Better off Dead – Six Money Habits That Should Be Extinct
None of us are perfect, but being a dinosaur with your dough can cost you hundreds of pounds. Evolve your ways and you could get a nice amount of cash to sink your teeth into.
Our six money habits that should be extinct:
1. Being loyal (or apathetic)
Whether you don’t have the time or don’t like change, you are losing money by sticking with the same provider. Switching your current account, broadband company or energy supplier are just some of the easy ways to be better off.
One of the worst habits is insurance auto renewal. You might have got a decent deal when you first bought your travel, home, contents or car policy but letting it roll over could cost you dearly.
2. Making minimum repayments on your credit card
Though missing payments altogether is worse – and bad for your credit rating and wallet – only making the minimum repayment on a credit card debt is never a good idea.
This is because, if you pay back a percentage of the debt each month, the amount you actually knock off the debt will keep getting smaller. The means it can take years for you to clear the money you owe. And in all that time, you’ll keep accumulating interest.
The best option, if you can, is to pay off the full amount each month. Failing that, choose how much you can afford and pay that same amount (or more) via a Direct Debit.
3. Relying on credit (and not seeking help)
If you can’t make it to the end of the month without borrowing money to pay your bills, rent or older debts, speak to a debt adviser. Using credit cards or payday loans to get by could push you into a debt spiral more difficult to out run than a velociraptor.
There are lots of organisations that can help with free, confidential advice. They can help you do a budget, prioritise your bills, talk to everyone you owe money to and see if you can agree a repayment plan.
4. Paying for things you don’t use
How many subscriptions and memberships have you got that you don’t actually use? A recent report by Topcashback found film streaming websites, gyms and magazines among the services most likely to be forgotten about yet still costing us cash.
Make a quick audit of your bank statements to see what you are regularly paying for and see if you still use them. If not cancel away.
5. Not using Direct Debits
Direct Debits and standing orders are a handy way to manage your bill payments. Setting one up means you won’t forget to pay, meaning you’ll avoid penalties and fees for missed payments. For many of your bills, you will also save some cash if you pay by Direct Debit.
However make sure you review your regular payments to make sure you aren’t paying for things you no longer use. Also, watch out for insurance products. You’ll be better off paying the full amount up front here.
6. Hiding money under the mattress
This is one of the worst ways to keep your cash. Money really is better in a bank.
The biggest benefit is your cash is protected, even if the bank goes bust. As long as your bank, building society or credit union is part of the Financial Services Compensation Scheme (FSCS) you’ll be able to claim back £85,000. Keeping large amounts of cash at home means you could lose out if there is a fire, theft or flood, even if you are insured.
Saving your money also means you’ll be able to earn interest. With current account providers competing for your business, there are some high interest rates available that don’t lock your money away for years.
If you would like to talk about any of the issues in this article or need more general help with your finances, please get in touch with us.