Personal Finances: Spenders & Savers

P‎eople have different attitudes and approaches to money, according to their lifestyles and income. Be you a spendthrift saver, or a compulsive spender, research shows that both types can learn from the other.

There are also similarities between savers and spenders – a major one being that spenders and savers alike have regrets and fears over missed purchases and opportunities.

Professor Ewan Gillon, the clinical director of First Psychology Scotland recently stated that “our attitude to our money is influenced by psychology… some people don’t spend because of fear – they are anxious people and deny themselves things that could be helpful to them. Others take it to the other extreme, spend more than they earn and get themselves into debt – encouraged by our current culture and the easy availability of credit.”‎

It is easy to make a spreadsheet on Excel or similar, and track personal finances that way. However, there are many interactive or online tools – for example, free apps such as OnTrees or MoneyDashboard– could help you to see where the money is going. These and other tools can be configured to be linked to bank accounts and credit cards. They automatically categorising spending on the accounts, giving an insight into his much and how often money is spent on social activities, bills, food, clothes and anything in between.

This information can be very helpful, according to Moneydashboard CEO Steve Tigar; ‎“if you monitor your spending over a period of a few months and continue to revise your budget based on the results, you will have a much better idea of how you use your money…. ‎You might want to cut down on the amount of takeaways you buy, but not really know what a realistic goal would be. Start tracking this and you might be amazed at just how much extra money you have left over to add to your savings at the end of the month.”

Setting aside such information, many ‎these days often struggle. Even those with decent salaries can regularly struggle with monthly outgoings. Those can learn budgeting tips and prioritising spending from those who are able to balance their household finances. For those regularly in debt, is imporfant to know that help is available, and that they can feel supported at such times.

There are also those who struggle to spend what money they have, even when spending would improve their lifestyle. Many of those may be suffering from anxiety about the future – or have experienced debt and financial pressure previously. ‎A survey carried out for the BBC b‎y behavioural finance experts discovered that men were much more likely than women to see money as a form of security. A tenancy to hoard, or avoid spending, can often arise. That aside, over a third of people surveyed said that they felt guilty about spending on themselves. M‎onitoring personal finances, and setting aside some money for little lxuries may help those to spend guilt-free. Those that are hoarding money due to worries about unexpected life events (such as illness) should perhaps consider a form of life insurance to take away the anxiety.

As a final word, Professor Gillon has ‎advice for both savers and spenders. For spenders, he advises to wait a day before making a significant purchase: “after 24 hours your emotions will have changed. If you still want to make the purchase it will be a logical one, not an emotional one.” For savers, and those with anxiety over their finances, ‎Prof Gillon suggests finding someonewhose financial strategy and sense can be related to, admired – and copied. “You’re unlikely to relate to someone at the other end of the ‘saver or spender’ spectrum, so just pick someone whose balance seems better than yours.”

 

How to be a Frugal Music-Lover

MusicMusic makes the world go round and the people come together, if you believe the various songs and sayings. Unfortunately, being a dedicated follower of your favourite artists can put a little too much strain on your wallet if you’re not careful. Not so unfortunately, there are quite a few ways to bring that cost down.

Free Streaming

There are entirely legal ways to stream music for free using services like Spotify and Deezer. All you have to put up with is occasional adverts, as the services make their profit from advertising rather than from charging you for the music. There are also paid subscriptions available with benefits like no adverts, unlimited listening (compared to only a certain number of hours with free accounts), offline listening, and higher-quality streaming. These can still represent good value for those who listen a lot, are purists for the highest sound quality possible, or really hate putting up with even the occasional advert. Even sticking to a free subscription, though, will give you access to huge catalogues of music including most major artists and many minor ones.

These streaming services are available in various ways. They offer downloadable desktop software for your computer as well as smartphone and tablet apps. Most are also available through a web browser, which saves you having to install software and expands the range of devices you can access your account from.

Don’t Abandon CDs

CDs are pretty much dead, right? It’s the age of the digital download, and it has been the age of the digital download for quite a few years. You want songs you can take with you everywhere and have on your computer, smartphone or media player, tablet, and an SD card or USB stick that stays permanently in your car stereo.

