Financial scams Archives - Alice Douglass

Groundhog Day: 5 ways to stop repeating the same financial mistakes

Alice Douglass — Mon, 20 Jan 2025 09:28:38 +0000

Sometimes, when life gets particularly busy, it’s easy to make mistakes, especially when it comes to your finances.

While “to err is human”, it’s important to learn from these missteps to avoid repeating them, as doing so can prove costly in the long run.

The idea of making errors over and over again is the theme of the revered film, Groundhog Day. In the 1993 classic, Bill Murray’s character relives the same day stuck in a loop until he learns to change his behaviour.

Financial blunders can feel just like this cycle and be just as hard to break.

Since 2 February 2025 so recently marked Groundhog Day, the event that shares its name with the film, this could be the ideal time to take a closer look at five financial mistakes that are best avoided… and certainly not to be repeated.

1. Not “paying your future self first”

While budgeting is one of the cornerstones of good financial planning, it can be surprisingly challenging to get right.

As an example, imagine you have £5,000 to spend each month. After covering your mortgage and bills (£2,500, say), paying for essentials such as food and travel (£1,000), and indulging in discretionary expenses (another £1,000), you’d be left with £500.

You may intend to save or invest this £500 at the end of the month, but this approach could backfire. It’s easy to overspend and find you have little left to put aside.

As such, you might want to “pay your future self first” by contributing regular amounts to your savings as soon as your pay lands in your account, rather than at the end of the month.

This ensures that your financial goals take priority, all while helping you to build a consistent saving habit. Over time, this could make a significant difference in helping you reach your financial milestones.

2. Paying only the minimum into your pension each month

If money is tight, or funds are required elsewhere, you might find that you regularly pay only the minimum amount into your pension each month.

While you’re at least contributing something, it might not be enough to secure the retirement lifestyle you dream of.

Increasing your contributions now could give your fund an initial boost while allowing you to benefit from increased tax relief.

The Annual Allowance is the total amount you can contribute to your pension tax-efficiently in a single tax year; it includes personal and employer contributions, as well as tax relief.

For 2025/26, it stands at £60,000, or 100% of your earnings, whichever is lower.

Tax relief sees the government “top up” pensions when you contribute, so a £100 contribution would only “cost” basic-rate taxpayers £80.

Meanwhile, it would only “cost” higher- or additional-rate taxpayers £60 or £55, respectively, so long as they claim the extra relief through their self-assessment tax return.

Taking proactive steps to increase pension contributions now could bolster your fund, helping to support your ideal lifestyle in retirement.

3. Relying on borrowing when the unexpected strikes instead of saving an emergency fund

You can’t ever know when an unexpected expense is right around the corner. Whether it’s a sudden car repair, a broken boiler, or even lost income during a period of illness, you may find that you rely on borrowing to cover costs if you’re unprepared.

But high-interest debt from credit cards, for example, can quickly snowball, resulting in financial stress and eroding your peace of mind.

Instead, it might be prudent to build an emergency fund of between three and six months’ worth of essential household expenses in an easy access savings account.

If you’re self-employed, retired, or have many dependants, you might want to save between one and two years of expenses.

This financial safety net means you’re more able to handle unexpected costs without needing to rely on debt or dipping into savings and investments.

Beyond the practical benefits, your emergency fund can offer invaluable peace of mind, knowing you’re prepared for the future.

4. Panic-selling during periods of downturn

Even though volatility is an inherent part of investing, you might be tempted to follow your emotions during periods of downturn and sell your investments.

This could be due to a desire to cut your losses, but remember that it’s “time in the market, not timing the market” that counts. A knee-jerk sale of shares during a market dip could inadvertently affect the long-term performance of your portfolio.

Take the chart below, for example, which shows the 20 best (represented by cyan bars) and worst (the orange bars) trading days since 1 January 1980.

Source: Vanguard

As you can see, the market’s best and worst days often occurred close together, so if you rush to sell shares after a downturn, you won’t be invested when the markets recover.

While it’s normal to feel concerned during periods of downturn, it’s often wise to remain invested and stay the course.

5. Staying silent about financial worries rather than discussing them

Money remains a taboo topic for many in the UK, even though communication can help you deal with your worries.

Research from Virgin Money UK shows that only 56% of Brits feel comfortable discussing money with their friends.

Even if you feel awkward bringing up your concerns, or shame at the mistakes you’ve made, you shouldn’t let this deter you from speaking with friends, family, or peers.

