The Times - UK (2022-01-01)

56 Saturday January 1 2022 | the times

Money

5

IN THE

SUNDAY TIMES

TOMORROW

plus

‘It’s OK that my sister will

inherit more than me’

special report

Get ready for

a financially

awful April

Be prepared,

this is going

to be the year

of the squeeze

A

re we at the beginning

of the end of the

coronavirus? Do we dare

to hope?

In the week that many

of us have allowed ourselves to

acknowledge a glimmer of light at the

end of the pandemic tunnel, we have

been walloped by problems arriving

from another direction.

If 2020 and 2021 were all about

fears for our health, then 2022 is

shaping up to be the year we worry

about our finances.

The Resolution Foundation, a think

tank that aims to help middle and low

income families, calculates that by the

end of April the average household

will be worse off to the tune of £1,200.

Happy new year!

Tax increases and high energy bills

are just two of the reasons why the

next 12 months, in China the Year of

the Tiger, may be better known over

here as the Year of the Squeeze.

Not many people like to be

squeezed (my eldest aside — he loves

the feeling of pressure) and I can’t be

alone in feeling my heart rate quicken

when I hear that word.

What is happening is largely out of

our control, except that we have the

ability to focus on the boring money

chores we have been putting off all

year. Actually, scrap that: it is time

that the status of these tasks was

elevated. Let’s make 2022 the year

that we finally appreciate them for

what they are: ingenious money tricks

that can at a stroke put paid to

sleepless nights. Some of them, at

least.

Now the threat of Covid is ever so

slightly receding, consider us Money

journalists as your financial Chris

Whittys. We are here to guide you

through choppy economic waters

with a series of small lifeboats that

can help make up for the inflationary

factors that we can’t do much about.

These little administrative tasks

can save you money on your

broadband, energy, investments and

insurance. Take a look at pages 58-59

for our suggestions.

We talk about mental health a lot,

about the importance of

mindfulness, the downsides of a stiff

upper lip. But what is less discussed

is that being sensible with your

finances can be just as vital a tool for

controlling anxiety as a yoga class or

stroll in the woods.

I am obsessed with my children’s

mental health. Do you think they are

happy, I often ask my bemused

husband. (He mostly worries about

them dying in some weird and

unexpected way; we have all the

neuroses covered in our family.)

However, while I spend a lot of

time trying to help them navigate

their emotional lives, I don’t spend

nearly as much time preparing them

to manage their own finances, which

may have as much impact on their

happiness later on.

A colleague (not on the personal

finance desk, I need to reassure you)

spoke of her relief, at the age of 40, at

finally having a pension. I had

nagged her and she eventually

responded. How did it feel, I asked.

“I feel lighter,” she said.

Exactly. The people who found they

had saved despite themselves in the

first lockdown know what she means.

They found that spending, just like

eating and exercise, is a habit, and

you can unknowingly slip into bad

habits, frittering money away without

even realising it. Or thinking that you

need to spend money when you

actually don’t.

The people who dabbled in the

stock market in the pandemic found

that investing wasn’t just for posh

men in suits, it was for them too.

They have built themselves a nest

egg, a security blanket, and it felt

good.

Their ability to keep that nest egg

may be challenged this year, which is

shaping up to be a tricky one for the

stock markets. They were boosted

during Covid as pent-up savings

poured in and governments around

the world put billions of pounds into

people’s pockets to stop economies

from falling over. Most of this will

come to an end this year as people

head back to the office, and energy

bills, food prices and taxes increase.

As the financial commentator

Merryn Somerset Webb pointed out

in the Financial Times, bringing

inflation under control quickly

depends on central banks finding a

way to take action without making

mistakes, and that may be unlikely

because they are so out of practice.

Andrew Bailey, the governor of the

Bank of England, may not have

heeded the lessons of the 1970s

enough when he ignored the

warnings of his chief economist, Andy

Haldane, last year, who repeatedly

and publicly stated his concerns that

problems were brewing.

