One of the most valuable and rewarding pledges you can make to yourself is truly taking control of your money matters.
It’s perhaps not as exciting as starting a new hobby, but it’ll be worth the effort – if nothing else, it can hugely help your mental health, so getting on top of your finances could really improve how you feel overall.
Sadly, it seems many of us don’t feel ‘financially fit’. A study by Coventry Building Society revealed that one in three people in the UK (34%) don’t feel in shape when it comes to their finances, meaning stress and confusion over how to look after their money.
But how does that compare to Saga readers? We asked authors of the study to crunch the numbers on those aged over 50, and it showed that our demographic is more comfortable with its finances, with only 28% admitting they don’t feel in shape financially.
However, that still means over a quarter of you could still do with some help demystifying how to control your money, so here are 10 of the best ways to get your into the best financial shape of your life.'
1. Getting to grips with your spending habits
The first step is simple: go back to basics. Be forensic about what goes in and what goes out of your bank account by looking at statements regularly every month.
You can even make a handwritten list, if seeing everything in black and white makes it clearer where you spend and where you can make easy savings, if that’s a priority for the year.
This might be spotting subscriptions for publications you don’t have time to read or cutting down on coffee shop lattes, but you’ll soon be able to spot what’s essential spending and what’s ‘nice to have’- and that can be the key to being able to make bigger changes that’ll really make a difference.
2. Get technology savvy
If you’ve got to grips with your spending, but don’t want to have to balance your budget in a notebook every day, there are plenty of clever third-party apps, or your bank’s own offering, to help you keep a better eye on things throughout the month.
(If you have multiple accounts from different banks, many apps will let you see them all in one place, so it’s easier to spot what’s going on financially.)
These budget apps generally work by letting you categorise your spend on things like bills, entertainment, savings and so on, so you’ve got a true view on what’s actually being spent.
You can either enter your spending as you go, or some will automatically pull your transactions in, if you give permission.
In using these apps, you’ll be able to keep up to date on the state of your account, and most have features to help curb unnecessary spending too. This works by letting you set limits on each category – if you overspend on food shopping, for instance, you’ll need to find the money elsewhere in your budget to cover it.
While these apps won’t solve all your financial needs in one go, they will help you understand where your money is going – and help you start making smarter decisions.
3. Have a switch-athon
Spend a few hours – or a day if necessary - going through your household bills to see what services you can switch to save money.
There’s potential to save hundreds of pounds across the board, so look at TV subscriptions, broadband, line rental and your mobile phone bills, and get online to see if there’s a cheaper option.
One top tip: never to be afraid of ringing your provider and say you’re thinking of leaving, as that often triggers offers or discounts for a set period.
You might also see if there’s anything you can do to reduce your gas and electric bills. Log into your account and see if your energy provider can offer you a cheaper tariff – or use a comparison site to check across all providers to see if there are savings you can make.
4. Review debts
If you have debts, Simon Trevethick at StepChange Debt Charity told us that anyone struggling to repay them needs a detailed budget (as explained above) to understand how much is left to go towards paying debts after essential spending.
He said: “If, after going through your budget and identifying areas for savings, you still don’t have enough to repay your debt, don’t panic, as support is available.”
If you’re struggling with credit card payments, Trevethick pointed to other cards that let you transfer the balance. He said: “Transferring a debt from a card with a high rate of interest to one with low or 0% interest could help you pay off the debt faster [but may incur a charge to do].
“But low or 0% interest credit cards are hard to get if you don’t have a good credit rating. This means you can’t rely on balance transfers as a way to deal with your credit card debts.
“If you do transfer a balance, make sure you cut up the old credit card and close the account. Otherwise, you may be tempted to keep spending on both cards and you’ll end up with two debts.”
If you’re struggling with your finances, remember that there is free help available via places such as Citizens Advice, National Debtline or StepChange Debt Charity.
5. Check your credit record
Taking the time to make sure your credit report is ship-shape could pay off in the long run, because the best deals are typically reserved for those with glowing reports.
Your credit file is checked even when you take out a new phone contract, so it’s worth knowing what information is being seen about you.
By checking your credit report, you will be able to spot and correct any mistakes – which are more common than you might think. Get a copy and you may find ways to improve your score and save money on any future borrowing.