A simple chat could actually lift a weight from your mind, allowing you to see things from a new perspective. Otherwise, worries could just build up in your head until they seem impossible to deal with.

Similarly, you might also want to talk through your worries with a financial planner. They could help you deal with the issues that cause you the most concern and suggest ways to tackle the errors you constantly find yourself making.

If you’d like this invaluable support, email me on a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046.

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The post Groundhog Day: 5 ways to stop repeating the same financial mistakes appeared first on Alice Douglass.

Financial Scams

Alice Douglass — Mon, 10 May 2021 08:24:15 +0000

Financial scams and financial fraud have probably been around for as long as we can remember and, in fact the first financial fraud can be traced back to 300BC Greece. It involved a plan to sink an empty boat, sell the corn (that the loan/insurance would think was lost in the empty boat) and keep the loan (insurance) money. The plan failed and the perpetrator drowned.

Financial scams have come a long way since then. With scammers becoming more sophisticated and the scams more convincing. Attempted Financial Scams are an every day occurrence.

Top 5 Financial Scams

According to the Financial Services Compensation Scheme (FSCS) the top 5 financial scams are:

1 .Boiler Room Schemes

These are often calls out of the blue to invest in a scheme offering impressive returns or with the promise of a guarantee. There is usually time pressure to act quickly or miss the opportunity to invest. You may be asked to keep the call confidential and be told you are receiving insider knowledge. In reality, they are selling worthless or over priced investments.

One example of this was a scam that ran between 2010 and 2014 where members of the public invested into a company that owned land in Madeira. They were told the value of the land would increase by 228% but no money was ever paid out and 170 people lost their investments.

What to do

If it sounds too good to be true, it probably is.

If in doubt, check the Financial Conduct Authority Register to check the authenticity of the company. You can check the FCA register here.

Seek independent advice

Do not be pressured into acting and make 100% sure the investment is genuine.

2. Phishing Scams and smishing scams

Phising scams are sent via email and smishing sent by text. These are now the most common form of scams. I am sure we have all had emails and texts from fraudsters who pretend to be an official organisation such as your bank. They contain a link that you are asked to click on to verify your details. Once you do so, the fraudsters have access to your account and steal your money.

A recent example of this is a text from the Royal Mail saying they are holding a parcel for you as there is unpaid postage and another from HSBC and other banks saying a payee has been set up and if it was not you to click on the link.

What to do

Stop and think. Do you have dealings with the company, have they contacted you in this manner before. If no, do not click on the link.

If you receive an email, check the email address from where it came. Does it look genuine?

Remember, your bank will not ask you to reveal your account details or password.

If in doubt, contact the company directly and do not click on the link.

3. Pension liberation schemes

When you reach age 55, you can access your pension (this is increasing to 57 from April 2028). Fraudsters are using this as an opportunity to tempt those over 55 into bogus investment schemes. Like Boiler Room schemes, you are usually contacted out of the blue and they may pretend to be from reputable companies like the FCA and pension wise. Again like Boiler Room schemes, they may offer higher returns and guarantees under time restraints.

They may encourage you to transfer your pension to them or withdraw the money from your pension to pay over. They are often presented as long term investments so it could be some time before you realise it is a scam.

What to do

If you get a cold call, hang up. It is highly unlikely the FCA, pension wise or a reputable Financial Adviser will contact you out of the blue.

Check the FCA register to see if they are a reputable company. If they are, contact the company to see if the person who called you actually works there and if possible, speak to that person.

Don’t be rushed or pressured into making a decision.

Seek Independent Financial Advice, Pension Wise or the Pensions Advisory Service.

4 Home buying Fraud

This can occur where a genuine email from your Solicitor is intercepted by a fraudster and their bank details put in place of the solicitor’s or the frauster sends and email saying the bank details have changed. Once the money is paid over, they withdraw it.

What to do

Watch out for emails with changes of bank details. Check with your solicitor if in doubt.

5 Freebie scams

These Financial Scams offer a free introductory period. In order to get the free period, you have to enter your card details. Once the introductory period end, the monthly subscriptions are expensive and difficult to get out of.

What to do

Read the T&Cs before signing up to anything and be careful about entering your card details online. If in doubt, walk away.

For more FSCS information on financial scams, click here.

Financial Scams a summary

Financial scams are sadly something we will have all been on the receiving end of. As technology advances, so do the scammers.

Remember:

If it sounds too good to be true, it probably is
Don’t be pressured into anything
If in doubt, check with a trusted third party
Do not pass on your bank details to anyone

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