we’re always happy to help. Thank you.