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5 Strategies to stop emotional spending

People are experiencing and dealing with the current coronavirus crisis in different ways. For many, it has resulted in financial strain and for a lot of people, there has also been an emotional and mental toll. For anyone who has a tendency towards emotional spending, this is a dangerous time as our emotions are all over the place and so are our finances.

In this post, we’re sharing 5 helpful strategies to stop emotional spending as a way of coping.

1) Recognise your emotional triggers

If your spending is triggered by emotions, then it’s helpful to identify which emotions are particularly dangerous for you. It could be relationship stress, self-esteem issues, boredom or even, ironically, money worries which cause you to get out the credit card.

Once you recognise what your triggers are, you’ll be better equipped to overcome them. Next time you find yourself hovering over the ‘Buy’ button, try jotting down a few notes on how you’re feeling.

2) Avoid temptation

If you know that you have a problem with emotional spending, then do what you can to reduce your temptation. Avoid advertising, by using software to block ads from your computer. Unsubscribe from any marketing emails that you know will tempt you.

You can also use services like the Vulnerability Registration Service to self-exclude from credit so that you know you won’t be able to emotionally spend beyond your means. When you sign up you’ll be given the option to request that any lenders signed up to the service will decline any credit applications in your name for as long as you’re registered.

3) Wait 30 minutes

When you do find yourself about to purchase something, try waiting for 30 minutes. Often this gives that emotional trigger time to die down and you, time to consider your decision reasonably. Try asking yourself the following questions:

• How am I feeling right now?
• Do I need this?
• What if I don’t buy it now?
• Where will I put it?
• How will I pay for it?

4) Review your finances regularly

If you’re prone to emotional spending, taking a good look at your finances can be like a bucket of cold water on your emotional trigger. When we bury our heads in the sand, it’s easier to justify our spending – but when we can see the actual numbers in front of us, it’s harder to go with the instinct to spend more.

5) Don’t save your payment details online

When we don’t really need something that we want to purchase, we can often be put off by something as simple as the inconvenience of having to go find our payment card and enter the details. Having to do this, also gives us more time to consider our purchase and let our logical mind take over from our emotional urge.

Lastly, if you find that your emotional spending is getting out of control, then consider getting some support whether that be talking to a friend or seeking some financial counselling.

If you’d like to know more about how The Vulnerability Registration Service can help, then take a look at our ‘Guide for Consumers’.

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How to cope with money worries

Many people experience money worries at some point in their lives – and thanks to the widespread impact of the Coronavirus, this is true now more than ever. The problem is that worrying about our financial situation alone, doesn’t improve it. In fact, often it’s those anxieties which drive us to bury our head in the sand or even to spend more – which of course, only makes things worse!

In this post, we’re offering some simple tips on how to cope when money worries are overwhelming you so that you can start to take back control of your finances and get the support you need to stay on top of your mental health.

Recognise your money worry triggers

Next time you find yourself worrying about money, take a moment to reflect on what triggered those thoughts and emotions. More often than not, there are specific triggers which set off your anxiety. It might be a bill arriving in the mail, or a bank notification on your phone. It might just be an advert for something you want to buy but can’t (or shouldn’t) right now.

Once you know what is triggering you, you’ll be better able to control your thoughts – and prevent the risk of overspending as a way to overcome your negative emotions.

Talk to a friend or family member who you trust

Having someone to talk to can make a huge difference to your mental wellbeing. Although it might feel scary at first, if you can share your worries with a person you trust, you’ll not only feel better, but they may be able to help you to find solutions for your financial difficulties.

Keep busy

If your money worries have been caused due to a loss of employment or business, then this can have a negative impact on your motivation and energy. Try to stay busy – whether that’s by looking for alternative work or just focusing on a new hobby or goal until you’re able to work again or replace your income in some other way.

Don’t be afraid to get professional support

If you feel like your anxiety – or your money problems are becoming unmanageable, then always get support. It’s common to feel embarrassed about asking for help, but in fact, the opposite is true. Asking for help takes courage and is the best way to overcome both your mental health and money worries.

The charity, Mind can offer money and mental health support.

Register with the VRS

We all experience times in our life when we’re vulnerable for whatever reason. It could be illness, bereavement, job loss or marriage breakup. During these times, it can be a great comfort to know that the companies you have dealings with know your situation and will treat you accordingly.

If your situation is causing you to overspend, then you have the option to ask all companies to automatically decline you credit for as long as you’re registered. Alternatively, you can choose to ask them to thoroughly review your application and to speak to you about your vulnerability.

