If you’re crap with money, guess what? You’re not alone. Feel better? Are you happy to be surrounded by others getting down and dirty with their overdrafts? Does your misery enjoy similarly skint company? Is it soothing to know wages are falling and rents are rising for everyone else as well? Well, it would be spectacularly unfair if it were only going tits up for you.
Being good with money is made no easier by the fact that there’s so little of it knocking about. There are rises in the cost of everything – except your labour of course. Your workplace is getting a sweet deal on that. So, in the current shitsandwich economy, it’s not uncommon to find it only takes one or two errant purchases in a month to plunge you into Overdraftland, a sad little service station on the outskirts of Debtville.
So, is there anything you can do to be better with money? No. Sorry. Go home and eat gruel. Only kidding – I had a chat with Patrick Collinson, money editor and personal finance editor at The Guardian, and Lucy Tobin, money wizard and author of Ausperity: Live The Life You Want For Less (buy it, but only if you've got the funds, OK?), and between us we’re going to sort your finances out. Probably. Well, here are some tips, anyway:
First, the obvious...
'The amount of money you can save just by staying out of your overdraft is shocking,' says Patrick. 'And I used to go overdrawn all the bloody time.'
How to do this? During the dark days of interning for minimum wage, my financial philosophy was: 'Don’t look at your balance and somehow it will all be fine.' Nothing snaps you out of that toddler-esque tactic like realising getting paid takes you to the princely balance of £756 overdrawn. The real answer, boring as it is, is budgeting.
Keeping an eye on your account is half the battle. 'Look at your direct debits,' says Patrick 'and strike out stupid ones like £400-a-year homecare policies that seemed like a good idea at the time.' It's also a good idea to keep an eye on what bank you're with because some of them can be way more vicious towards overdrafters than others. 'There's been a crackdown on what banks can charge if you go into your overdraft, it's a good idea to look on price-comparison websites like Moneysupermarket.com to compare what overdraft you can get with which bank,' says Lucy. 'Some have graduate accounts which, like student accounts, offer a bit more leeway. Some charge per day per, some per month, and some have really low rates.'
Natwest, for example, charges every month you remain in your overdraft when you're a graduate – but it's such a low rate that it's barely noticeable. HSBC can clap a £50 fine the moment you breach the red line. Know your bank accounts.
Get free cash for nothing
There are loads of nifty ways to get free money, on top of the usual 'make sure you're not spending on things you can't afford' advice your mum told you.
'When buying anything online, always use a cashback website. Always. Oh man, you've got to use them – I've made over a thousand pounds in two years,' Lucy says. Appetite whetted yet? Well, it works like this: say you're buying a scarf from ASOS because you're cold and you need a scarf. If you Google 'ASOS,' or go direct to the website, Google gets a cut from whatever you spend (I know, right?). If you go via a cashback site like QuidCo, you get between five and 10% back. Sometimes more. 'It's even bigger for services – if you get a new Sky subscription on a cashback website, you get £140 at the moment. The adverts on the Tube look dodgy and boring, but it's so worth it.'
Saving on the little things means that the big stuff will start to take care of itself – check which banks are offering the best perks, and swap if necessary. 'Halifax pays £5 interest a month if you're in credit by a certain amount, and Natwest have a cashback offering so when you spend, they will pay you a percentage back' says Lucy. Shop around and get free cash.
Work your loyalty cards like a mutha
Free coffee tip: offer to get one for colleagues – they’ll give you the money, but you get the stamp on your loyalty card, and you’re another step closer to a free triple-shot cappuccino with syrup and whipped cream. Everyone wins – but mainly you. Also, drink is ruinous. Go for small glasses of wine, and you can always miss a round or two on the pretense of going to the bathroom. Same goes for Boots runs, nipping to Tesco ('Oh, just give me the cash and I'll pick some stuff up for you, O Housemate-of-mine!') and anything else that requires you to fill up a card in order to get free stuff.
For god’s sake, give up smoking
The slow acquirement of cancer and a cough that frightens children is a terrible use of your money.
READ MORE: Some Easy Ways To Make More Money When You Can't Afford To Live Off
Cards encourage you to overspend
They say the devil makes work for idle hands, and debit cards are the idle hands’ tool. You swipe and forget, and it’s draining your account.
