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Are you making the most of your money?

Are you making the most of your money?

Category: Money

Updated: 22/10/2014
First Published: 22/10/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
There's more to proper money management than sticking it in an account each month and hoping for the best. You want your cash to work as hard as possible for you, whether that's through using it to reduce debts or seeing it grow in a savings account, so here are just a few things you can do to really make the most of it.
  • Review your bills. Bills, particularly energy bills, can be a key concern for a lot of households. That's why you need to regularly review your energy tariff and compare providers to make sure you're getting the best deal, and if your fixed tariff is coming to an end, don't be afraid to switch to boost your monthly budget. The same applies to phone, TV and broadband tariffs, too – there are always plenty of good deals to be found, so the key is to do your research. You may be surprised by how much you could save.
  • Look at your mortgage. If bills are one of the biggest outlays, then your mortgage (if you have one) will arguably be the biggest of all. That's why it's so important to find a mortgage that can offer the kind of repayments that will suit your budget, and with the possibility of an interest rate rise in the not-too-distant future, getting organised now could easily pay off in the long run. If you're coming to the end of your fixed term or are already on your lender's variable rate, make sure to start comparing fixed mortgages – there are some seriously low rates to be found at the moment, and if you fix to one now, you can keep your budget in check for as long as possible. Or, if you're already on a great deal, what about overpaying? It could reduce your balance and your loan-to-value in the long run.
  • Manage your credit card effectively. Credit cards can be a godsend when managed effectively, but they can be a serious financial headache when they're not. That's why it's so important to get into the habit of proper credit card management – try to pay the balance off in full each month to avoid interest accumulating, and ideally look for cards that offer 0% purchase deals, cashback or loyalty points so you can really make the most of your spending. Or, if you've already maxed out a card (or two) and want to get back on track, start looking for balance transfer cards that can give you time to clear your debt without racking up more interest. Then, put it away and stop spending on it, otherwise you'll be right back where you started.
  • Get into the savings habit. Proper money management means you should be setting money aside each month to put into a savings account, helping you build up a nest egg for the future – or a valuable fund for life's emergencies. It's generally recommended that you have at least three months' worth of income in a dedicated saving account, ensuring you've got a financial buffer should your boiler break or you need to replace your car. Saving regularly is key, and even if you've only got a small amount to put aside each month, it can soon add up. Make sure to consider all savings avenues, too: having an ISA should be first on the list so you can maximise your tax-efficiency, and after that it all comes down to your circumstances and savings goals. If you're saving up for something specific, then a fixed rate bond would be ideal, or if you're saving towards an emergency fund, you'll probably want an easy access account for penalty-free withdrawals whenever you need them. Or what about a regular savings account? It could be a great way to kick-start your savings habit.
  • Check your insurance policies. If you're in a cycle of blindly renewing your insurance policies without considering the alternatives, it's time to make a change. Reviewing your policy and comparing other providers in advance of your renewal date will ensure you know you're getting the right cover at the right price – it may seem like an extra hassle but it'll often be worth it, as you could well find that switching means you'll save some cash while getting a better level of cover in the process. This applies to all insurance policies, from car insurance to home insurance, life cover and even insurance for your pet, so always shop around to see if you could get a better deal.
  • Make the most of vouchers, loyalty cards or special offers. Becoming a true cost-cutter means always looking to take advantage of added discounts, and with so many voucher deals and discount codes available, there's no excuse not to use them. Just think of how much further your money could go! Do a quick search before you buy anything online and you'll be surprised at what you could save – cashback sites are becoming increasingly popular, as are voucher sites – and the same rule applies if you're planning to splurge on the high street. Ideally, you'll probably want to get a loyalty card from anywhere you shop at regularly to see your points build up, as these can often be exchanged for money off your shopping or extra rewards. You'll be a savvy shopper in no time!
  • Get a better bank account. These days bank accounts can offer a host of added benefits, from travel insurance and gadget cover to restaurant discounts and even breakdown assistance, and although you'll usually have to pay a monthly fee for these packaged accounts, they could prove to be highly cost-effective – as long as you'll actually use the benefits offered. A lot of accounts also offer things like cashback deals and reward points, putting cash straight back in your pocket every time you spend on your debit card. Or, you may prefer a high-interest current account, such as TSB's Classic Plus (which offers an impressive 5% interest on in-credit balances up to £2,000). These accounts will mean you're able to earn extra interest on your regular income, and could even prove to be a decent savings vehicle.
  • Make credit card/debt repayments. If you've got existing credit card debts or overdrafts, you should always try to pay these off before putting any disposable cash in a savings account or simply spending it. Why? Well, you just need to think about how much you're spending in interest compared with how much you're getting from a savings account. Credit APRs tend to be far higher than savings rates, and it wouldn't be an over-exaggeration to pay hundreds of pounds in credit card interest over the year, while the amount you'd earn from a savings account could be negligible. When you consider how much you're losing out, doesn't it make sense to use the money you'd save to pay off your debt instead?
  • Budget. Careful budgeting is one of the most important things you can do to make the most of your cash. Go through your monthly outgoings thoroughly and see where any adjustments can be made, and don't be afraid to make a few cutbacks. Sacrificing that weekly takeaway for a home-cooked meal could make all the difference to your financial security, and you may find you've got more cash left over at the end of the month - bonus!

As you can see, there are plenty of ways to make the most of your money, and you could easily make it go further as a result. A bit of active money management and some added research could be all you need, so start reviewing your household finances to see where improvements can be made – you could make even bigger savings than you think.

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