For more information on how to register, take a look at this brief video.

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5 Tips to help you clear your debts faster

It can feel completely overwhelming when your debts start to mount up and often, our instinct is to bury our heads in the sand and hope that the problem goes away.
Of course, this is the very worst thing that you can do – but the good news is that there are tons of great tactics out there that will help you to take back control of your finances and clear your debts faster.

1) Assess your debts

The first step to taking back control is to properly assess your financial situation. This can feel pretty scary, but it’s important to bite the bullet – you’ll feel so much better afterwards, promise!

Start by creating a list of all of your debts. The list should include:

• The company you owe money to
• The total outstanding amount
• Your monthly payment
• The interest rate for each debt

2) Assess your income and expenditure

Now you’ve got a good picture of what you owe, take a look at your overall income and expenditure. This could highlight areas where you may be able to save money to put towards your debts.

Create a list of all of your household income such as any salaries or benefits. Then also list all your expenses, such as groceries and utility bills. Now go through the list and identify any outgoings which you may be able to cancel.

3) Prioritise your debts

Now you know exactly what debts you have you can create a plan to pay them off. You have a couple of options to consider.

Pay the smallest debt first

This is known as the ‘snowball method’ and involves paying the minimum amount on all of your debts apart from the smallest, which you’ll put any additional funds towards until it’s clear. Then you’ll move to the next smallest debt and so on until all of your debts are cleared.

The benefit of this method is that you’ll get a psychological boost each time you clear a debt and this will help you to continue until all are paid.

Pay according to interest rate

Another option is to prioritise your debt with the highest interest rate. As with the ‘snowball method’ above, you’ll pay all your minimum payments, but your additional funds go towards paying your highest interest account.

This option allows you to pay less over all because you’re clearing your higher interest debts faster.

4) Contact your lenders

If you’re starting to struggle with debt, it’s always better to take a pro-active approach. Lenders will often be open to putting payment arrangements in place which allow you to make reduced payments for a period of time until you’re back in control of your finances again. Some lenders may also allow payment holidays or freeze interest on your accounts.

If the idea of contacting all of your lenders feels a bit overwhelming then consider speaking to the Consumer Credit Counselling Service or a debt counselling company such as Christians Against Poverty, as they may be able to help you with this.

5) Register with the VRS

Let companies know that you’re financially vulnerable right now so that they can treat you accordingly. This video tells you more about how the VRS can support you.

Register here.

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What to do if you’ve been scammed

It’s a horrible feeling to discover you’ve been scammed and it can often lead to a sense of being powerless. Of course in an ideal world, you’ll be able to spot a scam before the worst happens, but If you’re ever unlucky enough to be the victim of a scam, then we hope these tips will help you to take back control.

TIP 1: Keep a record of what happened
As soon as you can, write or record as much detail of what has happened so that you’re able to provide this information to the people investigating the scam. It’s amazing how quickly you can forget little things – especially when you’re feeling stressed.

TIP 2: Tell your bank
It’s good to let your bank know as soon as you can if you think your financial details may have been stolen or compromised in some way. This way, they can protect your accounts for you and make sure that no one can access any funds you have with them.

TIP 3: Report the scam
Please don’t feel embarrassed – scams can happen to anyone and it’s important that we report them in order to help protect others from falling victim too.

A good place to start is by contacting Action Fraud and you may also need to contact the police. Take a look at this great post from the Citizens Advice Bureau for more information on reporting a scam.

TIP 4: Reset your passwords
This is especially handy if the scammer has had access to your computer or information online. However, it’s a good safety precaution no matter what – and will help to give you some much needed peace of mind during a worrying time.

Here are some useful tips on how to create strong passwords that can’t be easily guessed.

TIP 5: Check if you can get your money back
All may not be lost! In a good number of cases, victims of scams are able to get back some or all of the money they’ve had stolen. Your bank should be able to advise you on this when you report the scam to them.

Here’s a useful article on what steps you can take to be reimbursed.

TIP 6: Get support
Being the victim of a scam can be very distressing and it’s important to have support during what can be an incredibly difficult time. Make sure you talk to friends and family about what’s happened and be aware that there are charities such as Victim Support who can also provide both emotional and practical help.

TIP 7: Register with Cifas
Cifas is one of the UK’s largest fraud prevention services and can flag your name on the National Fraud Database so that companies are made aware that your details may be at risk.

