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Revamp your finances
By Hannah Ricci
Would you like a pay rise? Silly question, of course you would - especially in January when most of us are feeling the pinch after our Christmas excesses. But what if your boss isn't feeling generous? If you take the time to rearrange your finances you could award yourself a whopping rise instead.
This isn't about cutting back or changing your lifestyle; it's about making pain-free improvements to your finances to free up money to save, clear your debts or indulge yourself. Even if you're not in debt and you think your finances are in good shape, if you reassess your providers and review your spending habits you'll be surprised how much you can save.
Read on to see how you could give yourself a pay rise of £10,000 or more.
Mortgage
Your mortgage is probably your biggest monthly expense, and if you're on a dud deal it could be costing you hundreds of pounds every month. Experts estimate that around 70% of homeowners are paying their lender's standard variable rate, which your mortgage reverts to when the fixed or discount rate expires. SVRs currently average around 7%, so on a loan of £225,000, monthly repayments are around £1,590.
Find the best deal in the online best buy tables.
Switch mortgages
Save: £5,535
Loans and credit cards
Thousands of us are also paying eye-wateringly high interest rates on personal loans and credit cards, when often there's no need.
Credit card interest rates tend to rocket after the initial tempting 0% period ends. If you forget to switch or just don't bother, you could be paying up to 18% in interest - that's an extra £180 a year on a £1,000 balance.
Check for credit card best deals.
Check for loan best deals.
Loan providers often charge penalties for early repayment, so check this first before switching.
Review credit cards
Save: £180
Running total: £5,715
Get a better loan deal
Save: £706.60
Running total: £6,421.60
Insurance
When it comes to buying insurance we all too often make an initial half-hearted attempt to get a good deal, then keep renewing with the same provider. But there's rarely anything to gain from loyalty, with many providers offering the best rates to new customers. So if you can spare the time to shop around every year there are big savings to be made.
Home insurance on a three-bedroom home in Staffordshire, valued at £275,000 with £10,000 of contents cover, for example, can cost up to £700 a year. An online search found an identical deal for just £224.21, a saving of £475.79.
Following price hikes in the motor insurance industry last year (including from the UK's largest insurer Norwich Union), you may be on an expensive deal and get hit with increased premiums when you renew it.
"If you have not made a claim in the last year, you should expect to pay less for your insurance this year," says James Harrison, chief executive of price comparison site, insurancewide.com. "Shop around to compare policies on a like-for-like basis, and consider excesses and exclusions carefully."
Premiums vary considerably across insurers. A 35-year-old man seeking fully comprehensive insurance with four-year no-claims on his Mini Cooper, for example, could save up to £197.64 just by scouring the market.
It's also worth reviewing your insurance policies and considering whether you really need them. Mobile phone insurance, for example, can cost around £8 a month. But you may find it's already covered on your home insurance.
See what you can save
Review your home insurance
Save: £475.79
Running total: £6,897.39
Review your motor insurance
Save: £197.64
Running total: £7,095.03
Ditch needless insurance policies
Save: £96
Running total: £7,191.03
Utility bills
With 14 price hikes from the UK's 'big six' suppliers, energy bills are flying through the roof, yet energy regulator Ofgem says that 10 million customers have still not switched to the cheapest supplier in their region.
"The average household's combined gas and electricity bill has hit £1,000," says Tim Wolfenden, product strategy manager at uSwitch.com. "Yet consumers can save more than £300 by switching both their gas and electricity to a duel-fuel tariff."
Online tariffs tend to be the best deals: they require you to pay by direct debit and allow you to manage your account via the internet. See what you can save.
Switch utility providers
Save: £300
Running total: £7,491.03
Phone and broadband
You can make huge savings by swapping your phone and internet providers. "Make sure you only pay for the connection speed you need, as this could be wasting up to £149 a year," advises Steve Weller, head of communication services at uSwitch.
It's possible to save without sacrificing speed. Some suppliers also offer bundles, where you can get more than one service from the same provider. However, customer service levels vary between these companies, so ensure you understand the deal before signing up.
There are also savings to be made by switching your landline.
See what you can save.
Switch phone and broadband providers
Save: £352.44
Running total: £7,843.47
Control your spending
After you've given yourself this financial MOT, you can rest safe in the knowledge that your money is working hard and you're not overpaying where you don't have to. The next step is to look at where you and your family are needlessly frittering money away.
If someone took £1,725 away from you this year, you'd be very annoyed. Yet this is how much we each waste every year on food, entertainment, gadgets and clothes that we don't need or use, according to Prudential. Temptation, clever marketing ploys or a lack of self-discipline - there's numerous reasons why we spend when we don't need to. Saving money, however, doesn't have to be about cutting back on the things we enjoy, but rather learning how to stop wasting cash.
Bank statements are a source of dread for many people, but they are crucial to discovering where your money goes, so dig out the past three months' statements and look at your income and expenditure. Saran Allot-Davey, managing director of Heron House Financial Management, says expenditure breaks down into fixed costs such as mortgage payments and bills, and whatever is left over and spent throughout the month.
Work through your transactions - are they lots of £10 and £20 ATM withdrawals that you can't account for? This is a common feature in bank statements, along with debit and credit card transactions for small amounts. "They can seem insignificant, but if you add them all up you might be in for a shock," says Allot-Davey. Check all your direct debits too - are there old subscriptions or memberships that you're shelling out for but no longer use? Be ruthless and cancel them. For example, gym memberships can be as much as £90 a month, and kidding yourself that you'll "definitely go next week" is throwing money down the drain.
Allot-Davey says your next step is to keep a spending diary for one or two weeks to see where your money disappears. "Be honest with yourself, so you can identify where your weaknesses are, and times and situations where you overspend or spend unnecessarily."
Draw up a budget
A budget is essential to keep track of your income and expenditure and to see clearly in black and white just how much money you have.
Review your spending habits
Save: £3,257
Grand total: £11,326.47
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