What's your financial faux pas?
Get your cashflow back on track in next to no time with our top money-saving tips
Let’s face it – we all want to make life that little bit more affordable. So whether you’re saving to buy a house, have a little one on the way or simply want to boost your pension pot, there’s no better time to start thinking about safeguarding your finances.
‘People often push finances to the back of their mind, thinking ‘‘I’ll deal with it when I get there’’, says Anita Naik, consumer editor forvouchercodes.co.uk. ‘And then find they can’t get a mortgage, or get married in the way they want, all because they didn’t start saving when they had the opportunity,’
Wanting security for the future is one thing, but most of us are guilty of everyday cashflow slip-ups that can have a long-term effect on financial stability. With new research showing that one in seven of us take on an extra job just to keep our heads above water, we’ve put together the most common money mistakes and asked the experts to come up with simple fixes. Break bad habits and beat financial pitfalls with these cash-savvy solutions.
You can’t stick to a budget
Solution: Budgeting may be boring, but if you want to build any sort of financial freedom it’s the first place to start. Begin by keeping a record of your daily expenditure and you’re sure to make some big savings as a result. ‘Carry a notebook or log it into your smartphone. This enables you to see what you’re spending your money on, work out what you have left to spend each day/week and identify your spending triggers (Lunchtime? Online at night? At weekends?),’ recommends Anita.
It’s important to get realistic about your regular pay-outs, too. ‘You’ll be surprised at how many payments you hadn’t accounted for when figuring out how much you have left in your monthly wage,’ continues Anita. After figuring out your monthly outgoings you’ll be in the perfect place to start making tweaks for the better. ‘You will need to review your plan and be flexible while you get used to what works for you. Too strict a budget is no good as it just means failure; likewise, too big a budget is useless if it doesn’t suit its purpose.’
You don’t plan ahead
Solution: Spring often signals a fresh start, so there’s no better time to re-evaluate your bank balance. The good news is that there are many ways to foolproof your finances for the future and making sure your credit score is good is essential. Your credit rating has a massive impact on what you can do financially – from taking out loans to getting on the property ladder. Build up your score by making sure you’re on the electoral roll, space out applications for credit cards and keep up to date with monthly bill payments. Want to make sure you don’t go into the red? ‘Another way is to keep a spending diary,’ says Anita. ‘It sounds dull but there are apps that will do this for you, like Spendometer (free from iTunes). This app makes day-to-day money management simple. It enables you to set yourself a budget, log all your spending and review your spending reports,’ she adds.
You’re a secret spender
Solution: One in 10 people admit money matters have been the cause of a relationship break-up, while a surprising 15 per cent of us confess to lying to our partners about our credit card purchases, according to a study by comparison site moneysupermarket.com. Consider yourself a financial fibber? Splurging on stuff you don’t need and then hiding it from your other half breaks the trust in your relationship, so ask yourself, is any designer handbag really worth that? Sacrifice a couple of guilty pleasures and not only will your bank balance flourish, your relationship will, too. And be aware that secret spending can be a sign of something deeper. ‘Either you have a treat mentality, where you feel you “deserve” something for X, Y and Z in your life, or you spend to feel better emotionally,’ says Anita. ‘Aside from the guilt you feel and the impact of getting found out, if you do end up accumulating secret debt your spending habit could have a serious impact on your partner financially. If your spending is secretly racking up debt, or you are not even using what you buy, then it’s a sign you need to seek advice and help for your habit,’ she advises.
You’re not money savvy
Solution: Get smart! We all want to live a nice lifestyle, but cut a few corners and you can save a huge amount of dough. Thinking of signing up as a member at your local gym? Tread carefully! Before committing to an annual gym membership, use trial vouchers to help make your decision. Think realistically about the facilities on offer and which ones you’ll actually use. Access to things like a swimming pool and fancy sauna and steam room will substantially drive up the monthly cost, so make sure you don’t pay above the odds for facilities you can do without. Pay-as-you-go gyms are a great alternative to annual memberships. Although the facilities are often basic, these gyms are great if you’re on a budget as you don’t have to commit to an annual upfront fee. Want a whole new spring wardrobe? Swap the high street for vintage second-hand stores and trawl car boot sales to get bargains that don’t cost the earth. Debating going for the chop? Forking out for a haircut can be hefty on your wallet, so do your research and take advantage of training days at high-end salons where you can get a new ’do by a trainee stylist at the snip of the usual price.
Solution: Whether you’re late paying your credit card bill or don’t bother doing your research when it comes to insurance policies, being lazy will cost you big time. Avoid enormous annual premiums by shopping around for quotes on the best policies and sidestep high interest rates by setting monthly reminders on your phone to alert you when bills are due. Another way to streamline your bank balance is to ditch the credit card and shell out cash instead – that way you know exactly what you’re spending. ‘Paying by card doesn’t have the same psychological impact as literally handing over money,’ explains Anita. ‘Dealing in cash gives you a much clearer idea of how much you’re going through daily. Take £20 out for the day and it’s likely you’ll be shocked at how much is left by 6pm. If you know you need flexibility to spend more on some days than others, set a weekly budget and get out cash to that amount,’ she suggests.