Fact Sheet 2: Household Budgeting

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1 Fact Sheet 2: Household Budgeting Mapping and Gapping The first step in smart money management is to know what money you have coming in and going out. For a user-friendly tool for mapping your income and outgoings, see our separate Money Plan template. Smart shopping You can save hundreds of pounds a year by practising a few techniques to get the most out of your budget. It s worth noting almost all the best deals are now sourced online, giving the advantage of being able to shop around and save time and money. However, shopping online can sometimes end up costing people more overall, as the experience is virtual, requiring a credit card or debit card for payment and can easily lead to overspending. If you recognise yourself here, often the best thing you can do is switch to paying in cash as much as possible, as this really brings home the true cost of spending and its impact on your household budget. Household Energy costs These take a huge chunk out of household finances, but if you change provider every time your existing deal runs out, you can almost always save money. Use comparison sites to take the work out of comparing prices, but remember to always untick the box that says show providers we can switch you to today as this limits your options and they may not necessarily be the cheapest. You may also want to negotiate directly with your current provider, as it is amazing how often they can match the competition if they re in danger or losing your custom! Fuel Supermarket fuel is often the cheapest, though some say it s not always the best quality. However, if you also use a supermarket points or loyalty card, this can also save you additional pennies at the pump. Tesco Clubcard for example, will give you money off per litre when you do your shopping in store and Sainsbury s often issue fuel coupons at the supermarket till. In surveys (as of June 2015), Asda has consistently come out on top as the cheapest supermarket fuel provider. You can also save money on fuel by switching to online grocery shopping, see below.

2 Online grocery shopping Online grocery shopping has numerous advantages. Time: Your time is valuable and shopping in store for groceries with grumpy kids, on the way home from work or at the weekend when you should be having fun, is often top of people s hate lists! Shopping from the comfort of your sofa seems like the much better option. Menu Planning: If you plan your menus for the week at home, you can shop for the items you need, in the amounts you need them. You can also save your regular items to a favourites section for next time, saving time and energy on your next online shop. Reducing waste: Food waste is estimated to cost the average family between 10 20% of their bills, so significant savings can be made here by not being distracted by all the wonderful-seeming offers in store and only buying what you need and will use. Fuel: Many big supermarkets are out of town and a big shop will often require a car. This will eat into your fuel budget, so if you either buy a supermarket delivery package, or have your shopping delivered at off-peak times, you can save considerable money. Insurances There are different views on insurance, some say in some cases, such as pet insurance, you are better off saving a bit each month towards those unexpected bills, rather than paying for insurance that may not cover you properly anyway. Others would rather not take the risk. If you have dependents or a significant asset you want to protect, such as your house and its contents, it s usually better to be safe than sorry, even if the likelihood of anything happening is rare. Some mortgage providers make it a condition that you have house insurance and if you have a big mortgage and dependents, you may want to take out life insurance too. Again, shop around, use price comparisons, talk to your current provider and do the calculations to make sure you get the best deal. Many bank accounts now include, for a monthly fee, insurance for mobile phones and travel. Calculate how much you re likely to need it and what your mobile phone replacement costs would be to make sure you re not paying more on a monthly fee than the insurance is worth to you. Many people find they re covered for the same thing on different policies, such as legal cover. Make sure you know what you re actually covered for and in what circumstances and always read the small print! Banking Bank accounts are the one thing that people are most reluctant to change, however, it is easier now than ever to switch. Many banks will do most of the work for you and offer financial incentives to switch, such as a switch reward, cash-back on purchases, interest free overdrafts and more. It does not negatively affect your credit rating if you switch bank accounts, as long as you are not doing this several times a year.

