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So you’ve decided you want to improve your financial future and get a handle on your money – brilliant! But where do you start?
If you’re a budgeting novice, the world of Personal Finance can seem overwhelming, but it doesn’t have to. Focus on taking it one step at a time and doing a little each day. Once you get into the swing of it, those little steps will snowball and before you know it you’ll be handling your money like a pro and wondering why you didn’t start sooner.
Not convinced? Here are 10 things you can do today to improve your financial future.
Having a budget is the first step to improving your finances. It doesn’t mean depriving yourself and saying you can’t spend anything but it gives you clarity on where you stand money wise – you’ll know what’s coming in and what’s going out so you’ll know how much is left over or what your shortfall is each month. Once you know this, you’ll be able to focus on cutting expenses and/or increasing your income.
Having a budget doesn’t have to be a complicated exercise, just deciding to start will put you in a better position. You can read my three part series on how to build a budget from scratch here.
Grab your phone, your diary or your calendar and let’s get organised! Write down all your renewal dates for insurances (car, house, pet etc) so that you know when you to start shopping around and it is not left until the last minute. Slotting these dates into your diary also helps if you decide to start saving into sinking funds.
Next look at your car – make a note of when the tax runs out, when the MOT is due, when it needs a service, any breakdown cover you have etc so that you can budget for any maintenance and repairs that might be required.
When was your boiler last serviced? Have your fire alarms been checked? Do you have any appliances in warranty? Make a note of any relevant dates. Maybe you’ve been meaning to add an item to your insurance policy. Get it all down on paper and tackle that to do list. It’ll save you money in the long run!
Note the household’s last dental and optician appointments, any vaccinations your pets have had/need. If you are with an NHS dentist and you don’t maintain your appointments you can be kicked out, which could then be costly if you need an emergency dentist, so ensure that your appointments are all scheduled in.
How much council tax you pay depends on your local authority, but there are a number of circumstances you could receive a discount – single person, students, carers – head to your local council’s site to check. Some councils even offer a discount if the annual bill is paid in full rather than monthly instalments.
You might also be able to get your home rebanded if it’s had a major decrease in value.
There is a scheme called WaterSure which could get you a reduction on your water bill – eligibility depends on whether you receive certain benefits – but if you have a health condition that requires excessive water usage, you might also be able to claim help.
If you’ve never claimed benefits before it can all seem a bit daunting and overwhelming, but that doesn’t mean you shouldn’t check if you are eligible for any help. If you are a parent, you are eligible for Child Benefit – even if you’re working.
To find out what you could be entitled to, head to this website.
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Are you paying a monthly charge? What does it actually get you and is it worth it? Circumstances change but a lot of the time we’ll stay blindly loyal to our bank accounts even if it’s not in our best interest. Most banks offer a free appointment with an advisor to review and see if you’re on the best account for you.
If you pay for banking benefits, are you aware of what they are and are you using them? Check the terms and conditions of each benefit – you could be paying elsewhere for benefits you already receive. For example my bank account offers the following benefits:
· Mobile Phone Insurance
· Travel Insurance
· Breakdown Cover
· Tastecard Membership
· Cashback on bills
I didn’t realise however, that my mobile insurance covered 2 handsets – meaning both Luke and I could be covered on one policy. My travel insurance also covers my spouse – and you don’t even have to be married, you just have to be living at the same address – so this saves us taking out individual policies when we go away. My breakdown cover also covers me both ways – any car I am driving, or anyone who is driving my car. This proved useful when my car broke down at the gym and I had to get to work because it meant Luke could hang around and sort it out for me.
If you’re not getting the most out of your bank account, you could think about switching to another provider. Lots of banks offer rewards for new customers who switch to them, and most of them handle the switching process for you too meaning you don’t have to stress about transferring all your bills etc across. This page on MoneySavingExpert compares the best bank accounts and the bonuses they offer.
Get all your information together – how much is owed, to who, interest rates and minimum payments etc. It is easy to bury your head in the sand and blindly pay minimums each month but by doing so you could be paying your debts off for a very long time and incurring unnecessary interest.
Play around with this calculator – it’s a real eye opener.
Once you have all the information you can formulate a debt free plan. Personally, I would tackle the highest interest rate first and put every spare penny to that – if possible doing a 0% balance transfer to interest charging balances.
Even if you’re not planning on applying for credit now, it’s important to ensure that your report is in order and there aren’t any mistakes. A few months ago, I received an email notification regarding changes to my report which was odd because I hadn’t applied for any credit since getting our mortgage. Turns out NatWest had performed 2 searches and there was an application for a Very Account. I contacted NatWest to get the searches removed (which they were, and I was compensated) but the worrying one was the Very – it was at an old address with a completely random date of birth and was clearly fraudulent. Luckily, the account wasn’t opened, but if I hadn’t checked my report, I’d have been none the wiser.