Here’s the thing, though; CDs can be turned into digital tracks very easily on just about any computer with a CD/DVD drive. On top of that, unless you are buying one of the latest releases it is entirely likely that you can get a second hand CD of a given album for less than it would cost you to buy that album in digital format. This is legal, as long as you are only “ripping” the tracks for your personal use and not to sell or redistribute in any other way (though be aware that this matter has recently become more complicated and controversial). If you want to try your luck at finding the artists you like or simply browse for new music, charity shops often sell all their CDs for £1 each or even less. When you’re actually looking for a specific title, on the other hand, eBay and Amazon Marketplace are great places to go. Their CDs starting from a little over £1, and digital downloads would often cost several times that.

Tips for Haggling

HandshakeHaggling isn’t a big part of UK culture, and it’s definitely not always appropriate. You certainly aren’t going to argue about the price of your weekly shop when you get to the checkout, for instance. However, there are some circumstances where we might find ourselves trying our hands at negotiation. Haggling is often appropriate when buying a car, for example, especially second hand. It can also be appropriate at markets, car boot sales, and even in antique shops.

The problem is, because the British aren’t big on haggling we often don’t know how to go about it when we do find ourselves in a situation where we want to secure a better price. Here are a few simple tips that can help you haggle more effectively:

Don’t be a Nightmare Customer

Just because you’re in a situation where it is acceptable to haggle, it doesn’t mean you should fight tooth and nail for the lowest possible price. Be polite and respectful, and don’t insult their standard prices as “extortionate.” Apart from being just rude, this is the kind of haggling that often fails because staff aren’t inclined to make a good offer to a rude customer. Also, don’t spend time and effort bringing them down to your required price and then walk away saying “in that case I’ll think about it.” A surprising number of people haggle for the best price before even thinking about whether they will buy the item, and this just makes them look like time wasters.

Don’t Tell Them Your Maximum Price

Never mention the maximum you would be willing to pay. If you do that, the other party will know how high you will be willing to go and will have little or no incentive to offer anything much lower. They might even try to stick to a price slightly higher than your maximum in hopes you’ll be a little bit flexible when they would otherwise have offered you a better deal. Keep your maximum secret.

Haggle With Multiple Items

If you are struggling to make headway with a single item, see if they might be willing to throw in something extra to seal the deal. Alternatively, if there is something else you would like to buy then ask whether you might be able to get a better price for buying them both together. This is often easier for staff and, if it means selling more items altogether, can make offering a discount more in their interest.

Go in Prepared

Do a bit of research before you haggle whenever possible. Try to find out how much an item sells for elsewhere (Google Shopping Search is invaluable for finding out online prices). This can be useful on two levels. It lets you assess what is and is not a realistic price, helping you to be reasonable in your haggling and know what represents a good deal. It also avoids the simple yet very real danger of haggling down to what you think is a good price, only to later find out you could have got it even cheaper down the road or online.

Beyond Comparison Sites: Saving Money on Utilities and Insurance

billsThere are a few things we tend to buy every year – or at least things which come with yearly contracts and then leave us the option to switch. The main ones are utilities (including phone and broadband) and insurance policies.

There is one big, overriding piece of advice that is regularly given out to save money on these expenses; use comparison websites. Of course this is very good advice, and gets repeated so regularly because many people still don’t appreciate quite what a big difference it can make. However, it’s trotted out so often that other money-saving tactics in this area tend to get overlooked. There are a few other steps you can take to reduce the cost of these big, yearly purchases.

Insurance Policies

When buying insurance, it is important to understand that the insurer prices your policy based on perceived risk levels. There are certain things you can do to reduce the amount of risk they judge to be involved in insuring you.

You should never lie on your policy; even if it doesn’t change the overall price it can still invalidate the whole thing. However, there are some things you can do without lying. For car insurance – the most common insurance policy to purchase – if you are a young and inexperienced driver you should consider including a parent as a named driver. In the company’s eyes, this reduces risk. If you find your exact occupation isn’t listed on their website and are torn between two close matches, get quotes for both as the exact phrasing of your occupation can make a real difference to your overall policy price.

Cashback Websites

Cashback websites can be useful for online shopping, but usually they build up a few pennies per purchase. Over time, this mounts up and every few months you find yourself with a balance worth withdrawing. For big purchases such as insurance and utilities, however, cashback offers can be much more attractive.