3 Debt and credit In a credit driven economy, it has become the norm for many to use credit cards to meet their shopping needs. While these can be a very useful shopping tool, not least because of the protection many providers give in the case of disputes or lost or damaged goods provided the purchase is over 100, it s essential, as part of prudent money management, to ensure you are not paying more interest than you need. Credit cards and their store equivalents, along with online catalogue credit arrangements have notoriously high interest charges. In the case of credit cards; regular reviews of your spending, interest rates and opportunities to swap to 0% deals can save you hundreds, if not thousands of pounds. However there is usually a transfer fee payable of at least 1% and often more, so be sure to work out what you will save in interest over the 0% period and take off the transfer fee paid to work out your overall saving, and make sure you pay the balance or switch to another card before the 0% deal runs out. In the case of online catalogue credit arrangements, it is crucial to check the terms and conditions of repayments. An initially great 0% finance deal over 6 months, for example, could prove very costly if you don t settle in full by the end date. In most cases this is because interest is accrued over the 0% time period and is added all at once at the end. On a 1,000 purchase over 12 months, if you don t settle in full, this could mean 300 added to the total at the end of the 12 month period, with more interest accruing after that. The terms and conditions are often very confusing and hidden in the small print, so read your terms and conditions carefully and always make your payments on time. One thing to note about the Argos Card, and this may apply to others too, is that they will not let you settle your debt with them with a credit card. This catches many people out who do not have cash in the bank to pay and costs them a lot of money in interest as a result. Subscriptions / TV Packages While many sign up to what appear to be great deals on home-based TV subscriptions such as Sky and Virgin, once the deal period expires, which can often be as little as three months on a two year contract, many find themselves locked in to expensive packages for services they are not using as much as they thought. With so much competition from lower cost providers, which only lock you in for much less time, such as Netflix, Now TV and Amazon Prime, you might want to consider what value and use you are getting for your money. For example, Amazon Prime for a one off annual fee; also gives you free one day delivery on goods and free access to the Kindle lending library. Getting online This is one of the best moves anyone can make to save money in our digital age. Virtually all information resources, comparison tools, deals, savings, offers etc. are only available online. If you don t have internet access, think about using your friends and family s internet service or visit your local library. If you lack online skills, how about a course to get you upskilled? Tablet computers have revolutionised online access for many who have difficulty using computers, as they are much easier to use and to interact with. There are many telephone providers who will add broadband packages to your telephone line for free or at relatively low additional cost. Again, make sure you shop around for the best deal if this is something you are considering. Many people are forgoing home

4 based, landline telephone and broadband connections altogether as mobile internet provision gets better and faster. Check your area before you make this decision, because not all providers reach all areas, and this is particularly important in rural places, such as Cornwall, where even mainline internet services can be slow! Cashback sites Increasing numbers of people are using cash-back sites to save money and/or contribute to good causes. These sites, which include Quidco.com, Topcashback.co.uk and Easyfundraising.org.uk, work by acting as a portal to shopping outlets, registering that you ve shopped and then paying a percentage either directly into your bank account or to the charity of your choice. Deals vary and not all outlets will generate cashback, but it s always worth registering and checking before you go shopping online. This can be particularly lucrative when it comes to high spend items, car insurance and home insurance, but always remember to check elsewhere just in case you could get a better deal even without cashback. The great sales myth Sales and offers abound, on the high street and online, and it s worth remembering that the retail industry spends millions on trying to induce you to spend your money with them. But is that great deal really what it seems? Bulk buying / half price / 3-for-2 offers Unless you are family of 8 with a garage to store your year s supply of toilet roll, you may want to think about whether those bulk purchases are really worth the paper they re written on. Will you really use it or waste it as you have so much of it? Do you really want to be cramming those great deals into your small cupboard, leaving little room for essentials? Does a 3-for-2 offer on a branded item really make better sense than paying full price on a non-branded item of equal quality? Savvy shoppers really need their wits about them, their basic maths skills in place, and a calculator will always come in handy. Sales There s nothing like a good sale to bring the consumer out in us all and retailers know this only too well, as there seems to be a sale on all year round! But don t let those apparently cheap offers lull you into thinking you really need that bargain. Unless you need it, a good price still ends up with you spending money. Money that you could be saving or spending on something you really need! If in doubt, remember our money saving mantra, inspired by Martin Lewis of Money Saving Expert: Do I Need Do I want it? Do I need it? Can I afford it? Have I checked prices elsewhere? If the answer is no to any of the above: Don t buy it!

5 Further Information and Resources This list could be a mile long, so the simplest solution is to use a search engine, such as Google to search for the relevant resource. Remember that search engines are only as good as the information you provide, so here are some search tips: Money Saving Expert: one of the best online money information resources, established by the award-winning Martin Lewis Budgeting tools Debt Advice 0% credit cards Cashback sites Supermarket loyalty cards Price comparison sites: utilities / travel / insurance Online shopping forums Best Buy We hope this guide has been useful. We make no claims, positive or negative about any of the companies mentioned above and there are many more providers of services than we ve mentioned in this guide. For further information, support, or to make a suggestion for how we can improve this guide, please contact our Advice Team. Tel: advice@disabilitycornwall.org.uk Website: Fact Sheet 2: Disability Cornwall & the Isles of Scilly Advice Services 2015