Like it or not, we’re all in a relationship with money.
For some people, money runs through their fingers like water, while others grip it tightly in their fists. Some people fret about their finances, others bury their head in the sand and emerge only when they need to work out how to make a tin of beans last for the week before payday (hello).
The key to cash confidence, however, is feeling like you're the one in control. That feeling of control? It comes from knowing how to save, and knowing that your money's safe.
As for your money being safe, rest easy; any money you put in your current or savings account is automatically protected by the Financial Services Compensation Scheme (FSCS), which was set up by the government and protects your money up to £85,000. So you can’t see it but you know it's got your back.
As for the saving, well, that requires a little more input from your side. But if you're clever, there are loads of easy ways to save money which don’t involve starving yourself or staying at home with the lights off.
Simple everyday changes are where it’s at, from switching your bank and rip-off energy supplier to making the most of holiday hacks. Here are the easiest ways to make big changes.
What's The Right Bank For Me?
Most of us opened our first account as teenagers with the bank our parents frogmarched us into. Chances are, you’re still with that bank and it’s doing nothing for you. Some banks on the high street pay as little as 0.05% interest. In real terms that means if you had £1,000 saved, you’d earn 5p interest which is, quite frankly, a joke.
If that's the case, it's time to dump your bank and find one that deserves you.
Nationwide offers a high 5% interest on balances up to £2,500 for a year so you’d get up to £125 by the end of the year. To get this, however, you would need to pay £1,000 a month into the account.
If you’ve got cash to stash you could earn 1.5% interest on £20,000 with Santander’s 123 account plus up to 3% cashback on household bills. This would add up to an extra £300 a year plus whatever you make on your bills. All you've got to do is set up two direct debits and pay in £500 a month. There is however a monthly fee of £5, which will put a bit of a dent in your earnings.
Nationwide, First Direct and M&S Bank all offer regular savings accounts which also pay 5% but you’re usually limited to monthly deposits of £250-£300, which you can pay in for a year. These are great for getting into the savings habit.
Other providers, such as HSBC, offer current account-switching bonuses of up to £200 and it shouldn’t be too much hassle to make the change. The Current Account Switching Service (CASS), an industry-wide initiative, makes it easy. Just pick the current account you want to switch to and ask your new bank or building society to switch using CASS. All your direct debits, standing orders and planned payments will be transferred within seven working days. Magic.
Prefer to manage your money on your phone? Monzo and Starling Bank are banking apps that can be downloaded within minutes for super easy money management and both are protected by FSCS.
Should I Get A Credit Card?
Credit cards have earned themselves a bit of a bad rep. We’ve all heard the nightmare stories about spiralling debts and unpayable interest.
But when managed well and paid off every month, they help to build your credit score. This is super important when applying for other credit cards, mortgages, loans and even some jobs.
Credit cards also offer protection when you buy something and it doesn’t show up or isn’t as it should be. You can claim your money back under Section 75 of the Consumer Credit Act if things go wrong when you’ve paid between £100 and £30,000 for it.
There are a number of credit cards which offer interest-free terms. Others reward borrowers with cashback and points. For example, Sainsbury’s gives you 31 months before slapping on interest and you’ll even earn Nectar points as you spend. And right now, they’re offering 1,000 bonus points for every £40 spent in store up to 10 times in the first two months if you apply before 25th March.
What is VERY important though is to set up a direct debit to cover at least the minimum monthly repayments. Your best move is to pay off the borrowed amount every month to avoid hefty charges. Also it’s a bad idea to use credit cards to withdraw cash – it will be mega expensive. And if you’re an over-spender, give the cards a miss altogether.
Can I Buy A House?
British people are obsessed with getting on the property ladder but it’s going to take a bit more than giving up the avocado toast and takeaway coffees to get a leg-up.
First-time buyers over the age of 16 can save £200 a month in a Help to Buy ISA, after an initial £1,200 in the first month. You’ll earn interest and the government will boost your savings by 25% when you come to buy a house.
There are rules though. You need to save between £1,600 and £12,000 and the house has to cost a maximum of £250,000, or £450,000 in London. The most free cash you can get is £3,000.
If you’re thinking of buying a house soon – as in within a year – it’s well worth opening one. At the moment the top rate on offer is 2.53% from Barclays.
If you’ve got a bit more cash or a bit more time you could open a Lifetime ISA. You can save up to £4,000 a year until you’re 50. Every year you’ll get a sweet top-up of 25%, up to £1,000.
