The following is a transcript of a bonus podcast episode of The Pension Confident Podcast. Listen to the episode or scroll on to read the conversation.
PHILIPPA: Hi, welcome back. For this special bonus episode, we’re looking at how automation can help you manage your personal finances. Standing orders, calendar reminders and of course apps - they can all save us time and make sure we keep our payments and our savings on track. So what might work best for you?
I’m Philippa Lamb - if you haven’t subscribed yet why not click right now and never miss an episode? And before we get going, here’s the usual disclaimer: please remember that anything discussed on this podcast shouldn’t be regarded as financial advice or legal advice. When investing, your capital is at risk.
1. Establishing good financial habits
PHILIPPA: So, automating your finances, and first up, here’s Financial Advisor and Author, Bola Sol, from episode 37, talking about how automation is great if you’re keen to establish good financial habits.
BOLA: Wherever you can automate money and contributions to your pension. Yeah, I’d say that’s key. And potentially, if you can add more in manually yourself, maybe set quarterly reminders on top of the automation, that way you have two different sets of reminders. One that’s happening automatically and one where you can say, “oh, I wonder, do I have a bit more money at the moment to put in?”.
PHILIPPA: I do that. Calendar reminders, that simple. It’s a nice idea, isn’t it? Set them for weekends, though, because if you set them in the week, you don’t do it. I speak from experience here because life gets busy. And then before you know it you’ve forgotten about that calendar reminder.
2. Sharing expenses
PHILIPPA: Automation can also take some of the awkwardness out of sharing expenses with loved ones too. Here’s Brooke Day, Head of Brand and Communications at PensionBee, back in episode 27.
BROOKE: So whenever I’ve gone on big group trips, we’ll use an app called Splitwise, and I’m sure there’s many others.
PHILIPPA: Oh, yeah.
BROOKE: And so then it takes away the awkwardness of, I guess sometimes you feel like if you’re owed £10 by the end, you don’t really want to ask for it. When everyone’s putting all of the different expenses on there and who bought things or shared things with, it rounds it all up and at the end, it splits it. So everyone gets what they put in. So some of my friends will like to go away with no cash, but they know, “oh, it’ll all be figured out towards the end”. Whereas I think I’m a bit more like, I like to know what I’m going with. But then equally, I’m going to get some back later on. So win-win from the situation.
3. Automation and credit scores
PHILIPPA: In episode 31 we chatted about credit scores and how vital it is to understand how your financial behaviour can impact your score. Here’s Financial Content Creator and Author, Clare Seal, remembering how automation helped her keep her finances stable at a really busy time in her life.
CLARE: It’s a really good idea to check your report if you notice a sudden change in your score. And this is why I check it every month. So I’ve got a 15-month-old daughter, and when she was born last year, fell over when a repayment was due on a small loan that I took out when we moved house a couple of years ago. And on the day that my daughter was born, I hadn’t done that.
PHILIPPA: You had your hands full though, didn’t you?
CLARE: I did, and my loan payment bounced.
PHILIPPA: OK.
CLARE: The next day, I phoned up and made it manually, but -
PHILIPPA: The next day, after you’d had your daughter?
CLARE: I did, yeah.
PHILIPPA: It’s impressive, isn’t it?
JOHN: That’s keeping control of your finances.
CLARE: She was - Well, this is, this is because I have everything set up to notify me on my phone, you see?
PHILIPPA: Understood.
CLARE: Also, she’s my third. So it was very much - It was par for the course.
PHILIPPA: No problem.
CLARE: But in the window between when the payment bounced and when it was made, the monthly submission of information to the credit reference agencies had happened.
PHILIPPA: OK.
CLARE: And it’d been recorded as a missed payment. And so I noticed then, a couple of months down the line, that my credit score had tanked, even though -
PHILIPPA: Really tanked? Just over that?
CLARE: Really tanked. But because I noticed that, I called my loan provider. They said, “Oh, this is what’s happened. I’ll put a note on your file. If you contact all the credit reference agencies with a query, we can let them know”. And so I did that. I submitted a form on each of the three. It took -
PHILIPPA: Fiddly?
CLARE: It was fiddly but it took 45 minutes, and it meant that that information was wiped from my files.
4. Boosting your credit score
PHILIPPA: And from that same conversation, here’s a credit score expert - John Webb, Consumer Affairs Manager at one of the big credit score providers, Experian. In this clip, he’s talking about how you can use automation to help boost your score.
