Detox Your Finances

Along with tightening our waistbands this is the time of year when we also try and tighten our purse strings too!

Follow our five simple steps to keep your finances in check without getting a headache.

1) Look at your spending

Before you can start budgeting properly you need a good understanding of what exactly you spend your money on. Make a list of all of your monthly outgoings from bills, mortgage/rent, the food shop and travel costs to extras like gym membership. Tot up any forms of income (sadly this will probably be much quicker) and see if the total covers all your expenses. If not, it’s time to tighten that belt.

2) See where you can make cutbacks

Treats or non essential spends such as taxi fares and the near-ubiquitous morning takeaway coffee may have to go too if money is particularly tight. Rather than see these as things you have to give up, try to focus on the extra money you will be saving.

3) Cull direct debits

It’s worth checking over your bank statement with a beady eye to see if there are any direct debits you’ve forgotten about. Also look at the monthly rates on subscription services such as broadband or your mobile phone bill. Payments may have risen slightly due to an introductory offer ending or new charges or fees. If you’re not using the services you pay for, cancel the direct debits with your bank.

4) Give credit cards the chop

Credit cards have their uses but there is no denying that for some of us the temptation to rely on our precious plastic is dangerously easy. If you’ve built up credit card debt, look for a low balance transfer card to move your debt onto, then set up a direct debit so you will have repaid the debt by the end of the interest-free period.

5) Divert money into savings each month

If you have money to spare, it’s worth allocating some or all of this to a savings account. Set up a monthly standing order to transfer money from your current account, ideally when the balance is at its healthiest (after a monthly salary or other income has been paid in) to a savings account.

ISAs or individual savings account should be the first place you go to as all the interest you earn you get to keep unlike normal savings accounts where you pay tax on interest earned.

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