You have to be between 18 and 40 to open the account and your cash is tied up until you buy a house – or until you turn 60. If you need the money for any other reason you’ll be slapped with a 25% withdrawal charge on the amount withdrawn. You can’t just take it out willy nilly.
You’ve also got to have a Lifetime ISA open for at least a year before you can use it to buy a house, which must cost £450,000 or less.
How Can I Save Money Easily?
Money saving, like charity, starts at home.
If you’re one of the millions of households on a standard variable energy tariff from one of the big suppliers such as British Gas or Npower, you could save around £250 or more a year if you switch.
Pop your details into MoneySavingExpert’s Cheap Energy Club and it’ll let you know if you can save and help you switch. It’ll also check every month whether you’re still on the cheapest tariff and let you know.
You’re also probably paying too much for broadband, TV contracts, car insurance and your phone. Give them a call, tell them you’ve found better deals elsewhere, and give them the chance to win you back with a juicy offer.
Before you buy anything, see if you can cut the cost by using a cashback site such as Quidco and TopCashback. Train tickets, insurance and energy tariffs are all examples of things you could save money on.
FSCS also has an online tool to help you manage your money, showing you how much you can save if you buckle down. They also offer loads of money tips and guides to help you manage your money better and make your cash go further.
These are all quick wins, but it’s also important to think about your future finances. This means addressing your pension. Yes, you’d probably rather be doing anything else, but how else are you going to afford all those cruises and polyester slacks when you’re old? Essentially by sacrificing part of your salary now. It means you’re funding your retirement and there are tax benefits, too.
Almost all staff are automatically enrolled in their company’s pension scheme. And if you’re not, you’ve got the right to ask to join.
How Can I Afford A Holiday?
Start saving in a separate account. The state of your holiday fund could be the difference between a once-in-a-lifetime trip and one you'd really rather forget.
Before you go on your holiday, check out the websites of local restaurants and bars to get a feel for prices in the area. For example, a bottle of beer in Bulgaria can cost as little as 73p. In New Zealand, expect to pay £4.39.
You’ll not be a stranger to the eye-watering prices of flights during peak periods such as school holidays. It’s all about demand. But there are some key things to remember: Tuesday is apparently the cheapest day to fly, you should aim to book 60 days in advance, and evening flights cost less. For specific destinations, search on Momondo’s flight insight data tool – just type in the destination and click “flight insight” to learn the cheapest days and times to fly.
Be sure to hunt down deals on comparison sites such as Kayak, Skyscanner and Momondo. Kayak’s search includes card and baggage fees. Skyscanner and Momondo both show you the cheapest days to fly.
Easyjet’s “Flexifare” also lets you switch dates a few weeks either side of when you’ve booked (provided there’s space) at no extra cost. The idea is that you can buy cheaper tickets at a less popular time to travel and change them to when you actually want to fly. This isn’t a foolproof plan as it’s subject to availability, but worth a shot if you can be flexible.
Investigate “splitting” your tickets. So if you want to fly to New York, you may be able to save money by buying a flight to a city en route and buying another ticket to NYC from there. It might prove cheaper to book a flight to, say, Norway, and then from Norway to NYC. It requires a bit of research but it's worth it if you can make savings.
Then there's the holiday money. Don’t leave it until the last minute because airports are a well-known rip-off. You can compare online providers using MoneySavingExpert’s tool Travelmoneymax to make sure you're getting the best deal.
Try not to use your debit card while you’re away as you’ll be hit with fees. Revolut, the mobile banking app, doesn’t charge customers to use their cards abroad and if you need cash you can withdraw £200 for free within a 30-day window. Metro Bank also offers free debit card usage in Europe.
With travel insurance, try to buy it on the day you book your trip; that way you're covered in case something happens with your flight. Comparison sites such as GoCompare, Comparethemarket and MoneySuperMarket can help you find the best deals but be wary of the cheapest policies as they won’t cover everything.
As a guide, some suggest looking for a policy with cover of at least £2 million for medical expenses, £1m personal liability, £3,000 cancellation (or enough to cover the total cost of your holiday), £1,500 for baggage, and £250 for cash.
And of course, if you’re going to Europe, make sure to bring your European Health Insurance Card. It’s free and gives you medical care at the same cost as locals, which is often nothing. But remember – this isn't a substitute for health insurance as it doesn’t cover everything.
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