Make the most of your money in 2020 with these top tips to help you save as much as possible.
The Roaring Twenties are back — but hopefully this time with a happier ending.
The financial exuberance and excesses of the 1920s eventually led to the Great Depression of 1929, which lasted until the outbreak of the Second World War.
So let’s learn from the past and ensure we each put our financial house in order to make the most of the 2020s.
1. First, clear your cards
Christmas can be very expensive. According to a recent poll by Nationwide Building Society, consumers were expected to splash out an average £727 each on Christmas 2019. That’s equivalent to almost two weeks’ take-home pay for someone on the average UK salary of £29,588.
And with more than eight in 10 overshooting their plans, and 40 per cent of those polled not even having a budget in the first place, many people’s credit cards have now taken a painful hit.
If yours is one of them, take action to get rid of your debt as soon as possible.
If you can, pay your balance in full when it is due. If you can’t, move your debt to a zero per cent interest balance transfer credit card.
Some will allow you to do this for free — for example, Santander is offering zero per cent for 18 months with no transfer fee.
Others charge a fee but give you a longer period without accruing interest, such as Virgin Money, offering zero per cent for 29 months for a three per cent transfer fee. Do the maths and pick the card best suited to you.
Remember that each application is noted on your credit file, so if you make too many, it could be a problem. Use an online eligibility calculator first, to minimise the chances of being rejected.
2. Stop wasting money
Direct debits are an admin delight. They ensure your bills are paid on time and stop you being stung with late payment fees. But your direct debits need an annual check.
Go through your statement to ensure you’re not paying unnecessarily for classes or services you have stopped using.
3. Make that switch
Switching energy suppliers is simple and saves you money. Yet 60 per cent of people have only done it once, or not at all, according to Ofgem.
If you are one of them, delegate the job to someone else. Lookaftermybills.com is a free service, that you can opt out of any time and automatically changes your deal if it will save you £50 or more.
If you want to be the one making the final decision, AutoSergei can help you find better car insurance and energy deals. It can also alert you when your home insurance is due.
4. Start saving
Start this decade with a savings habit. An easy way to begin is with a regular saver account. This lets you save between £250 and £500 per month, and rewards you with an interest rate of up to 2.75 per cent.
To get the top rate you’ll need to have or open a current account with HSBC, First Direct or M&S Bank.
If you bank elsewhere, Coventry Building Society regular saver is open to all, pays a decent 2.5 per cent and lets you deposit up to £500 per month.
5. Make use of your assets
You work hard to afford your home, so make it work for you, too. The Government’s Rent a Room Scheme lets you earn up to £7,500 per year tax-free from letting out furnished accommodation in your home.
You don’t even need to be a homeowner. If your lease allows, you can make good use of the spare room in your rented home.
If you’d rather not share your living quarters, consider renting it out while you’re away.
“Holiday rentals in London cost an average of £161.24 per night,” says Maxime Leufroy-Murat, chief executive and founder of City Relay, London’s leading short let property management company. “You would only need to rent out your home for five nights a year to cover the cost of Christmas.
“The average City Relay property rents out for 60 nights a year, generating an average income of £9,674.40 — well over the average UK Christmas spend.”
6. Where there’s a will…
More than three quarters of under-55s have not written a Will. That’s a startling finding from the beyond.life online portal for all your afterlife services.
It’s also a statistic I add to, as my “Last Will and Testament kit” has been sitting unopened on my desk for the past two years. Gulp.
If, like me, you’ve been avoiding the paper forms and can’t drag yourself to a solicitor, consider doing it online.
Beyond.life has an excellent Trustpilot rating and promises a legally binding Will in just 15 minutes, that you can start for free and only pay £90 when you print and sign.
While family and friends are likely to be your top priorities, gifts to charities can be mutually beneficial.
“Charitable gifts in Wills are exempt from inheritance tax (charged at 40 per cent),” says Rob Cope, director of Remember A Charity. “And those who donate over 10 per cent of their estate to charity get a discounted tax rate of 36 per cent across the remainder of their estate. This means that if someone’s estate is valued at just over the inheritance tax threshold level, a charitable gift can help to bring the taxable sum down significantly — benefiting both families and charities.”