One in three (34%) of us admit to putting off reviewing our day-to-day finances, new research reveals – even when we could be saving some money.
Whether it’s putting off things like cancelling unused subscriptions, changing an insurance policy, finding a better savings deal or switching a mobile phone contract, people could be missing out on some significant savings.
When it comes to taking control of their future finances, only two-fifths (42%) of people say they know how to add more money to their pension, according to the research for Lloyds Bank.
For other financial admin tasks, a fifth (20%) feel it’s easier to just leave their mobile contract rather than speak to their provider, the Censuswide survey found.
Jackie Leiper, head of pensions at Lloyds Bank, says: “It’s human nature to put off important tasks because they seem too complicated or overwhelming.
“People can be even less likely to engage in making a financial decision when they won’t feel the benefits until decades later, but it’s important to understand the impact that burying your head in the sand can have on your future finances.”
Keen to get on top of your own financial admin? Leiper shares the following tips to help you take control…
1. List all of your outgoing payments
“It’s best to first start by writing a list of all your bill payments, how much they are and when they are due,” says Leiper. “Think about things like your mortgage or rent payments, mobile phone costs and utility bills. If your bills are different each month, use the average cost of your last three bills.”
2. Look to see if you have any subscriptions and memberships and make a note of these too
Monthly subscription costs can seem small, but if you have a few little-used ones going out each month, the costs can really rack up.
Leiper says: “You can also often use your online banking to view your spending insights and it can be broken down into useful categories, so you can see where your money goes each month. This process can help you identify which of your bills are a necessity and any areas you can make cuts.”
3. Understand your spending habits and build savings
“As you look to understand your spending habits, it’s important to make a note of everything, from large expenses like mortgage, rent or car repayments, to smaller ones like your morning coffee,” says Leiper.
“When it comes to building savings, there might be many reasons why you may want to save money quickly. It could be that you want the security of a larger savings pot or have a big purchase on the horizon.
“While it sometimes feels like no fun, the quickest way to save up is resist those purchases of non-essential items. However, there are some purchases that simply can’t be avoided meaning it can be harder than ever to put money into savings.”
To make saving simpler, some banking apps have “round ups” which automatically deposit small amounts of money into savings accounts when you spend.
4. Weigh up the value of spreading the cost
Leiper suggests: “As you work through your outgoings, access the bigger costs. Large costs can be difficult to pay in one go. It may be better to see if you can spread the cost with regular, smaller payments instead.”
When deciding whether smaller, monthly payments are more affordable than paying in one go, it’s also important to understand how paying monthly might affect the overall cost. For example, paying for outgoings such as insurance, or gym memberships on a monthly basis could cost significantly more than paying annually.
5. Set spending limits where you can
“This will mean giving yourself a cap on spending on certain ‘luxuries’ such as subscriptions,” Leiper explains. “By doing this, it allows spending to not get out of control and also stay within your means. You can often use budgeting tools on your online banking app to automatically look after this for you.”
6. Cut bills if possible
“You might be able to cut your regular bills by contacting your current suppliers,” says Leiper. “Failing that, shop around and you could find a better deal elsewhere. You can use a comparison website to see lots of prices in one place, helping you to find the lowest price for broadband, car insurance and more. Just bear in mind, fees might apply for leaving an existing contract early.”
7. Get to grips with your pension
Leiper says: “The first step to getting a better handle on your pension savings is to find out the current state of play. Speak to your current employer about your auto-enrolment plan, including who your provider is, what your contributions are and how much your employer contributes each month.
“This will allow you to create a clear picture of how much you have built up over time,” she adds. “If you haven’t already done so, make sure you are registered with your pension provider and know how to access and navigate the platform. This will help guide you as to whether increasing your contributions feels affordable.”
You could speak to your employer about increasing your contributions, if you feel your savings are not on track.
Lloyds recently launched Ready-Made Pension, a personal pension that can be opened through one of the banking group’s Lloyds Bank, Halifax or Bank of Scotland banking apps, which is shown alongside customers’ existing bank accounts.