Tip 8: Check your credit report
If the scammer is using your information to apply for credit accounts in your name, then this will show on your credit report. There are 3 credit reference agencies (CRA’s) in the UK:

Experian
Equifax
TransUnion

It’s a good idea to check your report with each of them to make sure you’ve seen all the information recorded in your name. If you see any information that you believe to be fraudulent, then let the CRA know and they’ll be able to investigate this for you and hopefully get it removed.

Tip 9: Register with the Vulnerability Registration Service (VRS)
Our service is there to protect and support people during times in their lives when they’re financially vulnerable. By registering, you can let companies who use the VRS know your circumstances so that they can treat you and your information accordingly.

Register here

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How to Spot a Scam

Financial vulnerability can happen for all sorts of reasons and it can happen to anyone. Bereavement, redundancy, disability, marriage breakdown… just a few of the tragic and often unexpected life events that can lead to a sudden change for the worse in our financial circumstances. The problem is, when we’re going through these events, we’re often vulnerable in other ways too and this can lead to people becoming more at risk than normal when it comes to scams.

In this post, we want to give you some simple, practical tips to help you know how to spot a scam so that you can protect yourself or those you care for.

Scam Warning Signs

While the signs below aren’t a guarantee that something is a scam, they should raise an alarm that something might not be quite right and might need a little more investigation before you act.

You’re contacted out of the blue

If a company calls or emails you unexpectedly, then make sure you check that they are who they say they are. A good way to do this might be to ask them details about your account that only they would know. If you’re still not sure, then hang up the phone and call the company directly, using their official number. If possible, try to also call them from a different phone. Some scammers keep the line open so that even when you close the original call and then redial, they’re still there.

You’re asked to share personal details

Don’t share any personal data over the phone or by email unless you’re absolutely sure that the person you’re speaking to is legitimate. Neither your bank nor the police will ever:
• Ask you to transfer money to a new account for fraud reasons, even if they say it is in your name.
• Phone you to ask for your 4-digit card PIN or your online banking password, even by tapping them into the telephone keypad.
• Ask you to withdraw money to hand over to them for safe-keeping.
• Send someone to your home to collect your cash, PIN, payment card or cheque book if you are a victim of fraud.
• Ask you to purchase goods using your card and then hand them over for safe-keeping.

It’s too good to be true

This can be an especially cruel way to scam someone who is already financially vulnerable. If someone is offering you a deal or perhaps a prize that seems too good to be true (perhaps you don’t even remember entering a competition…) then there’s a chance that it is too good to be true.

Spelling or Grammar Errors

A legitimate company is unlikely to send out correspondence that’s littered with mistakes. The odd one might slip by, but if you see lots then this should raise your suspicions.

Protecting yourself from scams

When you find yourself unsure whether you’re being scammed, there are a few ways to try to protect yourself:

Check the company is real

Gov.uk have a handy tool that allows you to check whether a company is real or not, so if you’re in doubt, check a company out first.

Don’t click or download something you don’t trust

If you’re on a website that you’re not sure about or you’re sent an email from an email address that you don’t recognise, then don’t click any of the links until you’ve had a chance to check whether it’s legitimate.

Check company reviews

Another great way to check up on a company you’re not sure about is to search for any reviews they’ve had. If other people have had a bad experience, then hopefully their review can help prevent you from having one too.

Our final tip would be to take your time. Don’t let someone rush you into doing something that you’re not completely comfortable about. Take a breath, think carefully and make sure you’re sure before you act.

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How to budget on a small income

Budgeting is important no matter what your income so that you can keep track of your finances and achieve your financial goals. Of course, budgeting on a low income can be challenging – it isn’t just a case of what to do with your surplus income, but more how to actually have some surplus income in the first place. In this post we’ll be sharing some tips on how to budget on a small income so that you can actually save some money rather than living from paycheque to paycheque.

1) Review your current budget

A vital first step is always to get a good picture of your current financial situation. To do this, you’ll need to examine both what’s coming into your household each month – and of course, what’s going out in monthly expenses.

When you’re on a low income, this can feel particularly difficult – it’s never fun to see the cold, hard truth, especially if it shows that you’re not currently living within your means.

Don’t panic though – it’s much better to know exactly what’s going on with your money than to get a nasty shock down the road. It doesn’t matter how bad your situation, there’s always support available to help you to get back on track.

Have you seen our recent post where we share our 5 Budgeting Tips for Beginners?

2) Look at where you can cut costs

Now you know exactly what you’re spending, you can start to look at areas where you can cut costs. Usually, our biggest expenses are our accommodation, our cars and our bills, such as gas and electric. These can be a good place to start.