It varies between different providers, of course, but at time of writing top-paying cashback sites offer many deals from major car insurance providers around the £50 mark and sometimes these approach £75. For gas and electricity, you can claim back £30-40 and on phone and broadband your savings could potentially approach or even exceed the £100 mark. When this is taken into account, you could find that a provider becomes much cheaper than the one which came up as the cheapest on the comparison site. If the cheapest provider also has an attractive cashback deal, on they other hand, they become even cheaper.

Reducing Your Food Budget

Food ShopFood is a necessity, and usually also happens to be a pleasure. However, many people find the weekly food shop a drudge and it is also one item that regularly subtracts from a household budget. While nobody really wants to cut out all the most delicious or luxurious items in their diet, there are a few steps you can take to reduce the amount you spend every week.

Make a List

Making a list can do more than just ensure you don’t forget anything. It is also a valuable way to keep yourself focussed on the things you want to buy. One of the main reasons people overspend on their food shop is that they do not remain focussed. They let their stomachs talk them into buying things they wouldn’t otherwise get, or they get tempted by special offers before reaching the checkout and realising that their efforts to save money have just left them spending more. There is nothing wrong with giving yourself the odd treat outside of strict necessities, but if you want to bring your non-essential spending under control a bit then writing and sticking to a list is a great place to start. In the modern, technological age, there are a number of apps that enhance the concept of the shopping list with smart functionality.

Take Full Advantage of Offers

If there is an offer on something you regularly buy, then take full advantage of it. If it is something that will keep for a long time, or is suitable for home freezing, stock up while prices are low. This may mean that you end up spending more initially, but the result of your bulk purchase is that you will ultimately be a significant saving. You will not have to spend money on buying this item again for some time, but will instead effectively keep benefitting from the same limited-time special offer price. You can often achieve a similar effect by simply buying a larger pack size as these are normally cheaper than buying the equivalent amount in smaller packs.

Bring Your Loyalty Card

A loyalty card can bring two kinds of savings. As you shop, you will amass loyalty points which can be used as credit to spend in the shop in future. This may be a small amount, but can really mount up if you shop and use your card regularly. On top of this, you will often receive vouchers for things you regularly buy either at the point of checkout or in the post. This is the shop’s way of making sure you keep buying these things from them instead of a competitor, but as the result for the shopper is a discount on something they were already planning to buy it is hardly a one-sided arrangement.

Mortgage “Price War”

The Bank of England’s Monetary Policy Committee recently voted, yet again, to keep the base interest rate where it is – at 0.5%. The base interest rate has stood at (or around) the low figure since 2009.

As a result of that unchanged rate, banks have taken advantage of such continuous low rates- and have reflected them in mortgage rates. Amidst recent figures and market indications that first time buyers are effectively being priced out of home ownership, and the increasingly larger and larger deposits that are needed, the news from the banks is promising for those seeking a mortgage- and first time buyers.

Since the Bank of England’s announcement was made in January, the major banks have effectively set a mortgage ‘price war’, as each bank has been lowering their mortgage rates. The best rates and savings are those on a ten year fixed rate, or for those able to put down large deposits (usually 35% or more).

Santander had offered a 2.94% rate for ten year fixed rate mortgages, as had Barclays. First Direct had then decreased its own ten year fixed rate from 3.49% to 2.89%. The same banking competition was also seen in five year fixed rate mortgages. First Direct decreased its five years rate by 0.2%, from 2.61% to 2.59%. This was countered by Barclays with five year fixed rate mortgages starting from 2.29%, a decrease of 0.1%.

Those mortgage rates are on offer only for those with large deposits. However, for those with small deposits, or around 10% deposits (a large portion of first time buyers), the unchanged interest rates also brought some good mortgage deals from the banks. Once again, Barclays set an example, here offering a five year fixed rate mortgage with 10% deposit with rates from 4.38% to 4.05%. Barclays’ two year fixed rate similarly fell for those with a 15% deposit from 2.63% to 2.49%.

The unchanged interest rate means that more banks are offering more mortgages at similar low rates. This comes amidst an unexpected surge in house price in January. According to Halifax, the average house price rose by 2%, after a modest 1.1% average piece increase in December. The surge saw house prices now at a national average of £193,130. This is surprising, as January traditionally sees much less activity in the housing market. Although many urge caution with the figures from recent months, this seems to indicate that the much troubled and volatile housing market might not be cooling just yet.

