Some of us will have started to think about taking out a second mortgage to pay for the festive season. Others, meanwhile, got a bit carried away at Know Your Money’s Christmas party at the horse races this week. In the current economic climate, there are all sorts of reasons why we might be feeling a bit credit crunched, and most of us could probably do with a few extra pounds in our pockets.
What some people don’t realise is that there are plenty of easy wins around the house and in your personal finances that can boost your expendable cash. We’re not just talking small change either – follow a few of Know Your Money’s top tips and your back pocket will be bulging in no time.
Save savvy
There’s plenty to be said for putting away money for a rainy day and there’s all sorts of ways you can do it. The humble piggy bank is one of the easiest and it works even better when you come up with a good plan to fill it. Turning it into a swine-shaped swear jar would help to restore some old-school moral fibre to the world, while diverting cigarette or chocolate money will be good for your health as well as bringing home the bacon.
But that’s just the start of it really. Regular savings accounts offer great rates of return compared with other options through the high street banks and building societies, and by automatically allocating funds from your wages at the start of the month you should be able to ensure that less of it goes into fruit machines, impulse buys and all of the other ridiculous ways we all waste our money these days. Kids’ regular savings accounts tend to pay out even bigger returns.
Maximise your use of tax-free savings. Children and the unemployed don’t pay tax. Therefore, if you have a full-time parent that isn’t working, you might want to look at moving your savings into that person’s name.
There are also ISAs, of course, which currently offer tax free savings of up to £11,520 per year for anyone, no matter what their working circumstances. Half of the maximum can be paid into a normal cash ISA, with the rest available as a stocks and shares ISA. For couples, it is worth using up the maximum ISA levels for both of you before you start looking at other options.
Get your tax strategy sorted
While we’re on the subject of tax, you may be paying too much of it. We’re not suggesting you ‘do a Starbucks’ here, simply that you pay only the tax that you should do and that you claim the rebates that are rightfully yours.
Make sure you are receiving all of the tax credits you are entitled to, including Child Benefit, Working Tax Credit and Child Tax Credit. There are also some slightly more leftfield tax credits available too. If you work in a uniform for instance, you can claim back the cost that you incur in keeping it clean. The great news is that you can also claim back your costs backdated for a number of years, meaning if you haven’t made use of this entitlement up until now then you could be in line for a big return.
Her Majesty's Revenue and Customs announced earlier this year that it wrongly taxed millions of people and has sent letters to the fortunate with a rebate and the not so fortunate with a bill.
You should also check your tax code. Her Majesty's Revenue and Customs announced earlier this year that it wrongly taxed millions of people and has sent letters to the fortunate with a rebate and the not so fortunate with a bill. If they’ve made mistakes on such a grand scale before, who’s to say they’ve got it right now? The HMRC website has details on how you can check your tax code and how to correct it if you think it’s wrong. The website also lays out all of the aforementioned credits.
If you are a couple, and you have capital assets such as stocks and shares or a buy-to-let home, it might be beneficial to put them into joint ownership. You will each be entitled to your personal capital gains allowance (currently £10,900 per person per year) if you come to sell them. On that note, we wrote recently how buy-to-lets could offer you a very sturdy investment opportunity in the current economic climate. They also come with the added bonus that you can write down the mortgage payments against your tax bill in some instances.
And singletons, don’t despair, we’ve a tip for you too: if you live alone, you qualify for a 25 per cent reduction in your council tax. Make sure you’re getting it.
Finally, you might consider upping your pension contributions – they come from your gross salary, before it is taxed, and will then be hopefully earning more for your final payouts.
Keep the bills down
The household utility bills are a serious drain on our finances, with gas, electricity and telephones culpable for some serious dents to our holiday funds. We published a whole article last week on how to save on your heating bill, including estimates on how much you can save for some pretty minimal effort. That article can be found here.
The phone bill is one that requires some further attention here and now though. Here’s our three top tips for keeping the conversation flowing but the costs curbed.