Try using comparison websites to review and compare your bill payments – it can be a great way to make some serious savings.

It can be easy to feel like a few pounds here and a few pounds there won’t make much difference, but even small reductions soon add up and can make a real impact on your budget.

For more information, check out this great article from the Money Advice Service on ‘How to save money on household bills’.

3) Maximise your income

Make sure you’re fully aware and making use of any benefits you’re entitled to. Try this handy Benefits Calculator from The Money Saving Expert.

4) Prioritise paying back high interest debts

Your money is better spent paying back debts with high interest rates, than going into a savings account with a much lower interest rate.

5) Continue to track your finances

Tracking your money on an ongoing basis can often be quite eye opening. It’s also a great exercise when it comes to staying within a budget. When we monitor what we’re spending, we have the opportunity to ask ourselves if it’s really worth it – and that can only be a good thing!

Lastly, don’t forget that the VRS are here to help. If you’re going through a period of financial vulnerability for whatever reason, then registering can be a great way to protect yourself from additional financial harm or anxiety.

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5 Budgeting Tips for Beginners

The start of a new year often reminds us to take a look at our finances and our spending habits. We’re encouraged to set resolutions around saving money, paying off debt or making that big purchase such as a holiday, house or new car.

To many people, this can feel like a far-off dream – and even quite overwhelming, but the truth is that any financial goal starts with how we budget for our household. In this post, we’re sharing a few simple tips to get your household finances in order so that you can reach your financial goals in 2020.

What is a budget?

Put simply, your household budget is a plan for how you will use your income. Your overall income is assigned between your monthly expenses, savings and debt repayments.

Why use a budget?

Statistics show that households who use a budget are less likely to live from paycheque to paycheque. Budgeting allows you to identify financial problem areas before they become serious. A budget also helps you to save more money and to track and stay on target with financial goals.

Budgeting tip 1: Set budgeting goals

Establish what you want to achieve with your budget. This will give your budget both purpose and focus. There are a number of goals that you may want to consider, but the most common are related to:

  • Saving money
  • Reducing debt
  • Reducing stress caused by finances

Don’t forget to be specific with your goals. Instead of ‘saving money’, decide an actual figure that you want to reach – for example, ‘I want to save £100 per month’ or ‘I want to save £5000 for a new car’.

Budgeting tip 2: Calculate your income

In order for your budget to work, you’ll need a starting point. How much money is coming into your household each month? This sum will include any income from jobs, businesses, pensions, investments and benefits etc.

Budgeting tip 3: Create a list of household expenses

Now you know how much money is coming into your household, it’s time to look at your spending habits. This may feel a bit painful at first, but it’s a really helpful process to go through and will give you a much clearer picture of your financial position.
An easy way to do this is to go through a recent bank statement and note down all your regular expenses. Don’t forget to include things like groceries, nights out and new clothes.

You might also want to include an amount for more irregular expenses over the year such as Christmas, birthdays and car tax.

Budgeting tip 4: Calculate your surplus income

Hopefully, your monthly income will be higher than your expenses. If you find that isn’t the case, then take a look at your expenses again to see if there’s anything non-essential that you can cut back on.

You can also look at ways to increase your income, such as overtime or a side business.

If you’re struggling to find a way to make the numbers work, then it’s a good idea to get some advice. Try chatting to your local Citizens Advice Bureau who are trained to offer this type of support.

If your income is greater than your expenses, then this will give you a realistic idea of how much you can assign to your savings or debt repayment goal each month. This is your surplus income.

Budgeting tip 5: Set a timescale

The final step in creating your household budget, is to set yourself a realistic timeframe to complete your goal. If your goal is to pay off £5000 of debt and you can see that you have £500 per month surplus income, then a sensible timescale would be 10 months.

Household budgeting may feel overwhelming at first, but if you follow these steps, you’ll have your budget in place in no time. Good luck!

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Vulnerability implications of the increase in the self-employed

Recent Office of National Statistics (ONS) employment figures showed the rise in the number of self employed people in the last year was greater than the rise in the number of employed people (an annual rise of 195,000 to September, compared with 110,000 employed people). The proportion of all workers who are self-employed is now at 15.1 per cent. For most self-employed people, it can provide increased freedom, control and flexibility, and self-employment and small business ownership plays a crucial role in driving forward our economy.

