Back to school for a timely lesson to help rescue your finances
But now the kids are back in the classroom, there are some ways you can help improve your finances – whether it’s sorting your pension, saving for a rainy day, getting a new mortgage or dealing with debt.
“Parents who have done everything they can to prepare their children for the new school term may feel that they have neglected their own financial wellbeing,” says Rachel Springall, finance expert at Moneyfacts.co.uk. “If this is the case, there are many steps parents can take to rein in their finances and get back above board.”
But you don’t have to be a parent to benefit from these suggestions from Moneyfacts.co.uk.
Plug the pension gap
“It’s vital that consumers seek advice to ensure they have a comfortable pot ready for their retirement, as it will only get harder to plug the gap as they get older,” says Springall.
Depending on individual circumstances, she says someone could potentially build up £30,000 just by saving an extra £100 per month over 25 years. “While this sounds a lot, it may not last long, or could be just a one-year salary for some,” she adds.
Re-mortgage to reduce your monthly repayments
Some borrowers may be sitting on their mortgage lender’s standard variable rate (SVR) after an initial deal has come to an end. But big savings could be made by switching to a new deal.
According to Moneyfacts.co.uk, in early September, the average SVR stood at 4.89 per cent – but the average two-year fixed rate mortgage on the market had a much lower rate of 2.47 per cent.
“Borrowers may also be concerned about economic uncertainties and are looking to fix for longer,” says Springall. “Thankfully, there have been significant cuts to deals in the five-year fixed market, as well as more deals surfacing for even longer terms, such as 10-year and 15-year fixed deals. All in all, borrowers have plenty of choice.”
Shift credit card debts to an interest-free card
Credit cards can be costly – but there are still plenty of interest-free deals available. It’s important to bear in mind any fees for transferring your balance to an interest-free card though, as well as whether you can clear your debt before the interest-free period ends and charges start to apply.
Springall highlights a 29-month interest-free deal which has been offered on balance transfers from MBNA, for a fee of 2.75 per cent. Alternatively, NatWest has been offering a 23-month 0 per cent interest balance transfer deal without a fee.
Consider a low-cost loan to consolidate debts
Springall says some lenders have been offering personal loan rates as low as 2.9 per cent to borrow £10,000 over five years, including John Lewis Finance. Personal loan rates have become cheaper in recent years. Five years ago, the lowest rate for the equivalent amount and term was 4.1 per cent from Sainsbury’s Bank, Moneyfacts says.
Switch current accounts for some ‘free’ cash
Royal Bank of Scotland recently announced it would give £150 to consumers who switched accounts. Other examples of cashback perks include First Direct, which has been offering £50, while new customers who switch to M&S Bank can get up to £180 in gift vouchers when they switch and stay.
Build a savings fund
As well as saving small amounts often yourself, you may also be able to get extra help to save if your budget is very tight. The government Help to Save scheme aims to help eligible people on low incomes to build up a rainy day fund. More information is available at gov.uk/get-help-savings-low-income.