Whilst house buyers can benefit now from excellent low mortgage rates, indications seem to show that this trend is set to continue. As more efforts are put into house building and regeneration projects, and the UK economy slowly grows and recovers, many economists consider that the Bank of England will hold interest rates at this unprecedented low of 0.5% until well into 2016. Whilst economic theory and trends seem to support that conclusion, it must be noted that the ever troubled Eurozone, uncertainty as regards Greece, and the upcoming General Election will no doubt have an economic impact.

In the meantime, what is certain, though, is that this is all welcome news for home buyers, and those seeking to get on the property ladder. Such first time buyers are also vital to the success and growth of the housing industry, and as such every effort needs to be made to make housing more affordable to the young, and to first time buyers. Low interest rates will not doubt assist in this regard.

Home Improvements – How to save yourself money

Improving your home can easily raise the value of your property: always a good thing if you have the funds for it. There are many such as re-roofing or installing new windows that are big jobs simply best left to the professionals.  With that said, there are some home improvements that can be done relatively easily which can save you a lot of money, and make a lot of difference.

Some of the easiest home improvements to do while saving yourself money include simple things like hanging new blinds, when they are purchased the store offer to install them for a extremely high fee, although pretty much everyone can do if the instructions are included with the blinds.  Not many tools are required, nearly everyone has them lying around, the skills needed are really simple. Hiring somebody to this would be a waste of good money.

1Another easy way to improve your home is to hang new lighting fixtures. The price if costs to get someone else to hang it are easily sometime doubles the price of the lighting fixture itself! Although the only thing stopping most people from changing it themselves is the fear of electricity.

If the instructions are followed, it would prove to be really simple, namely switch off the circuit breaker in your home, then the job becomes almost as easy as hanging up the blinds! The money wasted is better spent on buying better lighting fixtures.

Painting in addition is a really straightforward way to add value to your home, manually; it would make the home look much better as well. A painted room can really change the whole view of the house in a matter of hours. Attention to detail is key, as well as a well kept secret to properly painting a home.

In essence, you can save yourself a lot of money if you role up your sleeves for some work. But remember, some changes to the home are best left to the professionals, in particular if they involve any potential safety element or electrics etc.  In those cases, just shop around for a good price for a job from someone you might have heard of or who has been used and recommended to you – cheapest isn’t always best.

Getting Gadgets for Less

GadgetsGadgets are often useful and always nice-to-have. Sadly, they can also be rather expensive. There are a number of tactics you can use to bring the cost down and get the gadgets you need or want for less.

Get a Free or Cheap Satnav

If you have a smartphone with GPS capability, you can basically get a free or very cheap satnav by downloading an app. Your phone probably comes with one navigation app installed, but this may not be very good. You can download much better free apps like Waze, offering almost all of the functionality you would expect from a dedicated satnav. All you need to do is buy an in-car mount for your phone for a couple of quid online.

If you want a truly fully-featured satnav, you may not get it for free but you can still save money by using your phone. For as little as £20, various paid apps such as Copilot can offer you functionality that puts any dedicated device for shame. Even if you’re determined to go with a big brand, you can download apps from the likes of TomTom and Garmin, which basically transfer the interface and functionality from the brand’s dedicated devices to your phone. These tend to cost around £40-50, so more expensive than other apps but still cheaper than a dedicated device from the same brand.

Buy Refurbished

Some people have reservations about buying refurbished products. It is true that you have to ensure you buy from a reputable seller, but as long as this precaution is observed you should have nothing to worry about. Refurbished products are usually little or no different from brand new ones. Usually, the main thing that sets them apart is a much lower price tag.

There are many reasons a product may be sold as refurbished. It might have been returned as faulty and had the fault repaired. It may be an ex-display model. It may even simply have been repackaged. Some refurbished products are as-new in every way, others may have minor cosmetic blemishes (which you should be informed about before sale). As long as you buy from a reputable retailer and the product has been restored by the manufacturer or a manufacturer-approved third party, you have little to worry about. Usually, they also come with a guarantee as well.

Mobile Phone Contracts

There are several ways you can save money on gadgets through mobile phone contracts. The most obvious way is using a contract to get a good deal on the phone itself. If you are on pay-as-you-go, look at your monthly spending and usage and see if you would spend less by taking out a contract. That way, you will get a new phone for free and save money instead of spending it.

