The economy has officially gone to the dogs and we are left to pick up the pieces. The government are happy to use our money to bail out the banks whilst targetting the poorest in our society, they now want a standard 20% tax for everyone but hold fast on declaring an ultra millionaires tax on the richest. So where does that leave you? In the red or the black? If you are like the majority of people, you won’t have much in the way of savings and you will be worried about your pension and your future. But just because the economy is looking pretty grim, does not mean that you have to lie down and roll over! We have some tips and advice on how to make the most of what little money you have and how to make it go a bit further. Check out the top ten tips on saving:
1. If by any chance you ever get any spare cash, a lotto win or an inheritance you were not expecting, use it immediately to pay off credit card debts and any outstanding loans. Do not put it into a savings account if you have these type of debts. The interest you gain from a savings account is never as much as the interest you are paying off from a debt. So pay these off, or as much off as you can.
2. If you are in a position to pay a small sum off your credit card debts, call your debtors and ask them whether they will accept a smaller amount as full and final payment for the debt. You’ll be surprised how often this works. For example, I had a credit card of £450 worth of spending and got a call out of the blue when I’d missed a couple of payments, asking me if I could pay a lump sum of £250 to clear the account. That’s a saving of over £200!
3. Take out an ISA if you have a lump sum of money that you don’t want to be taxed. ISA’s are not taxed by the government but savings accounts are so if you have anything up to £10,680 (tax year ending April 2012) then stick it in an ISA. Basically there are two types; a cash ISA and a shares or equity ISA and you can put £5340 in either but only a maximum of £5340 in the cash ISA. If you have any money lying around spare, and lets face it, who doesn’t these days, then you must put it in an ISA. You can easily take it out again but you cannot put it back.
4. If you are in a favourable position where you can afford to put a little away each month, shop around for the best rate of interest in a savings account before you commit to one. Use a couple of money comparision sites like Go Compare and Money Supermarket, not just one as individually they do not cover all companies. And try and put some money into the savings account as soon as you get paid, this means you will get used to not having it on a regular basis.
5. Eliminate the things from your life that you really do not need. They may seem small, but consider that latte on the way to work, that’s £2.50 every day, over the course of the week that amounts to £12.50, calculated over a month it is a staggering £50 for a single coffee! Instead, buy a flask and make your own. Do this for every little thing in your life, such as gym membership – are you going regularly to warrant the expense? If not, plan a jogging route with friends from work and cancel the membership. Buying books? Get a library card etc etc
6. Choose cheaper alternatives when out shopping for groceries. You do not have to get value products every time you shop, but some products like baked beans are actually better than branded, and if you buy supermarket brands as well as value you’ll be cutting your shopping bill considerably.
7. Work out a monthly budget and make sure you stick to it. Start by seeing what your monthly income is and then listing your expenditures. The trick is to put absolutely everything down, whether it is a packet of cigarettes you occasionally smoke at the weekend (do you really need those?!) to essentials such as rent, mortgage, debts. Make a plan to set up direct debits if you have not already, to have household bills such as gas, electricity, water rates paid out of your bank.
8. Can you get better deals on your phone/tv/broadband packages? Could you save money if you got your gas and electricity paid together? Always pay by direct debit and never wait for a bill or pay by invoice or credit card, you will be charged anything up to £4 extra for the privilege.
9. Consider having two bank accounts, one for household bills and debts and all the essentials, and the other for luxuries such as going out and clothing, music, entertaining etc.
10. Finally, be realistic, do not overdo the scrooge attitude or you will fail. Allow yourself and your partner a few treats or, as if you were on a strict diet, you may find the temptation to splash out and splurge occasionally just too much. Keep it within reason and sensible and it will work, and it is better if you are working towards a goal, such as a deposit for a house or a holiday.