New research carried out by Champions of Data and independent consumer data action service Rightly, has revealed that 98% of people are concerned about the current economic situation - with 56% expecting to be worse off over the next six months.
The high cost of living has forced families to reconsider how they spend and how they manage their money in order to make ends meet. But sometimes, managing your family’s finances can be daunting and you often don’t know where to start.
Whether you are planning on starting a family and are looking for ways to save for a baby, or are more concerned about how to save money in general, there are some simple ways to start to get a grip on your finances. Once you have a grip, the path to financial stability for you and your family will become much clearer. And it all starts with avoiding common money mistakes that can actually end up costing you money.
1. Having FOFO when it comes to your family finances
Suffering from FOFO, or the Fear of Finding Out, can spell bad news for your family’s financial health. If you’re worried about your money, or lack of it, it can be all too tempting to avoid looking at bank statements or bills because of the further fear it might cause. Similarly, if you’ve made some spontaneous purchases that you regret, embarrassment can also cause your FOFO to increase.
But, as understandable as FOFO can be, all it does is make any money problem worse and prolongs the worry you have. Only once you tackle your FOFO, can you really start to understand your financial situation, and come up with a practical plan to improve it. That could be anything from reducing your spending, trying to save more, or asking for professional support to help you reduce your debts.
2. Spending more than you can afford
Another common mistake is spending more than you have coming in, which you may have found happening more often, given that the price of essentials like food and energy are really high.
But in practical terms, if you spend more than you have coming in, your debt grows. Then a portion of your income then needs to be used to pay off the debt, leaving you less each month to live on.
To avoid this mistake, list everything you spend in a month and see if there is anything you can cut, or if you can shop around to reduce how much you’re spending. You could also think about how to make extra money to boost your income and ease the pressure.
3. Not regularly assessing your direct debits
Life can get busy when you have a family, so it’s all too easy to forget about direct debits that automatically come out of your account. Paying by direct debit can be really handy, but if you don’t regularly check your direct debits, you can easily continue paying for things you no longer need, like gym memberships or magazine or TV subscriptions.
It’s a good idea to regularly assess direct debits coming out of your account and cancel any that you no longer need. Make sure you check the terms and conditions before cancelling though - you may need to give written notice of your intention to cancel, or there may be an early exit fee to pay.
4. Having no idea when contracts are due to end
Speaking of contracts, another mistake is not keeping track of when contracts are due to end. This could be for things like your mobile phone or broadband service, or home and car insurance policies. Once that contract is up and your policy auto-renews you could find your bill goes up significantly (I’ll never forget the time my broadband went up from £27.50 per month to £47.90 when my fixed-term contract ended).
But at the end of your contract you are free to switch to a cheaper deal or move to a cheaper provider. It’s a good idea to make a note of any end dates on a calendar (or even better, set an alert on your phone) to avoid your contract auto-renewing. You should be able to find the end date on any policy documents or in your online account. If you're still not sure, contact your provider to find out.
It can seem like a faff to cancel contracts and take out new ones, but it’s well worth persevering in order to make sure you are always paying the best price. James Walker, CEO at Rightly, adds: “Every year millions of pounds get wasted in automated renewals that don’t get challenged, causing people to pay a loyalty penalty and miss out, when money-saving options are right there.”
5. Not shopping around
Whether it’s shopping for baby essentials like the best pram, tech for the kids, or looking for car insurance or a new mobile phone contract, it can be a big mistake to not shop around and check prices from different retailers or providers.
When it comes to branded products, you’ll often find that they are available from multiple retailers but the prices can be wildly different. So make sure you shop around to get the best deal, and take into account any delivery charges that you might face.
With services like broadband or insurance, it’s always worth using a price comparison website, like our sister brand Go.Compare, to find the right service for you, at the best price possible.
6. Not saying no to your kids
At times, the parent guilt can be all too real and it can sometimes be really hard to say no to your children. But it’s really important to establish spending limits to keep your finances under control.
Take a look at these essential money lessons to teach your children, including explaining the differences between needs and wants, to help. It’s also helpful to know which money phrases to avoid (and, importantly, what to say instead) to help your child grow into a financially-confident adult.
7. Not having a will (or life insurance)
It’s not nice to think about what will happen when you die, but it can provide massive reassurance for the family you leave behind. A will can make sure your assets are divided amongst your loved ones as you wish, as well as determining who should look after your children should they still be below the age of 18.
Similarly, life insurance can help ease any financial pressure on your partner, or appointed guardian, on raising your family. It can also be used to pay for your children’s education or make up for a lack of income in the wake of your passing.
8. Not asking for help
The rising cost of living has been challenging for many households, but some are struggling more than others, through no fault of their own.
The key is to ask for help - and this help could come in many forms:
- If you are struggling to pay any of your bills, speak to your provider who could potentially help lower your bills, or advise on any extra support you may qualify for
- If you are struggling with childcare costs, speak to friends and family to see if they can help, even if on a temporary basis
- Use Entitledto’s benefits calculator to see if you could qualify for extra financial help from the government.
- If you are struggling with debt, contact a debt charity, like StepChange, for support and advice
- If money worries are getting you down, you’re not alone. Call the Samaritans if you need to talk.
