Fifty percent of the families the UK would not be able to cope for over a month if something happened that meant they lost their income, according to a recent study by the Financial Services Authority (FSA). The FSA are an autonomous body that polices financial services in the UK. Their team of experts has put together some simple advice that you can use to make a huge difference to your finances.
Understand your finances
Before you can do anything you need to know where you stand. So first of all put aside some time to look at where you spend your money and do some planning, this should take about an hour.
Start a spending diary
A few pence here and there can make a difference and it is easy to forget everything we buy, so keeping a diary of everything you spend will give you a more accurate picture. You should make a note of how much you have spent, where and what you bought.
The spending diary will help you make savings by letting you see the things each week that you buy but you don’t actually need and that you could easily do without.
Pay bills by Direct Debit
Direct debit can help you with your budget. Paying your credit card and household bills by direct debit makes it less likely that you will forget when the bill is due and pay late incurring charges for late payment. However, you must make sure that you have enough money in your bank account to pay the direct debits or your bank may charge you. Regularly check your bank and credit card statements so that you know how things are going. You are aiming to always have a good idea about how your finances stand and know how they will be affected every time you buy something.
Cancel unused subscriptions
Many people pay direct debits each month for things and services they don’t need or use, often after signing up for a free trial that has ended leaving them paying the full price. The most common are gym memberships and magazine subscriptions but there are many more. Cancelling these unnecessary subscriptions can make a big difference to some people. However, before cancelling any insurance policies to save money, make sure that you could afford it if things went wrong.
Learn to shop around and compare prices
You can compare prices and shop around on a whole range of products and services today and the internet makes this so much easier. As well as comparing prices to make sure that you are getting the best deal on any items you need to buy you can also compare savings accounts, credit cards and even your supermarket shopping.
The FSA’s research also shows that in 2009 the average parents spent £442 on Christmas. Christmas is a really good time to shop around as buying your presents on a whim will usually cost you more.
Choose your debt carefully
If you are in debt then you can still save money. It is important that you make sure you have the cheapest debt available to you. For example if you have overdraft or credit card debt and you feel it will take you a long time to pay back then you could look at moving that debt into a personal loan. If you have debts in a range of different places look around for the lowest APR that you can get.
Start saving
Putting away a little bit of money each week or month will soon add up, but saving in little bits means that you may not notice that you do not have that cash to dspend each month, especially if you need less money each month because you have followed the information above. Setting yourself a savings goal can be helpful and give you the motivation to stay on track. So why not save for Christmas or a summer holiday. Make sure that you shop around and that you are getting a good interest rate.
Set financial goals
Goals can really help you keep on track but make sure that they are realistic. If they are too hard to achieve you may be tempted to give up. Example goals could be paying off you debt entirely or if this is unrealistic reducing your debt by a certain amount, saving for a special occasion.
