Flipping the script
Doing hard things in a different way can turn them into easier things.
I did an aerial yoga class yesterday for the first time (terrifying, amazing, exciting). One moment that stuck out was when we had to get our hands into Reverse Prayer Pose (Paschima Namaskarasana), fingers pointing upwards, behind our backs.
Most of us struggled to do it. But, when you put your hands in the hammock behind you, and then walked forward, we came easily into that position. Like SO easily.
It was kinda amazing.
It got me thinking about investments (when am I not thinking about personal finance…) and how so many people (including many Money Brunch readers) believe that investing is hard.
Part of it is a mindset thing, but part of it is also due to the path that we choose to take. You can go down the usual route of complexity (platforms like Vanguard, Hargreaves Lansdown, Charles Schwab; reading Investing for Dummies etc).
Or you can find a new way. Like finding a like-minded group of people, reading a great newsletter (😉), finding platforms that work for you specifically…
And ending up in Paschima Namaskarasana far easier 🙏
1. The Bank of England has paused its interest rate cut cycle
After three reductions in the past year, the Bank of England has paused its cycle of cuts. Members of the Monetary Policy Committee (which makes interest rates decisions) voted eight to one to do so.
Why?
There’s obviously a ton of economic uncertainty — so there’s more ‘waiting and seeing’
The Chancellor is delivering the Spring Budget next week — again, this requires more ‘waiting and seeing’
This is despite slow growth (rate cuts typically lead to more economic activity and therefore growth) and new data from the Bank showing that companies are freezing their hiring plans.
The plan is still for rates to come down, but more gradually.
Side note: Every year the Office of National Statistics updates its basket of goods. That is, the 700-ish goods and services whose prices are tracked, and their combined price moves determine what the Consumer Price Index (CPI) rate of inflation is.
This year, VR headsets are one of the items added to the basket — but turns out the specific items are more of a ‘vibe check’ than the result of a science-backed exercise. An FT journalist looked into this: “I asked the ONS where it got that very high number from and it turned out to be an estimate from a free market research report by Statista.” Oh dear.
2. The madness of the £100,000 childcare tax trap
What is it?
From September, free childcare is being expanded in England — so working families with children aged under three will be able to claim 30 hours of government-funded childcare a week on top of a tax-free childcare scheme
The bulk of this entitlement is lost if one parent’s adjusted net income1 is more than £100,000 per year
So if you earn even 1p over this amount, you lost the entitlement
“From September, a parent in London with two children at nursery would need to earn more than £149,000 to compensate for the loss of childcare support from the state — a pay rise of almost 50 per cent.”
So what? Isn’t £100,000 enough to not worry about this?
Yes, this amount doesn’t make you poor
But the amount of money people have left over is small and leaves little to no breathing room — once you factor in housing costs, childcare costs for other children over three and other life costs — all of which have rocketed
What are people doing?
You can do the classic move of reducing your pre-tax earnings by paying more into your pension — but this means that you’re still struggling for cash in the present
It means that “high-earning parents are opting to limit their earnings by reducing their working hours or making outsized pension contributions to hang on to their childcare benefits”
Interestingly, many FT readers in their 30s and 40s who responded to the journalists’ recent call out said they were totally unaware of the complexity awaiting them.
So if you’re likely to be affected by this at some point in the next few years, make sure you do your research. Talk to other people. Figure out different scenarios ahead of time. Be prepared.
3. Things to do before April — ahead of price hikes and a new tax year starting
Use as much of your ISA allowance as you can
You know this one. I bang on about it enough.
Check your tax code
The code defines how much tax you should be paying — and it’s sometimes wrong.
Even though it’s determined based on your earnings (by your employer and HMRC), it’s your responsibility to check whether it’s correct or not
If you’re overpaying, you’re due cash back
Broadband and mobile bills are rising by 6-7.5&
This is for existing customers and amounts to around £3 a month
Look to switch to a new contract, especially if you’re out of contract
Links!
Money
Putting your house on the market? Here’s some tips for getting it sold
Bigger homes have been driving property price growth over the past year — this could make it easier for first-time buyers to take their first step on the property ladder, but harder for them to move up to a property with more space
Moped scammers are staging accidents and demanding photos of driving licences and insurance documents — be alert!!
Hidden ‘double dip’ charges are penalising UK car insurance customers on monthly contracts — this is likely to be reviewed but, in the meantime, be aware that even selecting ‘monthly’ earlier in your search, and then switching to an annual payment when it comes to pay makes it more likely that you’ll be paying a higher premium. Urgh
Life
“It’s almost like how propaganda works where it’s sort of a kernel of truth, and then it just gets exaggerated and blown out of proportion.” Why you should be more skeptical the next time you read a health news article
How to avoid US-based digital services—and why you might want to
A first-person account of being detained in the US immigration system
27 files I need more urgently than the JFK files — very good by
; includes “Tree Paine’s entire email archive2” and “WHAT is the pitch to go on Only Murders in the Building. Lol.”IRL singles events have WAY more female than male attendees (except for when everyone is naked)
'Adolescence' — the wake-up call for parents that could change the online lives of teens. This show looks terrifying and intense, and therefore something that I’m never going to watch — but it’s great that it’s been made
Money Brunch is on Saturday :) Who’s coming?
Know someone who would enjoy this in their inbox on a Sunday morning?
Total taxable income before any Personal Allowances and less certain tax reliefs,
Taylor Swift’s publicist.