However, while many of these businesses or individuals are able to flourish, for others it is less straightforward. The reality is that the growing number of self-employed people also means that there is a growing number of people who are potentially earning less, not paying enough into their pension and experiencing cash flow issues that could put them at risk of high levels of debt – the vulnerable self-employed. They are also missing out on employee benefits such as holiday and sick pay, life insurance and income protection. The financial vulnerability of this growing group of workers is an area of concern, and they are a group that the VRS feels particularly well positioned to help, given the flexibility of the register and the ability to add, and remove, yourself as necessary.

Should you, or someone you know be self-employed and facing debt or other financial concerns, the VRS can help you to find some support whilst you need it. As you are able to sign up as and when you require the register, with no impact on your credit rating and no cost to you to do so, it can be a useful source of protection in more challenging times, whilst allowing you to flourish when times are good.

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Support for our Armed Forces community

On this day, Armistice Day, it feels particularly poignant for us at the VRS to pay tribute to the selfless and heroic role that our veterans have played in keeping our country safe. We value the sacrifices that have been made, and remain constantly grateful for their contribution to our security. The VRS believes that veterans should be supported in every way necessary in recognition of this, and hope that the voluntary register, which is free to sign up to, can be one route to achieving this support.

We are aware that there are a number of veterans who struggle with financial vulnerability, or mental or physical health issues which may also impact on their financial affairs. For example, the Defence Select Committee published a report last year which said that cuurent research suggests that the number of veterans with mental health conditions that require professional help could be around 10%.

For this reason, we are honoured to be working alongside Veterans’ Gateway, a fantastic organisation that provides a first point of contact for veterans seeking support, and hope that the service we offer will be able to be of use for some of the people that they advise. Veterans’ Gateway have reported that finance is continually in the top three areas of need, though frequently in combination with another issue, for those using their service. Members of the Armed Forces community can encounter many of the same financial issues as the general population, for non-Service related reasons, but Service life, often starting in very early adulthood, can leave them uniquely financially underprepared.

A recent government consultation, The Strategy for our Veterans, spoke of the need for improved collaboration between organisations in order to offer veterans coherent support, which is the essence of what the VRS are hoping to do. It noted that veterans receiving support from many different organisations often have to repeat their circumstances and historic experiences to each new provider, which can be frustrating for the individual and inefficient for the organisations concerned.

If you know a Veteran who might benefit from contact with the Veterans’ Gateway, or the service that the VRS provide to support the financially vulnerable, we would strongly encourage you to put them in touch. Details about contacting the VRS can be found here.

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VRS Power of Attorney

Planning ahead with a Power of Attorney: don’t wait until it is too late

No one wants to think about what would happen if they lost mental capacity and could no longer manage their affairs. But many people don’t realise that if you don’t appoint someone to have power of attorney when you are mentally and physically capable to do so, it could potentially mean a complete stranger will one day make decisions regarding your future. At best, your preferred representative will have a more complicated and time-consuming struggle to ensure that they can take responsibility for making decisions in your best interests. One of the most common misconceptions around this area is that people assume there is an automatic right for their spouse, or next of kin, to make decisions on their behalf, and deal with their bank accounts and pensions for example, if they are no longer able to do so, but this is not the case.

Everyone knows that we should write a Will, but too few people know that it is also important to consider a Lasting Power of Attorney (LPA). This means choosing another individual, who can be anyone you believe to be appropriate, and giving them the legal authority to look after specific aspects of your financial affairs, or health and welfare, should you lose the capacity to do so. It ensures that even with a mentally debilitating illness, you can feel that you are keeping control by being the person to decide who will take future decisions for you.

It is a depressing statistic, but one that we all need to bear in mind, that by 2025 more than one million people in the UK will have dementia, according to the Alzheimer’s Society. One in five people over 85 already suffers from it, and apparently one person in the UK develops dementia every three minutes. In situations like this, handling your financial affairs becomes impossible, and you need to have decided upon the best person to take decisions on your behalf before it is too late to do so and you are deemed mentally incapacitated.

For, should you fail to do so and there come a time in the future when you don’t have the ability to make or communicate your own decisions, but you haven’t created a LPA, it may be necessary for the Court of Protection to become involved, as only a mentally competent individual can appoint a Power of Attorney for themselves. If you have not done so in time, then the Court can appoint someone to be your deputy, but their powers are very limited compared to someone who has Power of Attorney, it takes time for this to be processed, and there is an annual cost to renew a deputyship.

Once someone holds a Power of Attorney, the VRS are on hand to help them with alerting financial institutions to the circumstances of the individual as and when required, to ensure they are treated appropriately. You can read more information on our website about the process, and the various steps to take, here.

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