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11 Ways Brexit Has Affected Online Shopping

11 Ways Brexit Has Affected Online Shopping

Uncertainty.

There is only one certain thing that has come from the Leave vote — it’s certainly uncertain what will happen next.

But just minutes after the Brexit vote, we did see changes. And almost all of those charges are great for online shoppers — especially those who are looking for terrific deals.

1. Your Pounds Buy Less Outside Britain

Immediately after the news broke that the Leave vote had won, the British pound fell dramatically in value. This means the pound isn’t as valuable as it previously was compared to other currencies.

Therefore, if you’re looking for great deals, don’t look outside of Great Britain. Your money will buy you less when you spend it in other countries, at least for right now. But there’s good news about the pound.

2. Bargains Abound

If you shop in the UK, those same pounds that have been devalued will buy you quite a bit more than you might expect. It’s not just the money in your bank account that has lost a bit of value. Prices have had the same reaction to the dropping pound.

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This means stores, especially faced with the uncertainty of Brexit, have adjusted some of their prices to account for the falling currency value. This is true of some brick and mortar stores, but even truer of online purchases. Online retailers can adjust to a currency downturn immediately, and they have.

Many of the best bargains are on UK websites you might not have shopped on previously because of high tariffs and taxes. Those tariffs and taxes don’t bite quite as much now and prices are falling.

3. Your Foreign Currency Buys More

If you’re living outside of the UK and working in a different currency than the pound, you’re in the best position of all. The pound has fallen against the dollar and other currencies, so shopping in dollars saves you even more.

This is, again, especially true for online shopping, as they have had the most dramatic price fluctuations as the pound has fallen. Seek out the British Amazon, for example, to find great deals on items priced in pounds.

Granted, there are often high tariff and shipping fees for online purchases, so be sure to include those costs into items you’re purchasing. Even with those tariffs, you’re still likely to come out ahead. But you can save even more if you’re outside of the UK by using a shipping company to buy up items and ship them for less.

4. Cheap Prices Are Short-Lived

Immediately after the Leave vote, the pound fell dramatically. It has continued falling for a bit, but is now showing signs of stabilizing as some of the uncertainly passes. There will be additional shocks to the currency system as the UK actually splits from the EU. This will be a rather drawn-out process, and it’s very likely that the currency will stabilize and begin to rise again.

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For savvy shoppers, this means that the online deals are great right now, but they may not stay that way in the long term. The longer the pound stays devalued, the longer the low prices stick around. But once the pound begins rising again, prices can be expected to go right up again, too.

5. Electronic Prices Will Rise

Not every item will drop in price during the Brexit uncertainty period. Electronics may actually become more expensive. Very few electronics are made in Britain, so companies outside of the UK must make some adjustments in their pricing in the UK to account for the fallen pound.

HP has recently raised prices in the UK 10 percent across the board to compensate for the weaker pound. Dell has made a similar move, raising prices to be sure the cost of manufacture and import are covered in the retail price. The best bargains here are not going to appear until the pound strengthens against foreign currencies again.

6. Digital Products Are The Best Buys

Of all of the online shopping deals to be had, the best are the digital products sold on UK websites. Selling physical items on websites still requires some form of inventory or controlled costs for moving tangible products.

Digital products, on the other hand, are not tied to shipping or holding costs. That means there are constant fluctuations in prices of music, digital books, software, game, and apps. Lately, the items that are sold in pounds have fallen, leaving plenty of bargains to be found on the UK versions of Amazon and Steam.

7. No Risk of Import Issues with Digital Purchases

Every physical purchase made online may be subjected to import taxes and duties. It’s a cost you have to factor into the online sales of actual items, but it’s completely non-applicable to digital products that are purchased in the UK.

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Immediately after the pound began falling, gamers and savvy online consumers switched their home counties to the UK on their App Store and websites like Steam. Terrific bargains have been found in digital products priced in pounds, and there is no risk of duties since the digital products are purchased and downloaded, not purchased and shipped.

8. Import Taxes Could Rise

Many of the best bargains for those living in the UK are going to be short-lived. As the UK moves forward in separating themselves from the EU, they can expect two things: inflation if the pound remains down and higher import taxes from the EU.

One benefit of being part of the EU was the elimination of import taxes between EU countries. With the UK no longer part of that legal entity, there will no longer be an EU trade agreement. It’s logical to assume that import taxes will return on items that are manufactured outside of the UK and shipped in. This will include everything from candy bars to electronics.

9. UK Shoppers May Pay More Down the Road

Import taxes aside, as the value of currency falls, deals are to be found immediately in the uncertainty. But prices won’t stay depressed for the long term. The devaluation of currency will eventually lead to a round of inflation where pounds go shorter distances in buying popular and everyday items.

For the savvy shopper, it makes sense to buy items now while prices are low rather than wait for better deals down the road. It’s very likely that those better deals simply won’t be forthcoming — at least not for a while. On the other hand, those shopping in the UK with stronger currencies other than the pound will be able to buy more now and potentially into the future as well.

10. Online Clothing Will Drop in Price

Leaving the EU may raise the price of some goods that are subject to import taxes and tariffs, but other items may fall a bit in price. A report in 2013 by the House of Commons library found that EU membership appears to increase the price of consumer items like clothing.

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It follows that being out of the European Union will lead to a drop in clothing prices as the UK will no longer be subject to the same requirements as other countries. This price drop will be seen first online as internet prices tend to be more responsive to sudden changes than brick and mortar stores with more fixed costs.

11. Powerful Vacuums Are an Option Again

In one rather amusing example, Brexit will actually free up some purchases for UK shoppers. As members of the EU, Britain was required to follow requirements of that entity. In 2014, the EU banned “powerful vacuums” over 1600 watts in a bid for the environment.

The restrictions are scheduled to tighten up in 2017 when vacuums over 900 watts are forbidden in the EU. Fortunately, if you’ve been in the UK dying for a Dyson or Miele, your time has come. There’s soon to be no rule blocking the most powerful vacuums for UK residents.

Likewise, if you smoke menthol cigarettes, you’ve dodged a bullet as well — those are to be banned by the EU in 2022.

While there is certainly uncertainty about the future of the EU and Britain, in the meantime there are bargains to be had! Prices may shift as currency valuations change and Britain formally splits from the European Union, but for now, at least, consumers are coming out ahead.

Featured photo credit: Unsplash via hd.unsplash.com

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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