Here's why you’re always low on cash and how to be more savvy.
If you’re always running out of cash, it’s time you got financially savvy.
By facing up to poor spending habits and setting yourself a budget you’ll find that not only does your money go further but you may even have some left over.
Here’s why you’re broke – and how you can fix it.
1. You don’t follow a budget
A survey by debt charity StepChange found that 21 million British adults don't have a household budget. Adding up all your income (after tax) then subtracting how much you spend each month is a good starting point.
Apps such as Goodbudget, Toshl and Spendbook will help. The key is to set a realistic budget you can stick to.
Image: Andrey Popov/Shutterstock
2. You don’t take out a set amount of cash each week
In an age of cash cards and contactless shopping it’s easy to overspend because no ‘real’ money is exchanging hands.
One way to curb this is to take out a set amount for the week and try not to use your cards – this way you’ll become aware of exactly how much you’re spending and where you can save.
3. You go food shopping on an empty stomach
It’s well known that we’re more likely to buy more food when we’re hungry but, according to the University of Minnesota, hunger is more likely to make us buy other stuff too.
This is because being hungry stimulates our desire to acquire things. So eat before you shop or you’ll be buying more than you need.
Image: Paolo Bona/Shutterstock
4. You buy fresh when frozen is just as good
Frozen food, especially vegetables and healthier items, lasts for longer and is often cheaper than fresh food.
Reduce food waste and your shopping bill by stocking up on products you can freeze.
5. You buy too many takeaways…
Coupon site Vouchercodes.co.uk found that Brits spend an average of £1,308 on takeaways – that’s a third of our total food budget.
Just halving the amount of fast food you eat will save you hundreds.
6. ...and that includes lunches…
It’s not just fast food dinners that are burning a hole in our wallets: buying lunch and snacks to eat at work costs Brits £1,920 a year.
Make your own packed lunches and save a small fortune.
7. …and coffee
The average British coffee drinker spends £393 on coffee annually.
One way around this expense? Invest in a thermal coffee mug and make coffee at home before heading out.
8. You pay to get to work when you could walk or cycle
If you drive or use public transport to get to work when you could cycle or even walk you’re not only losing money, you’re missing a perfect opportunity to get fit without shelling out for gym membership.
If the journey is too far, consider car-pooling to save fuel and money.
9. You buy or rent films when you could use a streaming service
If you watch a lot of films, box sets or documentaries, then switching to a streaming service such as Netflix or Amazon Prime will work out cheaper than buying DVDs or renting films through your TV service provider.
10. You shop online too much
The internet is a fantastic place for finding bargains but we can all have too much of a good thing.
Being able to buy something with a few clicks rather than cold hard cash makes it harder to keep an eye on your spending – and you’re more susceptible to fake reviews, counterfeit goods, hidden costs, or fraud and identity theft.
Limit your shopping online and then only use sites you trust.
11. You don’t take advantage of loyalty schemes
Loyalty cards are everywhere – from coffee shops and supermarkets to airlines.
Accumulated points mean money off and free goods. Yes, the companies are buying your loyalty but if you shop with them regularly anyway, loyalty cards can offer real rewards.
Don't like carrying lots of cards? Use an app like beep'ngo to store your card details.
12. You buy branded products rather than the store’s own
This is no secret – stores’ own ranges (often called basic, essential or value) are usually cheaper than branded goods and often taste just as good, as they are often produced in exactly the same way in exactly the same factories.
13. You’ve got the storage space but don’t buy in bulk
Stocking up by bulk-buying non-perishable items can make a real difference to a tight household budget. Taking advantages of offers then storing or freezing the products is a good way to make your money stretch further.
14. You don’t look up offers and discounts online
Websites such as Quidco and TopCashback, where you can earn money back by shopping online; grocery comparison sites such as MySupermarket; and luxury and leisure deal sites such as Groupon and Living Social all offer the chance to save money by being a savvy shopper.
15. You’re haven’t changed your mortgage for a while
It pays to keep an eye on your mortgage deal, especially if it’s coming to an end, the interest rate is changing, or if you’re not tied in.
Sometimes, leaving a mortgage earlier than the term agreed works out cheaper in the long-term even if you have to pay a penalty charge upfront.
16. You’re paying too much for insurance
Car, house, health, life, pet, phone – these are just some of the insurances we fork out for every month. They can add up to thousands a year so it’s worth looking for better deals annually. Alternatively, speak to your current provider and ask them for a better deal – you’d be amazed at how far they will go to keep you as a customer.
17. Your credit card isn’t interest-free
In the UK, the average household credit card debt is £2,293. Combined with an average APR of 18% many are paying far too much interest on their borrowing.
To resolve this shift debt onto a 0% balance transfer deal to freeze interest, set up a direct debit to pay off a decent sum each month, then don’t use your card again until your debt is manageable or paid off.
18. You’re paying too much for your phone
Find a plan to match your real usage – it could be that you’ve outgrown your current one or you don’t use your phone much but your contract cost doesn’t reflect this.
Try going contract-free or tell your provider you’re leaving – they won’t want to lose your custom and will try to keep you. Use free messaging apps like What’sApp or Viber, or get rid of your voice plan and use Skype to make calls.
19. You waste food
In the UK, household food waste costs the average household £470 a year – that rises to £700 a year in households with children.
Plan meals and shopping lists, get clever with leftovers, and donate to food banks.
20. You waste energy
There are a number of easy ways to reduce your household energy bills such as turning down the heating, minimising the use of power showers (they can use up more water than a bath), washing clothes at a lower temperature, putting appliances on standby, and shopping around for a better value energy deal.
21. You drink or smoke too much
In the UK, Brits spend an average of £787 on booze each year, while smokers who have five cigarettes a day can save around £548 a year by giving up.
Giving up the fags will mean you'll save a fortune on your life insurance too.
Image: Stefano Carnevali/Shutterstock
22. You spend too much on luxuries
Yes you deserve to eat out, take trips and cabs, and buy clothes, electronics and music but be aware of how much life’s little luxuries add up.
Have a monthly budget for treats and stick to it. The likes of Groupon, Living Social and lastminute are go-to sites for discounts and offers (though watch the small print) and Uber is cheaper than licensed cabs – though not as cheap as the bus.
23. You pay a fortune for babysitting
Babysitting usually costs between £7-£15 an hour, which can make going out expensive. Instead join – or create – a babysitting circle. In return for babysitting yourself you get free childcare and a cheaper night out.
24. You spend too much on your kids
Do your children really need that designer outfit or trainers that they’ll outgrow in a few weeks? Or new books, shoes or electronic devices that can be sourced second-hand on Amazon or eBay? Or the branded cereal that tastes no different to the store’s own (do a blind taste test to prove it)?
Don’t give in to their demands – and don’t take your kids food shopping without feeding them first.
25. You spend to cheer yourself up
In Britain it is estimated that 8-16% of adults are oniomaniacs – shopping addicts.
Shopping gives many of us a short-term high and provides an escape from depression or anxiety but it can have debilitating consequences on our finances.
Talk to a friend, find an alternative ‘hobby’, or seek help from a doctor or therapist.
This article is regularly updated
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