Want to be better with money in 2019?
If you eat and drank and sat on the sofa far too much over Christmas, you may be thinking of detoxing your body and making 2019 the year you get fit.
A Money Detox is the same approach for your finances. All that Christmas spending may have left your bank balance looking sick and your credit cards bill looking fat.
You want to track and then reduce or get rid of the things that are poisoning your bank balance. And also look for ways to make the rest of the year easier and less stressful so you can keep up good money habits.
The seven ideas here aiming for long-term gains with the least pain.
You don’t have to have problem debts for these ideas to be useful. They will also help if you are saving for a house deposit, thinking about starting a family or getting serious about increasing your pension.
Whatever your target, you will be getting the rewards of this detox for a long while after it finishes!
1) Check your STOs and DDs
Check all your Standing Orders and Direct Debits – that’s money just vanishing from your salary. There may be some you have forgotten about! Magazine subscriptions? Paying for ad-free apps? A free trial that wasn’t cancelled? Insurance you don’t need any more?
If you decide you don’t want a service or a subscription, remember to tell the firm, don’t just cancel the payment at your bank.
Bean is an app than can help with this. It checks your bank account and credit cards for regular payments and when you tell it to cancel one, it informs the firm, not just your bank.
Cancelling a regular charity donation may not feel right. But if you are paying 20% interest on a credit card, you are effectively borrowing the money that you are donating. It’s better to halt donating until your finances are back in better order. Here are 7 ways to donate to charity that don’t involve giving money.
Also check with your partner, that you aren’t duplicating things like Netflix, Amazon Prime or Spotify subscriptions, or insurances.
Not all DDs and STOs are bad. Paying the rent, council tax, credit card repayments, utility bills and TV license by DD or STO is great – these are priority bills and it saves you time in making the payments. In fact, if you are paying any of these manually, why not set up a Direct Debit to automate it? A money detox means making everything as easy as possible!
2) Pay lower bills
If you haven’t changed gas and electricity suppliers in the last year, see what you could save by switching.
There are lots of comparison sites, I like MoneySavingExpert’s Cheap Energy Club and so do more than two million other people. This looks at all the suppliers to find you the cheapest deal now, then it will email you in the future when you can again save money by switching. So by joining the Cheap Energy Club now, you are making it easier to keep your bills as low as possible in future years.
For example, I signed up in November 2016, then a year later I got an email from the Cheap Energy Club saying my fix was ending and unless I switched again, I would be on a very poor variable rate tariff. Then in 2018 another switch was suggested to me.
For water, think if a water meter could save you money. If you don’t have a meter, you are effectively being charged by the number of bedrooms you have. A simple rule of thumb is that most people who have the same or more bedrooms as there are people in your family can save by getting a meter. So a couple with two bedrooms can probably gain from switching.
If you are on a low income or certain benefits you may be able to switch to a cheaper water tariff, see How to cut your water bills.
You can’t switch insurances until they come up for renewal – but you can make a note now in your diary a couple of weeks in advance of that so you are ready for it.
And see if you are overpaying for TV packages. Many people on older Sky packages are – you may even be able to complain and get money back!
3) Get a better bank account
In Britain, you are more likely to get divorced than switch banks. That’s not because we love our banks but because it seems too complicated or scary to try to change. But it’s got a lot easier in recent years!
Most banks now offer a switching service takes care of everything, notifying all the people who send you money and the people you pay regularly. It should all be completed in seven working days. If they get it wrong, you will be refunded any lost interest or extra charges that occur as a result of the switch in the first 13 months.
So look for an account which sounds right for your banking needs. Are you often overdrawn or always in the black? Some people can even get cash back by switching!
If you would be refused a normal current account because of your poor credit score, you can still switch to one of the new-style basic bank accounts. They are good and have absolutely no fees, even if a direct debit is returned unpaid.
4) Pay less interest
With a good credit rating, you may be able save a lot of interest by refinancing credit card or other expensive debt.
At the start of 2019 there are some good 0% deals on offer, but they are shorter, with higher fees and lower credit limits than they were a couple of years ago, so grab one now while you can!
Did you list your mortgage as one of your debts? Interest rates edged up again in August 2018. There may be more rises in 2019, depending on how Brexit goes. If your fixed rate has ended, you may be able to cut your interest rate by switching now, but even if you can’t cut your costs much, it’s good to get a fix for as long as possible so you are protected against future rises.
5) Automate saving an emergency fund
Having an emergency fund can really cut down on stress. Perhaps you try to keep some spare money in your normal bank account for a rainy day, but all too often you will find it isn’t there when you need it, you have spent it on something that wasn’t an emergency.
Here are two approaches:
- open a savings account Open a new account, not with your current bank. You want to be able to get at the money but not be tempted to dip into it too easily! Then set up a standing order to move some money across to it the day you get paid. Paying in £25 a month may not feel like it’s enough, but it will build up over time and it feels less painful as the money goes out automatically, you don’t have to make the decision to save each month.
- get an app that does it all Chip and Plum are two savings apps that move small amounts of money that you won’t miss out of your current account several times a month. See the reviews here: 2 automatic savings apps.
6) Sign up to a cashback site
If you don’t already use Quidco or TopCashBack, sign up to one or both of them now! They may be able to save you small amounts on lots of purchases and over time those small amounts add up if you buy a lot online.
Of course you could save even more money by not spending online so much – if you think that is your big weakness, have a look at these tips to let you get online spending under control!
7) Pay more into your pension
Most people should be paying more money into their pension!
If your work has a pension scheme but so far you have opted out, think again. Unless your financial position is dire, you are effectively turning down free money from your employer, see Too much debt – should I still pay into a pension for details.
If you are in a pension scheme at work, if you and your employer pay the minimum, this will go up in April 2019. That’s good as your employer is also paying in more and you will be getting extra added by the taxman. Don’t opt out just because things are difficult – see Too much debt – shall I stop paying into a pension?
If you are self-employed you also need a pension. This can be really hard when you are trying to balance having a life and expanding your business, but it is a necessity, not an optional extra that you can postpone until next year. Pension jargon is off-putting and making investment decisions seems scary, but so is the idea of being old with little money. So make a start, even if you start small. Nutmeg is an option that is worth considering if you don’t know where to begin with investing.
Which will you do first?
You don’t have to do everything here all at once. You could plan one a week or even one a month if that seems more realistic. Perhaps do one that sounds challenging, then an easier one. If you have a partner, split them between you.
At the end, you are going to be in a much better financial shape!