Once again New Year’s resolutions are being drawn up – maybe to join a gym, go on a diet or take up a new hobby.
One resolution that is beneficial to make every year is to review your household finances. You can easily improve your financial position with some straightforward steps:
1. Be a smart borrower. After the binge in spending around the festive season you may have built up debts on your credit cards. Interest rates on credit cards are sky high. Try to pay down these debts as quickly as possible, if necessary using a cheaper short term bank loan. Some credit cards do offer 0% interest rates for a time, but after these ‘teaser’ deals end the interest rate goes north. Latest data show credit card debts rising quickly in Scotland – buck the trend by lowering yours to zero.
2. Turn the heat up on your energy providers. Households from Shetland to Dumfries should add this to their list. Ask your existing suppliers for a better deal, and do comparison price checks online. Switching is quick and simple and usually a sure-fire way to save money.
3. Don’t double up on tech spending. Review the deals you have for your smart phones and internet services. Do you need extra phone insurance, or is it already covered by your bank account or home insurance? Would it make sense to have a ‘SIM only’ mobile deal? Can you get Wi-Fi cheaper elsewhere?
4. Spring clean direct debits. Over time our lifestyle changes and we move on from the things we used to do, like going to a gym, or using Amazon Prime. Do a bank account spring clean and sweep away those direct debits for things that are history as far as your current lifestyle is concerned.
5. A bank account is not a lifetime commitment. Be prepared to switch your current account. It’s simpler than you think and, as banks fight fiercely for customers in this market, you can get a great deal that pays you a high interest rate and even cashback.
6. With major purchases timing is everything. Retail is increasingly competitive and sales are becoming the norm. Do not buy major items for full price. For really big items, like white goods, try haggling the price down. It doesn’t come naturally to a lot of people, but it can be fun!
7. Have a financial backstop. Try to ensure you have a pot of savings to deal with life’s uncertainties – like your washing machine breaking down. Aim to have at least £1,000 in savings for each adult in the household. Doing this gives you financial resilience and ensures that a mechanical nightmare doesn’t turn into a financial nightmare.
8. See what people are writing about you. You can check your credit files for free. Go to Experian, Equifax and Callcredit and see if there is anything on your files that is wrong or may be adversely affecting your credit rating.
Your rating may be marred by things that don’t directly relate to you – for example financial matters relating to a former partner!
9. Save the planet as you save money. Try to cut out wasteful spending – three fewer coffees a week can save you around £500 a year. This can help you build up that resilience fund and help save the planet too by reducing plastic waste.
10. Get free financial education. If you are really serious about becoming financially savvy in 2019, why not sign up for the Open University’s award-winning financial courses at www.open.edu/openlearn. For grown-ups there is ‘Managing My Money’ and young people can begin early with ‘Managing My Money for Young Adults’. These short courses are free, so won’t impact your budget or ability to undertake any of the steps above!
Martin Upton is the Director of the True Potential Centre for the Public Understanding of Finance (PUFin) at the Open University Business School. Previously he was Treasurer of Nationwide Building Society.