There are three credit agencies - Equifax, Experian and TransUnion – that might be used when you’re checked. Head to checkmyfile.com, which allows you to see information from all three agencies, using a free 30-day trial offer, although you will need to pay to access all your information on an ongoing basis.
6. Make sure cash savings are working hard
If you have money sitting in an old savings account you opened many moons ago, you might be able to gain more interest from switching up.
Anna Bowes, co-founder of comparison website Savings Champion, told us: “Many savers fail to review or switch their savings accounts and as a result they could be missing out on much more interest.
“Many older accounts pay some of the lowest rates on the market. If you switch you can earn the interest you deserve.”
Now that interest rates have risen, it’s a good time to check what your money is earning and switch to the highest-paying account that suits your needs.
Further, according to the Building Societies Association, up to a third of savers keep their cash in current accounts only, many of which earn no interest, so it’s wise to make sure your money is working as hard as it can.
7. Be more tax efficient
While there are many tax breaks available, there’s one that experts will instantly recommend: if you’re still working, make sure you’re paying as much as you can afford into a pension. The tax breaks are unrivalled, and it’s still worth investing hard later in life.
You can do it via PAYE by asking your employer for help with adjusting the amount you contribute, or you can put money into a personal pension.
As a reminder: you get a tax top-up when you pay money in, at the rate of 20% if you’re a basic rate taxpayer, 40% for those on the higher-rate tax band or 45% for top rate taxpayers.
So, every £800 paid in would automatically be turned into £1,000. Higher- and additional-rate taxpayers could then claim back an additional £200 or £250 via a self-assessment tax return.
Don’t forget to use as much of your £20,000 tax-free ISA allowance as you can afford too. There are a few different ISA choices available, with cash or stocks and shares being among the most popular, and you can spread your allowance across them to suit your financial needs.
Do remember that a stocks and shares ISA involves investment, which puts your money at risk, and could mean you get out less than you put in, compared to a cash ISA that offers a more stable return.
8. Check your tax code
Incorrect tax codes are particularly common for those taking their pension, especially those who typically have income from lots of different sources.
As shown in our piece on how you can claw back money owed to you, a recent survey from financial services provider Canada Life showed that 43% of UK adults who checked their tax code found they were on the wrong one.
Even HMRC can get things wrong — and no one wants to pay more than they must. You’ll find your tax code on your P45, the PAYE Coding Notice sent by HM Revenue & Customs, or on your wage slip if you're still working.
Pensioners on low incomes can get help from the charity Tax Help for Older People at taxvol.org.uk or call 01308 488 066.
9. Spend wisely - get paid to shop
Why not earn rewards on your everyday spend by using cashback schemes? Websites such as Quidco and TopCashback offer cashback if you buy through them.
This tip is no great secret, but there are still many who think it sounds like hard work – but it really isn’t. You can pay a subscription to use them, but they offer a free tier of use too.
The cashback you receive on shopping is an effective discount on the big brands they partner with including Argos, John Lewis, Boots and B&Q – although do make sure you focus on the best deal for your needs, rather than those that give you the most money.
Thinking of the cashback as an unexpected bonus means you won’t alter your shopping habits, making it easier to stay on top of your outlay and not encourage you to start spending more.
10. Do your Christmas shopping all year long
To spread the cost of Christmas, buy gifts as you go during the year. There are certain items family members will always want, so keep your eyes peeled for bargains and generous discount codes and stash away the gifts until December.
You may want to keep a list somewhere you’ll access regularly, so you don’t forget what you’ve bought - or where you’ve stored it.
Also, if you’re not spent out, consider buying up bargains in January such as crackers, decorations and beauty or skincare gift sets that are routinely heavily discounted – sometimes as much as 70%. It will ease the pressure for next year or can help with birthday gifts too.
Key takeaways
- Start by writing down all your income and outgoings to get a sense of where you’re spending
- Consider using an app to help track your daily spend
- Make sure you’re getting the best deal on things like broadband and phone contracts
- If you’re struggling with debt, talk to organisations like Citizens Advice, National Debtline or StepChange Debt Charity
- Keep on top of your credit score
- Check your tax code is correct
- Make sure your savings are working hard for your financial goals
- Consider shopping out of season or signing up for cashback sites to help with outgoings