The solution? Cash. Lovely, papery cash. Work out how much spending money you have left per month after expenses, divide it by however many weeks there are in that month (it’s sometimes five, remember) and take it out of the cash point on Mondays. If you have any left over at the end of the week, hide it away and let it build for a modest end-of-the-year splurge. 'Use an online budgeting tool to see where your money's going,' advises Lucy. BudgetTracker and the Money Advice Service do good ones – also, some banks offer breakdowns of what you're spending your money on each month, which is helpful, so do some noseying around.
Make a list of credit card purchases
If you use a credit card, make a table of every purchase you made to avoid surprises, like that you spent £80 on emoticons last month after all those small glasses of wine.
The best way to annoy a credit card company is to pay off your bill in full every month – and even if you don’t, say you do when you get cold calls from them. They’ll power through your agonised pleas to 'stop calling stop calling dear god please stop calling', but a simple 'I pay off my credit card in full every month' will get them off the line in approximately no seconds. Credit card companies don’t see dollar signs on people who are good with money.
Avoid storecards at all costs, unless there's one of those 'get 20% off if you register for a storecard' offers on. In which case, sign up, buy the jacket/scarf/hat/whatever, then pay it off immediately and cut up the card. That last bit is really important: CUT UP THE CARD.
Do NOT put money in a pension scheme
Start thinking about a pension from 30 onwards – until then, use every spare penny to become the sort of person who puts money into a pension. 'Unless you’re in a fantastically well-paid job, getting out of debt is your number one priority,' says Patrick. 'Preparing for the future doesn’t include the reality of debts or saving for a deposit.'
Make smart savings
It's not just about putting money aside, there are cool ways you can save and actually make a bit of extra cash, too. 'Interest rates are so low, you're not going to get much of a return on a standard bank account while saving, so a lot of people are starting to look at peer-to-peer lending,' says Lucy. 'Basically, they cut out the bank. You lend a hundred pounds and someone in Sheffield will borrow it, but when they pay it back, they pay a certain interest rate. The website will take a cut and you'll get a higher return. The difference is, that when you put your savings in a bank, there's a government guarantee that if the bank goes bust, you get your money back. But these peer-to-peer lenders do have contigency funds, or rather, big pools of money they can dip into if that person in Sheffield can't pay you back and there haven't been any problems so far.' So it's basically a place for your savings, but you also get way more money than if it was just sitting dormant in a bank – the popularity of this form of saving is shooting up at the moment, too.
Check out RateSetter, they're the biggest peer-to-peer lenders in the UK and be aware that it's not just people in Sheffield who will borrow the money. Just in case you were wondering.
Set up a standing order… to yourself
Whether you go peer-to-peer, or opt for a more traditional form of saving, calculate whatever you can realistically afford to save (even if it’s just £20 a month) and set up a standing order to a savings account. The saving happens behind your own back and you never have to think about it. Even £20 a month adds up to £240 in a year, which is a flight to Rome if you’re thinking glamorous. Or a cushion for when you get hit with an unexpected bill if you’re not. 'Six months' rent is the ideal cushion, but obviously that's difficult to hit,' says Lucy. 'It's a good idea to aim for that, though, so if anything goes wrong, you've got something to fall back on.'
READ MORE: The Complications Of Lending Your Cash To Siblings
Get appy
Aside from getting a banking app (do this. DO IT NOW), then there are plenty of other apps to help you keep your finances in order. Direct Debit Control Centre is a fantastic one – free on iPhone, iPod Touch, iPad and Android, it alerts you when a direct debit is about to come out so you have time to move stuff around if you need to.
To make some extra cash, there's an app called Field Agent which gives you small-scale market research tasks. Just photograph products and write a quick review, for a tidy £4.50-£10 per item. (And, may I say, hmpf – that's more that I got paid per hour in the job I had before uni, and that involved cleaning out rat cages.)
Being cash-poor and time-rich comes in handy for the app Mysupermarket, which lets you scan things in your cupboard and see where they're cheapest that day.
NEVER get payday loans
'I understand why people do, but don’t,' says Patrick. Enough has been written on this, but it bears repeating: using a payday loan to get money is like drinking vodka to get hydrated. Do. Not. Do. It.
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This article originally appeared on The Debrief.