Things have changed so much in the past ten years – and the way we relate to our finances is no exception. So this Christmas, we take a look at the biggest money developments over the years and ask: what can we learn for the 2020s?
So that’s it! Christmas Day is almost here, and we’re fast approaching the end of 2019 (and a whole decade). Woah, that went quickly!
So how was the past ten years for you? A-MAZING, I’m sure…except, maybe, when it came to money? Or perhaps you absolutely smashed it out of the park when it came to your finances…if so, maybe you should be running this blog instead of me!
The truth is that we could all do with reflecting on our relationship with money this Christmas and New Year. None of us are perfect, but money still remains a huge blind-spot for most people. And some might say that’s because being good with our finances has never been more tricky. Today, there are endless ways to spend and borrow money, but not many ways to save and invest for reliable rewards.
Others might say the rise of tech has made money management easier and more egalitarian than ever. But in truth, tech is only as good as we make it.
Either way, the start of a New Year (and indeed a new decade) is the perfect time to look back on the so-called teenies and ask: is there anything we can learn so we can absolutely OWN our finances in the next decade? There sure is! So here we go.
Spending got a LOT easier. Dammit…
Cash is fast becoming the stuff we’ll tell our grandchildren about (we used to carry around coins and notes in things called wallets! Yes, really!)
The teenies was the decade that we started using debit cards – and specifically contactless debit cards – for EVERYTHING. Just tap and go, baby.
Unfortunately, that made us all far more likely to spend more, bust our budget and go into debt. When money becomes totally virtual, it’s tricky to get a handle on its REAL value.
So as we go into a new decade, make sure you’ve got a grip on your spending. If you use contactless cards, at least make sure you also have an app that allows you to see your spending in real time, and categorise it so you know exactly where all the money is going. And maybe, just maybe, take some cash out once in a while to keep the spending in check. Just a thought!
…and so did borrowing! Oh dear oh dear oh dear
At the beginning of the teenies, thousands of young people were taking out instant, so-called ‘payday’ loans with hardy any credit checks. That didn’t end well, with dozens of lenders going bust and lots of borrowers getting into huge debt.
Towards the end of the decade, we started seeing a new debt danger: the rise of buy-now, pay later schemes like Klarna. These allow you to buy something without actually having to pay for it straight away. You can get it delivered, see if you like it then send it back without having to return any money. But if you keep anything, the bill’s due in exactly 30 days, and late payment will hurt your credit score, and therefore your borrowing prospects, in the future.
So before you click on the cute pizza icon at the checkout, think. Would you still buy this if you had the money? Do you really want ot need it? Fast fashion, fast beauty, fast interiors – they’ll all fast fun, but damaging to the environment and sucking you into shopping for its own sake. Don’t fall for the marketing and hype: buy now, pay later is not there to help you but to increase the profits of retailers. Stick to buying what you can afford right here, right now.
Overdrafts are also getting a LOT more real from May next year. New rules mean banks have to be much clearer about the true cost of going into the red. So you might get quite the shock when you realise just how much you’re ACTUALLY paying to use that extra bit of your balance. That means 2020 is the year to try and break up with your overdraft for good. It’s also an opportunity to take advantage of interest-free offers on credit cards to pay down your balances and get those monkeys off your back – once and for all!
Your phone got way better at handling money
The teenies was the decade that the smartphone took over the world. And our finances! The digital revolution has changed the way we bank, save, shop and invest. At the beginning of the decade, not a single bank offered an app: it was all about desktop banking (old-school!) Today, we have a huge range of banking apps, most of which offer a range of neat features that embrace something called “behavioural economics”. This is a field which explores how people REALLY behave when it comes to money, then offers ideas for products and services to help us, help ourselves.
A really great example of this is the “round-up” savings feature, now available through most banking apps. These round up the amount you spent to the nearest pound and transfer the difference from your current account into a savings account. You may be able to choose to round up every week or month and you might be invited you to set up a standing order to put some spare cash away specifically on payday. These apps are a game-changer for those who find active saving too difficult and well worth checking out next year, if you haven’t already.
If you want to take things to the next level, you can now link your account to a chatbot like Plum or Cleo. It will analyse your spending, help you budget, flag up spending weaknesses (mine are beauty products!) and decide how much you can save and when to do it.
Social media dominated our lives
At the beginning of the decade, it was all about Facebook and Twitter. By 2019, Instagram, YouTube, Snapchat and TikTok took over, partly thanks to the rise of influencer culture. Yes, celebrities like the Kardashians and the cast of TOWIE got in on the act, but so did ordinary people who rose to incredible Insta-fame, like Mrs Hinch. But as a new decade arrives, it’s important to keep influencers and their commercial activities in perspective. Numerous studies have shown a link between excessive time spent on these apps and mental health problems.
It’s hard to see people who appear to have a better life than us, and this subconsciously influences us to spend money than we can really afford. Always remember that social media tends to present the edited highlights of other peoples’ lives, not the messy reality. Keep it real and resolve to live more IRL: it’ll do your finances (and your peace of mind!) the world of good.