It’s a tough time for everyone at the moment. Even the most frugal among us are still feeling the pinch. But in the same way you might be planning to detox and shape up for summer, it’s time to take a fresh look at shaping up your finances too. Even if you have blown your budget, you can sort out your money worries with our financial detox plan.
Retreat to the Moneymagpie money spa for a day – or a weekend – and sort yourself out. Get into your towelling robe and we’ll start the rub-down. Take it one step at a time, and you’ll have your finances back in shape in no time.
- Health check – get a basic idea of how fit your finances are
- Money diet – plan to spend less and save more
- Ease the pressure – find out how you can earn a bit extra and clear your debts
Keeping track of your money
Millions of people (literally) are afraid of looking at their bank and credit card statements. But often they are imagining the situation to be so much worse than it is. Unfortunately, burying your head in the sand is not an option.
So first things first. Your finances might be in better shape than you think – the only way to find out is to face them head on. You don’t need to be an qualified accountant or a mathematical whiz kid to get to grips with managing your money, trust us!
It’s also important to remember that you can potentially make money from opening your bank statements. Checking your statements regularly will help protect you from fraud because you’ll be able to see straight away if there are any unusual payments or withdrawals.
Not only that but it can allow you to stop yourself becoming overdrawn and being charged through the nose for it. Bank charges are one of the worst ways to lose your hard-earned cash – and if you’re careful with your money and your account they are completely avoidable.
Once you’ve had a good sort out of all your statements, you can make yourself a budget by calculating your incomings and outgoings. This will show you if you’re spending unnecessarily and if so, what on.
A budget is the financial equivalent of joining the gym – it’s a great step in the right direction, but is only as good as your commitment to stick at it.
We’re not going to lie; it isn’t a fun job, but it’s one that you absolutely must do. And to make things a lot easier for you we’ve written a step-by-step guide to budgeting and made you a fabulous budget calculator which will do all the hard work for you.
We reckon it’s also worth keeping a spending diary for at least a week to check exactly where you’re money is going and what you can cut back on in future.
Check your credit rating
Checking your credit rating is so important – not only will it give you your credit score (so you know how likely it is you’ll get accepted for all sorts of financial products) it’s the best way to check if you are a victim of identity fraud.
You can check your rating quickly, easily and best of all for absolutely nothing. Just sign up for a free 30 day trial with CreditExpert to find out your credit score, but remember to unsubscribe after the trial period so that you’re not charged.
It’s important to know that being refused credit will damage your rating, so choose wisely. For more information on exactly how your credit score is calculated have a look at these articles:
Spend less, save more
Now you know the score with your financial situation it’s time to save yourself thousands with very little effort, and make even more from your hard-earned savings.
A money diet is actually a lot easier than you might think – you need to imagine the process in two simple stages – spend less, and save more.
We’re not talking about making your life dead, dull and boring – it’s about having a healthy attitude towards money which will allow you to spend more of it on the things you enjoy, instead of wasting it. Lots of little savings add up to lots more spare cash.
First of all – spending less.
There are loads of easy ways to do this:
- Take your own lunch to work. If you spend about £5 each working day on lunch, coffee or anything else that gets you though the day you’ll be forking out more than £1,000 a year for the privilege. Make your own lunch for work, take a flask of coffee with you and make a huge dent in those debts with £1,000 saved.
- Switch and save. The Moneymagpies won’t pay any more than necessary for those essentials. Switching your gas and electricity supplier could save you over £500 a year. If the thought of switching fills you with dread, or the world of energy is too confusing, read our invaluable guide to switching, and use our comparison service to find yourself a cheaper deal without the hassle.
- You might also be paying too much for your insurance. Spend just five minutes on our insurance comparison pages and see if there’s a provider out there who can beat your quote and offer you a better deal.
- Look after your wallet and the environment. Going green can really save you money – save energy and water around the home and cut hundreds off your utility bills. Read all our 50 ways to save money by being green and check out the green products we’ve found that will save you money in the home.
- Pay attention to that spending diary you made. Be strict and cut out all the things you don’t need. If you’re really struggling then smoking, restaurants and buying non-essential items are out. For even more ideas, have a look at our guide to reducing your outgoings.
When you’ve got into the swing of cutting back, you should have a bit of spare cash after the bills are paid. But don’t spend it! The best thing to do is put it in a online or instant access account. We like the ING Direct savings account which you can open online in a mere 10 minutes with as little as £1. It pays 2% interest and allows you to pay in and withdraw money whenever you want.
This account should become your designated emergency fund. Putting aside as much as you can afford each month will give you a financial cushion against that sudden loss of income if it does happen. So you’ll have some time to look for a new job before you need to worry about money. If you are concerned about redundancy, read our helpful action plan so that if the worst does happen, you’ll be well prepared.
If you find you’ve got a bit more left than you expected get yourself a regular savings account. This will force you to put away just a little each month, and you’ll get a better rate of interest than with an instant access account.
Phew! You’ve made it this far – give yourself a pat on the back.
If you’ve got debts to think about in your financial detox plan then don’t worry. We’ve got absolutely loads of invaluable information about coping with debts and how to start clearing them in our debt issues section. Plus the extra cash you’ve hopefully managed to accumulate should help!
The first thing to remember is that there are absolutely thousands of people in the same situation. The average debt per household in the UK (excluding mortgages) is £9,500.
Help yourself out by moving your debts onto a 0% balance transfer credit card. This will give you breathing time to pay off your balance rather than just the interest on it.
We recommend the Barclaycard Platinum credit card which offers 0% interest on balance transfers for a whopping 29 months. Better still, Barclaycard currently offer six months’ 0% interest on purchases. It’s by far the best deal on the market.
Remember, if you’re having trouble paying bills it’s always best to speak to the company direct, in case they can arrange an easier re-payment plan. They want you to pay the money back, so it’s in their interest to help you.
Don’t be too strict on yourself – an absolute maximum of a third of your income should go on paying off debt. All budgets have to allow some kind of room for manoeuvre and that includes treats too. That way you will keep motivated to keep at it, and your finances will look fit in no time.
If there’s no money left in your budget to pay off debts, it’s time to think of ways to boost your income. If you increase your income, you can throw more money at your debts and get them cleared faster giving you extra cash to spend on things you enjoy.
Our site is positively teeming with ideas on how to make that bit of extra cash, and best of all there are plenty of things you can do really easily.
We show you how to make money by doing anything from recycling your mobile phone for cash, to making money by filling out surveys online with companies like Lightspeed. Learn all about how to earn more in our making money section.
Taking care of yourself on a basic level is important to all areas of your life and your finances are no exception. When you feel good you make better, healthier decisions all round. Managing your money needn’t be scary or intimidating, and once you start to get your finances under control it will be a weight off your mind.
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