The second is by using deals that offer a free gadget along with your new phone. These are often (but not always) cheaper than buying the gadget. If you want a new TV or tablet and it is time to renew your phone contract soon, you may want to start investigating whether you’d be better off getting the two together. Even if it works out slightly more expensive compared to taking out a cheaper contract and buying the gadget separately, if the difference is small it can be a way to make the cost more manageable.

 

Surprising Money-saving Tips

There are all kinds of things you can do to be more frugal. But some of these may seem surprising or even counterintuitive. Nonetheless there are certain things that, in spite of what you might expect, can help you to save money or cut costs.

Get Coats and Scarves in July

Summer is the time to stock up for winter. By the same token, the frostier months are a good time to buy summer supplies such as swimwear and barbeques. When demand is low, retailers offer lower prices to try and encourage sales. Buying when demand is high, on the other hand, will usually end up costing more.

In brick-and-mortar shops, you may struggle to find gloves and scarves in a heatwave. However, by shopping online – which is also often a good way to save money – you can find off-season goods almost as easily as you can at the height of the season.

Get More Car Insurance to Pay Less

Due to unique quirks of the market, car insurance prices follow some odd structures. In some ways, the more cover you get the less you will pay. Firstly, comprehensive car insurance is almost always cheaper than third party. Due to high-risk motorists using third party cover to keep costs down, insurance companies have started seeing this type of policy as a risk factor and charging more.

Secondly, insuring more drivers can often cost less than insuring one. This is mostly true of young, inexperienced drivers. Adding relatives such as parents who are more seasoned drivers and who may use the car occasionally will usually bring the cost down. This is because insurers are in the business of assessing risk. If more experienced drivers are using the car, the overall risk will decrease.

Don’t Call Freephone Numbers

This one is only true in some circumstances. Freephone numbers obviously save you money when calling from a landline, but they often do not apply to mobiles. On the contrary, you could find yourself paying very high rates for these supposedly free numbers when calling from a mobile phone.

08800buster.co.uk offers a free service to bypass this problem. You call an ordinary landline number that they provide, and from there you will be able to connect to the Freephone number. From the mobile network’s point of view, you are simply making a much cheaper landline call. On smartphones, you can automate this same process through a free app called 0800 Wizard.

Forgotten Funds: Finding Money you Didn’t Know you Had

MoneyIn this busy modern age with its huge range of financial products and payment methods, it is entirely possible to forget about a chunk of money. There are a few places you can look to see whether you have money that you forgot you even had.

Online Accounts

It is possible to forget about money held in bank accounts, but it is more likely that you will not realise you have funds in other types of account. For example, if you ever sell things online or receive any other type of payment by Paypal, you may wish to check whether you have money sitting in your account. It is easy to forget that when using Paypal, money doesn’t go directly to your bank. Instead, it goes into your Paypal balance and has to be manually withdrawn.

If you use cashback sites, they are another place to look for forgotten funds. Like Paypal, you receive money but it goes into an online wallet instead of directly into your bank account. It is easy to forget the money is there or not realise how much has built up, so check how much you have amassed and consider making a withdrawal.

Money you are Owed

Sometimes, you may not realise that you are owed money. The most prominent example in recent years has been the mis sold PPI claims scandal. Thousands of people are still discovering that they are owed a refund or compensation for PPI that was missold to them. If you have been sold any sort of credit in the past, don’t just ignore the adverts. See if you are owed money, and if you are unsure how to proceed seek advice from a reputable PPI claims company, such as PPI Claims And Advice.

If you have lent money to family or friends, it is easy to be lax about repayment. This is fine, but friends and family will rarely wish to rip you off and so it is best not to forget about the debt completely. Don’t let it slip out of your mind altogether, and don’t be afraid to politely bring up the subject when you would like to be repaid.

Utility Companies

Many  people, especially those who are frugal with energy or water usage, find that they end up in credit with their utility companies. When it just happens over a few months, it can be best just to leave the money in the account against future bills. However, when you are paying by direct debit it is possible you will be consistently overpaying. There is no point in leaving the money in your account if you are already paying too much.

Write to your utility company and request that they pay the money back. It will do much more good in a savings account or investment than in the hands of an energy provider. If you do consistently overpay for your bills by direct debit, you can also ask to have future direct debits lowered accordingly.