JOHN: There’s loads of ways to do it. But actually, the first thing I’ll say is be patient. These things don’t happen immediately. If you’re renting, you can share your rent payments with Experian, so you can add that information to your credit report as well. That will help if you’re making your rent payments on time regularly. We also have something called Experian Boost, where if you’re paying for certain things like digital subscriptions, Amazon, Netflix, Spotify, if you’re paying for your Council Tax regularly, if you’re paying into any savings regularly, you can get that information included in your credit score.
PHILIPPA: How do you do that?
JOHN: So it’s open banking. So you connect your bank account securely. We only scan for those transactions, so things like Amazon Prime, for example.
PHILIPPA: OK.
JOHN: And then you can boost your score by up to 101 points. That’s really great. If you’re looking for credit, your score is not particularly great, and it can unlock other lenders and other deals that are there. But the process of, you know kind of, building it up over time, making it look a bit better, is fundamentally, make your payments on time and try not to get into too much debt. So your outstanding borrowing will have a big impact on that. And if that’s why your score is low, work on a plan to bring it down over time.
5. Stress-free retirement planning
PHILIPPA: Now, onto pensions. Here’s Financial Journalist, Faith Archer, from episode 32 explaining how automation can take the stress out of retirement planning - especially if you work for yourself and you don’t have an employer doing the heavy lifting for you.
FAITH: I’m a big fan of pensions and I do pay a lot into mine.
TIM: But are you behaving optimally? Are you just behaving in a reasonable way, in a way that you think is making a really informed decision that you’re not going to regret? Or are you worried about making the pure, optimum decision? Because I think if you sit there trying to work out the exact right answer for yourself, you might be sat there a long time. So, I like to take the pressure off and think about it.
FAITH: I think the bit I worried about was choosing which pension because I’m self-employed, so I don’t have a boss to choose a pension for me. I think there are a lot of self-employed people that I’ve talked to, and it’s that decision about which pension company should I go with.
PHILIPPA: Yeah, I’m in the same boat. It’s all you, isn’t it? If you make a bad choice, it’s your fault.
FAITH: That can set up a huge hurdle to actually make your choice in owning a pension. But I think once you’ve opened it, once you’ve made that decision, then it’s much, much easier to pay money in. You can also use those things too, I call it “saving despite yourself”. If you set up a Direct Debit so that the money goes into your pension every month, you might be really surprised at how quickly that money adds up.
6. Financial personalities
PHILIPPA: We all have our individual financial personality and that can play into how we manage our money. Here’s Emma Maslin, Financial Coach and Founder of The Money Whisperer, chatting to Rotimi Merriman-Johnson, Founder of Mr MoneyJar about how important it is to understand what’s going on in our subconscious and how we can help ourselves make good financial decisions.
EMMA: There’s so much shame around money. Quite often because we see how other people are doing things and we feel that we should. There’s so much ‘should’ in the personal finance space. “You should do this, you should do that, I should be like that person”. No, you are you, you’re navigating life through your lens and your lens is a product of your education, your experiences when you were young. Knowing that’s so important because it really helps you lift a lot of that shame. Say, “if I can understand who I am, I can best navigate my circumstances in a way that feels good to me”. And a lot of the work I do is actually around the nervous system because when we feel outta whack, when we’re pushed outside of our window of tolerance, we might go into fight or flight mode.
Actually, we become somebody whose brain is operating from our subconscious. It’s not the rational part of our brain, which can say, “I should save, a pension’s a good product, my budget is my saviour”. All of that goes out the window when we’re operating from our animal instincts. What drives the animal instincts is those scripts that were developed when we were young to the extent that they’re maladaptive, to the extent that they’re saying something like, “money is secretive or only greedy people can be rich”. If you have that as your loop that’s running in your brain, you’re not going to become an investor. Actually, we need to learn how to regulate our nervous systems, which is really difficult in modern day life, so that we can make practical decisions from a rational standpoint rather than being emotionally driven.
ROTIMI: The way that I’ve been able to get over the nervous system point’s automation. When it comes to saving, just set up that standing order to your separate savings account and let it run.
PHILIPPA: It’s not a decision, it just happens?
ROTIMI: It just happens using budgeting software which automatically categorises your spending. You just need to review and check it. I do that every week. I like relying on tools and things outside of me, systems that can help me make good decisions.
PHILIPPA: Interesting isn’t it? And easy to do. If you’d like to find out a bit more about automation and personal finance, head to the PensionBee website for blogs, videos and explainers.
You can listen back to all the episodes we’ve highlighted today in full wherever you get your podcasts - just look out for episodes 13, 27, 31, 32 and 37. We’re on YouTube and in the PensionBee app too and while you’re subscribing you could even give us a rating and a review! It’s really quick to do.
Just a last reminder before we go that anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. When investing, your capital is at risk.
Thanks for listening.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
