Detox Your Finances
19 Sep 2017
Few New Year’s resolutions make it to the end of January, with the cold weather and the return to work putting a dampener on even the best of intentions.
But, if you’ve already abandoned your exercise routine, bagged yourself a six pack of donuts or poured yourself a large G&T, don’t despair, spending an hour or so detoxing your finances can save you loads of money and deliver benefits that can last all year and beyond.
Here’s a six-point plan that can deliver significant benefits – and requires zero willpower.
- Analyse your financial health
Spend 10 minutes looking through your bank statements to see how your finances shape up.
As well as making a note of all the regular payments you make each month; check for, and cancel, any direct debits for things you no longer need, such as magazine and streaming subscriptions or gym membership.
- Enhance your spending well being
You’ve cut out the toxic direct debits, now see if you can switch to healthier versions of the things you can’t avoid spending on.
Comparison sites let you check out the latest deals on everything from your gas, electricity and broadband bills through to your credit card, mortgage and insurance. Whizz through them all, setting diary dates for when your insurance is up for renewal, to see how much you could save.
- Set your goals
One of the best ways to manage your spending is by setting a budget. Work out how much you receive each month, then deduct all the regular expenses such as rent or mortgage, insurance, council tax, travel and so on.
The rest is what you’ve got to live on; so think about how you need to spend it each month. If you regularly run out of money a week before pay day, set weekly spending limits and stick to them.
- Check your rating
Whether you’re planning to buy a property or arrange a new phone contract, if you’re borrowing money, your credit records will be checked. It’s worth making sure they’re in order! Regularly checking your details with the credit reference agencies ensures everything’s correct, so you don’t get turned down for credit, but can also help you identify if your identity has been stolen.
The three main agencies – Callcredit, Equifax and Experian – can provide a one-off credit report for £2, but you can also sign up for free services with Noddle, ClearScore and Experian.
- Put an emergency fund in place
Unless you’re up to your eyeballs in debt, it’s sensible to have some emergency savings set aside in case you’re hit with an unexpected expense such as a large dental bill, car repairs or you lost your job.
Ideally you need two or three months’ money somewhere you can access it easily but don’t despair if saving that much seems impossible. Even saving a small amount each month will help and it’s a good habit to get.
- Protect yourself and your loved ones
As well as putting some money aside for all those unexpected emergencies, it’s worth thinking about how you and your family would cope if you weren’t around or were too ill to work.
Protection products can provide a valuable financial safety net and include life insurance, which pays out if you die, critical illness insurance, which pays if you’re diagnosed with a serious medical condition such as cancer or stroke, and income protection, which pays an income if you’re too ill or injured to work.
Importantly, if you take them out while you’re young and healthy, it’s a relatively low-cost way to ensure you and your loved ones are protected.
Average cost of income protection
30 Jul 2020
You want to protect your salary, but you don’t want to have to spend a lot of money doing so
Joint Income Protection Insurance
22 Jul 2020
Is a joint income protection policy possible?