Tips to cut costs and better manage finances

According to the research conducted by WEALTH AT WORK on over 2,000 employees, the top financial concerns of the year are not having enough money saved for unexpected expenses (40%), being unable to save enough in the future (38%), and not being able pay for basic living costs like rent, mortgage, energy bills, or food. (34%) or being in debt (29%).

WEALTH AT WORK has provided some tips to help you cut costs and better manage your finances during this Talk Money Week.

1. Create your budget– The first thing you need to do to cut costs is create a plan. The first step is to create a budget. This will help you determine your monthly income. Next, check out your bank statement to see what expenses are due. Then, divide the outgoings into those that are fixed, such as mortgages, council taxes, energy, and water. And then, there are other expenses, such as grocery shopping, TV subscriptions, monthly contracts, etc., which can be cut. Some banks offer apps that allow this to be done automatically. This will show where the money is being spent and where it could be saved.
2. Track finances After creating a spending budget, it’s important to track your expenditures. It can be a big difference to learn to budget, stop eating out and take your lunch to work. The average UK household spends £1,220 ^[1] per year on food (e.g. Takeaways and restaurants are the most common types of food consumed by households in the UK. Many budgeting apps are available for free that will track your spending on groceries and entertainment, as well as eating out.
3. Plan your shopping – This will give you time to find the best deals, and also reduce spending on items that are not essential. Switching brands can also help you save a lot of money on your regular shopping. A person who spends PS60 per week could save PS20 if they switched supermarkets. This would be a savings of PS1,040 ^[2] over the course of a year for a family or couple. Discount vouchers can be obtained through discount and voucher websites, and many companies offer employee discounts (see tip 10). Idealo will find the lowest price for any product online. CamelCamelCamel lets you track Amazon prices. Install browser extensions such as Honey, which search for discounts during online checkout.
4. Save money on household bills– You can save a lot of money on all kinds of household bills, from home and car insurance to mobile, broadband and TV contracts. Comparison websites make it easier to compare different offers. Switching to a SIM-only deal for your mobile after you have finished your contract can save PS321 per year. Plus, switching broadband providers can save PS179 per year ^[3].
5. Avoid Auto-Renewals– Many insurance policies renew automatically each year, so if you don’t compare prices, many people could be paying more for their policy than necessary. You should know when your contracts will end and write it down a month in advance so you have plenty of time for comparison shopping. A price comparison website could help you save PS460 ^[4] for car insurance. That’s PS920 if you have two cars.
6. Manage Debt It is important to know the difference between bad and good debt. A mortgage, for example, is a good form of debt that should be reviewed periodically to ensure you are getting a good deal. Payday loans and credit card debts with high interest rates can spiral out of control when not paid back quickly. If you pay PS50 per month to repay a PS3,000 debt with an 18% APR, it could take ten years and ten months. The total interest would be PS3,495. If the monthly payment were increased to PS100, it would take three years and four month to pay off the debt. The interest would only be PS908. Consolidating debts onto a low-interest balance transfer card with 0% interest could be a great option for those who are struggling to pay off debts. This will allow them to clear the debt in a shorter period of time. If you are having trouble making a payment to your provider, they may have some help available.
7. Create an emergency fund– Saving money for unexpected expenses such as car repairs or house maintenance can help reduce the need to borrow for these costs. Aim to have an emergency fund large enough to cover several months’ worth of bills. Calculate if you have the money to save each month. Even small amounts add up. You can separate your savings from regular spending by setting up a regular transfer. Money Helper offers a savings calculator to help determine how long it will take to reach a savings goal: https://www.moneyhelper.org.uk/en/savings/how-to-save/savings-calculator
8. Beware energy costs– Do everything you can to save energy. Even small changes, such as switching off lights that are not needed, washing your clothes at 30 degrees rather than higher temperatures, using the dishwasher only when it is full, or reducing the number of kettle boils can make a impact on energy bills. Switching off all standby appliances can save PS45 per year .
9. Get the most out of pensions– Pensions are one of the best ways to save for the future. Employers are currently required to contribute 3%, while employees must pay 5%. This brings the total contribution to 8%. Check the amount of contributions you are currently making, and decide if you can afford to raise them. Some employers will match additional contributions, which can be a huge help. An employer who matches an extra 1% of savings each year in a pension can boost a pension pot at retirement by up to 25%!
10. Maximise your workplace benefits Many employers offer additional perks, such as discounts with major retailers for groceries, dining or electrical goods. This can save you a lot of money. Many workplaces also provide financial guidance and education to assist with a wide range of money issues, and to give access to savings vehicles like ISAs and Share Plans that can help build financial stability.

Jonathan Watts Lay comments; It’s concerning that many people are concerned about their finances. Many employers recognize the need to improve their employees’ money management and provide them with financial education, guidance and access to savings vehicles like Workplace ISAs and Share Plans in order to build financial stability. It can be a great way to help people understand their finances. They will learn how to budget, manage debt and boost savings. When employees feel more in control of their finances they are happier and more productive at work.

The first time this post appeared was on Human Resources News.