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Whilst many people love to save money, there are only a handful of people who actually search and switch to get the best deals. In some cases people are not aware on how to be more savvy and in others its inertia towards change.
To help, we list some of the popular bad habits and how to overcome them.
Failing to set a budget
Whilst setting a budget is both logical and sensible, many of us fail to do exactly that, leading to our income not being distributed properly through the month and leading to bills not being paid on time. By spending some time at the start of every month, you can quantify which amounts are mandatory (i.e. rent) and hence, how much you have left for disposable income.
A good way to begin this habit is during months of heavy spending, such as Christmas. By knowing your Christmas budget you can be aware of what you afford to get for your friends and loved ones.
Looks after the pennies….
If you don’t set yourself a budget then you probably have no accounts of your small spending habits, whilst these small spends won’t break your bank singularly, it worth thinking about how much this spend builds up to over a year.
For example, buying lunch and a coffee everyday can easily lead to a daily cost of £10, which over the year is £2,400, presuming you work 48 weeks of the year. By controlling your small spend and budget you will be able to grasp how much money you are spending and if you want to control that amount for a big weekend then you can do it affordably.
Make switching a habit
A lot of people in the UK have inertia towards change, so we allow our car insurance to be auto renewed, never leave our energy suppliers or bank accounts despite the terrible service and rising costs. According to Which?, switching energy suppliers leads to an average saving of £191 a year meaning most households are simply throwing this money away.
To help you keep motivated, it helps to treat yourself or your family whenever you take the action to save money. Perhaps a family dinner out or treat to the cinema, it really is up to you as the saving is all yours.
Living in the red
By dipping into your overdraft to pay for those daily costs you could be losing a lot of money in interest payments and you don’t have an emergency buffer for those unforeseen circumstances such as fridge or washing machine breakdown.
By carrying out the advice above, such as budgeting and switching, you could have enough money to come out of the red and hence, start saving money on interest.
Credit card spending
A lot of people in the UK simply pay the minimum on their credit card and feel they have paid the full outstanding amount. But this is not the case, and the luxury maybe costing you dearly as it takes you longer to repay the debt and the interest keeps piling on top. To add, this also affects your credit history so should you require a mortgage or a loan you could be refused by the provider.
Ultimately, you should pay the full amount at the end of each month, this stops you from having to pay any interest and it looks favourably on your credit history. Moreover, if paying in full is not possibly, aim to make the payment as quickly as possible- the more you pay, the lower the minimum repayment will be too.
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