Check your address history is correct and up to date, filling in any gaps and ensuring the dates are correct. If you’ve moved home a lot, like me, it’s easy for this to get muddled up so make sure it all makes sense.
Seen something on your report, that doesn’t make sense or you don’t agree with? Dispute it! My NatWest issue came about when I was opening an account online BUT I did not complete the application. Yet somehow, they performed not one, but two searches. In all fairness, the issue was quickly resolved but two searches in close proximity could have a detrimental effect on your credit worthiness.
You can also dispute late payments by contacting the company directly and asking for it to be removed – obviously, you need to provide evidence to back up your reasons why you feel it should be removed and they won’t always agree to do it, but it’s worth a go. Back in my housesharing days, all our names were on the bill but one person was responsible for paying it. Needless to say, they didn’t pay it on time and subsequently a late payment was added to my file. I wrote to the supplier with copies of my bank statements showing the transfer for ¼ of the bill amount with the reference ‘April Gas’ (for example) and they did remove the late payment from my file. Even if they don’t remove it, you can add a Notice of Correction to explain how it occurred.
Even if an account has a zero balance, it still shows as a credit account on your file. Once you get the account balances to zero, close them down. This will also prevent you from adding more debt to them in the future.
Being on the Electoral Roll has a positive impact on your credit file, so if you are not already registered to vote at your address, do it!
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You can register with Gov.uk online and log in to check your tax status – what you owe, your tax code, previous years etc. If you are on the standard tax code, it’s worth checking if you can squeeze a little more tax free personal allowance out of it.
If you or your partner earn under the personal allowance (currently £12,500), you may be able to transfer a portion of it to the higher earning party meaning that they effectively pay less tax. You can find out more here – Marriage Allowance
If you wear a uniform to work which you are responsible for washing, you can get a rebate for up to 5 years prior to the current tax year and have your tax code adjusted for future tax years. You don’t strictly have to wear a uniform either – for example, if you work in an office and are required to wear suits etc you can still apply. Find all the information here
Pensions are not my strong point and to be completely honest, I’ve buried my head in the sand with them, paying the minimum amounts required to receive the employer match. I’ve always paid into a pension but I’ve never looked into how much I should be contributing or how retirement will look for me. It’s on my to do list to educate myself more. But these are the first steps I have taken:
I registered online with my current pension provider so I could easily access my account and see the current situation. As I only receive sporadic paperwork from them in the post, it allows me to have more visibility on a more regular basis. I was also able to link up a past pension as it was with the same provider.
If like me, you’ve changed jobs a lot you might find that you have many pensions dotted about around the place. My last two employments I had paperwork from, but I couldn’t find anything from my previous employer despite being certain I had paid into a pension with them. I used this simple online service and by just inputting my employers name, I found out who the pension was with and was able to contact them for more information. There is also a pension tracing service but this is not something I’ve personally had experience with.
As with the pensions, register to view and manage your mortgage online. With my personal mortgage, I am able to easily make one off overpayments online and can also increase my regular direct debit. Accessing your account online gives you more timely and accurate balance information than waiting for the annual statement to roll around. You are also reminded then what deal you’re on and if/when that changes.
If you’re paying off debt you might not be in a position to overpay your mortgage, but for a bit of inspiration, place around with this Mortgage Overpayment Calculator and see how much time you could knock off your mortgage term, if you overpaid by the amount you’re currently paying to debt. If that’s not motivation, I don’t know what is!
Even if you’re not in a position to make a significant overpayment yet, consider overpaying by just a small amount. We rounded our Direct Debit up by £4ish and it has knocked 6 months off the term and saved nearly £800 in interest. Who would have thought such a small amount could have such an impact?
Open an account and just transfer something into it, anything! Just get it started. If you’re paying off debt you might not feel like saving is feasible right now, but you should try and allocate a small amount to savings.
The advice on emergency funds varies and personally, I don’t feel comfortable with less than £1,000. However, all our circumstances vary and what means emergency for you might not for someone else. The most important thing is you try to set aside some money to cover you for situations where you’d usually reach for the credit card. Even if it’s just a few hundred pound, having an emergency fund in place offers you a safety net to stop you going backwards and back into debt.
Again personal preference, but once you’ve identified your annual expenses you might want to start putting aside money for them next time they roll around. The benefit of saving for next year’s annual expense is being able to pay it upfront and in the case of car insurances etc not only does this save you money as it makes the premium cheaper, it also frees up a chunk of money in your budget each month.
Sinking funds for variable expenses such as holidays, Christmas and birthdays might also be something you want to consider.
Once you’ve got a handle on the first two, you can think about your long term financial goals and saving for the more distant future. Consider what financial freedom looks like to you and set goals and make a plan for how you’re going to get there.
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So there we have it, 10 things you can do today to improve your financial future – will you be doing any of these?
I started Katie Saves while on Maternity Leave to document our adjustment to living on less. Now back in work - I blog about making extra money, saving money, getting my life organised and being a new mum. Join me!