All the more reason to pay

attention to the “boring” old money

tasks that might just make this year a

whole lot easier if you do them.

Switch your savings account, move

to a cheaper investment platform, or

broadband account, or TV deal.

Check you are paying the right

council tax, go through your standing

orders to make sure that you aren’t

signed up to anything you don’t need

or have forgotten about.

Invest if you have money you won’t

need for at least five years; scrutinise

those investments and consider

jettisoning any that for three years or

more have underperformed.

I will certainly be doing all the

above as I am currently moving from

a flat with a modest mortgage to a

house with an indecent one. And the

night before I read the Resolution

Foundation report I had entered the

stress dream stage of my house move.

The supply chain problems, as well

as the lack of good builders, were all

too evident in the eye-watering quote

we recently received from one.

Make this the year to save where

you can. We’ll certainly do our best to

give you sensible advice and reliable

information that will hopefully make

2022 less of a squeeze.

@jessiehewitson

Home Economics

Jessie

Hewitson

I am taking on an

indecent mortgage. I

have to make savings

Parcel left in the bin? You probably deserve it

Delivery companies, eh? Who

hasn’t had a driver chuck

something “in a safe place” (the

bin) while you were out or had a

“you were out” slip through your

letterbox when you were most

certainly in?

Since the pandemic began we

have been forced temporarily to

live, learn and shop online, and the

indications are that the shopping

bit will become permanent.

First-world choices, however,

can sometimes cause first-world

problems. A Times investigation

found that some staff at Hermes,

which is used by retailers including

Asos, John Lewis and H&M, throw

parcels across their depot, hurl

them over fences and regularly lie

to customers about next-day

delivery promises.

There’s no excuse for negligence,

but you might argue that this is

what you get if, like Hermes,

your new warehouse staff

are paid £8.08 an hour

excluding a one-off

£25 starter payment.

The national living

wage is £8.91 for

those over 22.

You might also

note that Amazon,

whose owner Jeff

Bezos’s pockets are

£150 billion deep, does

not seem to have the

same service problems.

But I would argue something

else: that we’re partly to blame

because we’re lazy.

During the pandemic I have

started buying everything on the

internet — a roll of sticky tape,

a netball for our new garden hoop,

a lightbulb, batteries. Yet if I’m

asking a company to use a delivery

service to pick and pack my

lightbulb and deliver it the next

day, and I’m only prepared to pay

£3, should I expect great service?

When people started to use

low-cost airlines, they made a

choice: to get from A to B

at rock-bottom prices,

but with fewer frills.

They got their sun-

drenched holiday

but flew on

cramped jets and

were served by 18-

year-olds in boiler

suits. And they

accepted they would

have to fly from

airports that felt like a

cross between a detention

centre and shopping mall. They

adjusted their expectations to fit

the fact that they were paying

£29.99 return rather than £200.

Today I expect convenience from

my shopping, but I want to pay less.

I want batteries for my daughter’s

night light, but I can’t be bothered

to go to Tesco Express, so I expect

someone to bring them to me —

and I want to pay next to nothing.

My batteries will probably arrive,

but I might not get the gold-plated

service I would if I paid a bit more.

This is about convenience and

cost versus service. It is absolutely

not to say that we should put up

with poor service from official

bodies such as HM Revenue &

Customs (one in five calls is never

answered), or the Passport Office

(thousands of passports take

months to be delivered).

The prime minister said during

Brexit talks that his policy on cake

was “pro having it and pro eating

it” — but that is not an option.

When you fly with Ryanair for

£29.99 you expect the dystopian,

armpit-infused experience that is

Luton airport. When I buy a Biro

online and pay peanuts for it to be

packed and driven to me at some

environmental cost, I might have

to expect it to be chucked in the

bin every now and then.

David

Byers

Comment

5.7bn

parcels delivered by

UK carriers in 2021,

Pitney Bowes

estimates, up from

3.7bn in 2019