- Calling a company on a premium rate number? Resigned to the fact that you’re going to be spending a fortune to listen to Greensleeves over and over again? Even HMRC siphons £136m per year from us with its 0845 'helpline', it was revealed this week. However, All companies have a local number which gets you through to the exactly the same place, at a fraction of the price. The companies don’t make a habit of advertising these numbers, of course, but there are Internet sites and Forum boards which list them out. Finding them is rarely too much of an issue.
- We live in a digital world. Put your handset down and pick up your laptop instead. Services like Skype and Viber let you make calls to anyone else with an account, for the square root of nada. Even if the other person doesn’t have an account, making calls to mobiles or landlords is far cheaper through the Internet based providers.
- If you are looking to ring abroad, and you can’t go via the Internet route, use a service like Telediscount. The website offers calls to anywhere around the world from just a penny per minute, using your normal landline telephone. You state the country you are looking to call, find out the charge, dial the number the website provides you, and then dial the number of your contact when instructed. There are different options for both landlines and mobiles abroad and even our old friends, the 0844 numbers, which are reduced to 4p per minute.
On the electricity front, our top tip is to pay attention to your plugs. We all know that appliances like televisions and stereos left on standby can use half as much as if they are in full operation, but did you know that laptop and mobile chargers left plugged in use electricity even if they are not connected to a device? True story.
Earn some extra cash
Most of us will be able to put our respective talents to use to earn some extra cash on top of our wages. Writing freelance articles for the web could earn you upwards from 10 pence per word – or £100 for a 1000 word piece – while the going rate for musical tutorials is around £20 per hour.
There’s also accounting, washing, babysitting, proof reading, educational mentoring, social media management for small businesses, dog walking, gardening, party planning and a whole world of other work that you can pick up casually. We should probably implore you to let HRMC know about what you’ve earned in a self-assessment tax form, but you’ll usually be able to find enough expense allowances to make sure what you pay is minimal, if anything.
You could also consider becoming a mystery shopper. This will allow you to get free meals in restaurants by carrying out a review of the service you receive while you’re there.
Groceries
According to the Government Waste & Resources Action Programme (WRAP), the average UK family throws away £680 worth of food each and every year. That amounts to £12bn and 7.2m tonnes of food between us.
In order to avoid wasting food and money, make a weekly plan for dinners and lunches and work out exactly what ingredients you will need. Then, when you’re at the supermarket, buy in bulk on single items that have long shelf lives, and those that you know you will use up. Use your local markets for fruit and vegetables where possible; they’re almost always cheaper.
Don't pay a premium for fancy packaging, the budget options that the supermarkets offer are often exactly the same quality.
Don’t pay a premium for fancy packaging. Meat, as a prime example, is often one of the most expensive items on your shopping bill, but the budget options that the supermarkets offer are often exactly the same quality. All meat is graded on an alphabetical system – the ‘budget’ options are most often the same grade as the premium ones.
In fact, many of the budget lines are worth a try. Know Your Money tips its hat especially towards Tesco’s deliciously zesty ‘Everyday double strength lemon squash’, available at a mere 39 pence per 750ml.
Don’t get taken in by the offers – a big bold price saver label doesn’t necessarily make it the best deal. Check the price per weight information to make sure you’re not getting hoodwinked. Be wary of the ‘three for two’ offers too. These always seem like a good bargain, but ask yourself if you’d really buy them all separately if they weren’t in a deal and consider exactly how much you’re saving when it’s a ‘cheapest item free’ arrangement.
Finally, never go to a supermarket when you’re hungry! You’ll end up with a veritable banquet but will feed the bin more than you put away yourself.
Budget properly
‘Fail to prepare and you prepare to fail’, as is often said yet almost as often disregarded. The best way to keep your costs down is to keep an eagle eye on your outgoings, remembering to factor in a little to account for the unexpected. You’ll then be able to work out how much you have to spend throughout the course of the week or month and you’ll be less likely to run into trouble.
If you’re computer savvy at a base level, you can set up your own budget tool using a spreadsheet like Microsoft Excel. However there are purpose-built programmes out there which will offer a more holistic view, such as Money Dashboard. This service allows you to link it directly to your bank account so that all of your most recent transactions and your balance are automatically factored into your budgets.
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Author: KYM Editor
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