Fight back against high energy bills, rising interest rates, hefty debt repayments and rampant inflation with a few small changes to your lifestyle.
Just because you have your payments under control and you can manage the monthly minimums doesn’t mean you are on top of your spending. Ask yourself how much slack there really is in your finances. What happens if inflation keeps rising or fuel bills leap up again?
Trimming your spending can be the only way to build some security back into your monthly finances. This means kicking some of your spending bad habits. And to do this you need a budget.
Search uswitch to discover if you can save on your household billsChange old habits today… start with a budgetTake the time to sit down with a notebook and make a note of your major weekly or monthly outgoings. You won’t be able to really cut down the amount you are spending until you know where the money is going.
List all the essential items you need to pay first. Mortgage/rent, council tax, fuel bills, phone, credit card payments and insurance policies and food are expenses that have to be prioritized. You can include transport here but think about alternative ways to get to work, like cycling.
However, it is also very important to note down those things that aren’t absolutely necessary expenditure like clothes (beyond the obvious minimums!), entertainment, your daily coffees and sandwiches, takeaways and meals out, cheeky taxis and so on. You will have to monitor how much you spend on these things for a few days, you may well be amazed at how much disappears on this stuff.
Check out our independent savings account best buysBuild up your financial security… not the shopkeeper’sOnce you have allowed for the essential outgoings then you can work out the surplus cash you have left. With the surplus, you could start to save up an ‘emergency fund’ in case the unforeseen occurs such as job loss or illness.
Ideally everyone should have between three and six months after tax income in an easily accessible good quality savings account. This may sound like a lot but the feeling it gives you is worth any number of Starbucks coffees or Prt sandwiches.
At this point it is important to sound a warning note: if you have credit card, personal loan or overdraft debts then you need to consider these before you start salting money away into a savings account. This is because gaining 5% interest on your savings is pointless if your credit card debt is costing you 16%.
Check out our independent savings account best buysCut the interest you are paying on your debts FASTRather than waiting until you have paid off your debts completely before you start saving we advise that you take action to reduce the interest you are paying on those debts and then save while paying off your debt.
If you have a large overdraft or credit card debt you should be able to move it onto a low or zero interest rate credit card. If your credit rating is poor then you may have problems but otherwise you should be fine. Personal loan debt is more difficult due to the early repayment charges many loans levy.
There are a number of credit card balance transfer offers on the market today that allow you to borrow a 0% interest for a year or more. Apply for one of these cards and transfer your existing balance to the new card to save hundreds of pounds in interest. Many credit card providers will allow you to move overdrafts over also.
Find yourself a 0% interest balance transfer offer todayPay off the most expensive debts firstSo once you have transferred as much expensive debt to a 0% card as possible. Then start putting as much off the money you are saving by spending less each month into paying off the most expensive debt remaining. If you’ve got it all at 0% then congratulations… it’s time to start saving as much as you can into a
instant access account or - better yet - a
tax free mini cash ISA.
Once you have got your savings habit well and truly rolling you can start to shop around to cut the cost of the other financial products you already buy, whether it’s insurance, a mortgage or whatever. Don’t forget to keep paying those debts though.
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