Why Scrapping the ISA Scheme Could Hurt Students. Here’s What You Can Do About It…
The recent decision by the Labour Party to scrap the proposed ISA scheme, which would have allowed tax-free investments of up to £5,000, is a missed opportunity for those who are already struggling with the rising cost of living.
This scheme could have offered young savers a real boost in growing their wealth, encouraging early investment in the UK market.
Let’s not dwell on this. How can we turn this into a learning opportunity?
Why This Matters for Students
For some, every penny counts. Whether it’s budgeting for tuition, rent, food shops, or even social activities, financial pressure is real.
The British ISA scheme was an exciting proposition because it would have provided a tax-free incentive for young people to start investing. In an era where student loans, interest rates, and debts are increasing, creating wealth early can be a game changer.
Without this scheme, it’s just yet another reminder that students need to rely on their own financial literacy.
But whatever let’s look at our options.
A Mindset Of Action: What You Can Do Instead
Even though the ISA scheme has been scrapped, there are still other ways students can grow their wealth and make smart financial decisions.
Here are some alternatives worth considering:
1. Lifetime ISA (LISA):
A good option for students looking to save for a first home or retirement.
With a 25% government bonus on contributions up to £4,000 per year, it’s essentially free money.
BUT, it’s not flexible. You can’t just take money out as needed.
This is a long-term investment - a solid alternative.
2. Stocks and Shares ISA:
If you’re looking for more investment freedom, this type of ISA still allows tax-free growth on investments.
You can invest up to £20,000 tax-free!
And, there’s flexibility! Take out money when you need it, but do it in advance. Brokers need to settle your investments before they can transfer your earnings. Expect a 2-5 working day delay.
The key is to start early and invest in the long term. Compound interest can work wonders when you give it time.
3. Peer-to-Peer Lending:
Platforms like Flippa offer students a way to invest in businesses and earn higher interest than traditional savings accounts.
However, be cautious—this option carries higher risk, but it can also come with higher rewards.
If you’re entrepreneurial, like us, this might be the move for you.
Remember, things you see being flexed on Instagram took time to earn, don’t be fooled by the facade.
4. Robo-Advisors:
If you’re new to investing and don’t know where to start, robo-advisors like Nutmeg can make investing easier.
These platforms use algorithms to manage your portfolio based on your risk tolerance and financial goals.
Plus, some have low minimum investments, making worth considering for students.
But, as always be cautious.
The Smart Spenders Take
At Smart Spenders, we’re all about taking control of your financial future.
The government might not always have the best options in place for students, but that doesn’t mean we’re powerless. You can still build a strong financial foundation—no matter what policies come and go - if you don’t have a victim’s mindset.
Some questions to think about before you head off:
Is putting money aside every month something you can sustain?
Are you really disciplined enough to stick to a budget, day in & day out?
If the above answers are no, it’s okay.
You’re doing the best you can, and that’s all that counts. Comparing yourself to others is a recipe for disaster. Take a moment to figure out if you have the time to take on another job, start a side hustle, or reduce your current expenses.
Stay tuned for more practical tips, real advice, financial tools, and strategies to help you navigate the sometimes confusing world of personal finance.
Note: We are continually improving, we’ll be posting as often as possible, and adding to previous blogs!
