A JANUARY detox is a great way to jump-start healthy eating habits or a new fitness regime — but it’s also the perfect time to get your finances in shape for the year ahead.
If your New Year’s resolutions are already starting to slip, fear not – there are some simple tips you can use to detox your finances and pocket almost £4,500 by the end of the year.
Jason Hollands, managing director of online investment service Bestinvest, says it’s more important than ever to get your finances under control because inflation is driving up the cost of everything.
Energy bills are already expected to soar to over £2,000 this year.
The cost of supermarket staples is also rising, with all retailers already warning of price hikes in the coming months.
This means getting the most out of your money is more important than ever.
Whether it’s moving your money to a better bank account or making the most of cashback and loyalty programs, every penny in your pocket counts.
Jason says, “Inflation threatens to put a real strain on family finances, but there are things you can do to ease that.
“Getting ahead of inflation should be a key financial priority for anyone in 2022.”
Here are Jason’s three tips for detoxifying your finances in January.
Check your bank statements – save £1000
Reviewing your spending in January can be painful because chances are you spent more during the holiday season than you would in a typical month.
But taking the time to review your expenses can help you identify areas where you can save.
“It’s all too easy to accumulate subscriptions and memberships that you no longer use or could do without,” says Jason.
It’s estimated that Britons spend hundreds of pounds a year on subscriptions they don’t really use – whether it’s the gym you never visit or the streaming service you never watch.
Check your bank statement to see where your money is going and determine if you really need ALL of these services and direct debits.
Ditching all your unnecessary direct debits could even save you up to £1,000 a year.
That comes from £79 per year for Amazon Prime, £72 for Netflix, £300 for Sky, £7.99 per month for a Deliveroo pass and £300 per year for a gym membership.
Add £7.99 for a Tesco delivery pass and £10 a month for unnecessary insurance policies such as gadget protection which is probably already included in your home insurance anyway.
This all adds up to £967 – and may not include other direct debits such as old magazine subscriptions or cinema passes.
You should also be on the lookout for transactions you don’t recognize, as the Christmas period is a key time for fraud.
Switch, switch, switch – save £1000
If you’ve been with the same provider for a while or your introductory offer has run out, chances are you’re paying too much.
This goes for everything from your mobile phone and broadband to your home and auto insurance.
Use comparison sites like GoCompare and Confused.com to find the best deals.
It’s best to set a reminder or note in your calendar for a month before your deal ends to give you time to search for the best deal.
Cashback sites such as Quidco and Topcashback can also refund your purchases.
Jason says: “You can also renegotiate rates – threatening to quit will often prompt suppliers to respond with a better offer and you might be pleasantly surprised at how much you can save.”
A Virgin Media customer recently revealed how he saved £264 on his bill just by asking.
If you save £22 a month on your TV and broadband like this savvy switcher, add the £300 saved on average per year by users of the cashback website and the £253 typically saved shopping for car insurance.
Switching bank accounts could net you an extra £150, bringing your total to £967
Boost your savings – save £2,426
When inflation rises, it eats away at the purchasing power of your money.
Simply put, if inflation is 5%, a loaf of bread that costs you £1 today will cost £1.05 a year from now.
It may not seem like much, but it starts to bite when everything goes up by that amount and your salary doesn’t keep up.
“Inflation hurts people who have savings in the bank, especially when interest rates are so low,” says Jason.
He says it makes sense to find an account that will give you a decent interest rate to try and avoid the effects of inflation.
According to MoneySavingExpert, the best easy-to-access savings account currently earns 0.7%, meaning you earn £7 for every £1,000 you save.
Meanwhile, Nationwide pays 2% interest if you save up to £200 a month – if you set this aside each month you’ll have £2,400 after a year plus £26 in interest.
First-time buyers might consider a Lifetime Isa – this saves you up to £4,000 a year on a property and you get a 25% bonus from the government when you come to buy.
Cashback bank accounts allow you to repay your daily expenses. The Chase bank account, for example, pays 1% for the first 12 months.
If you spend £1,000 per month, you’ll get £120 cashback over the year.
If you already have a fund for emergencies, you can also consider investing money through an ISA.
Jason says, “If you invest small amounts on a monthly basis and hang in there for the longer term, you’re almost certain to outperform cash and beat the inflation dragon.”
For starters, he suggests a so-called tracking fund, which copies the performance of a stock market, investing your money in hundreds of different companies.
We’ve looked at how investing £78 a month could make you a millionaire when you retire.
As always with investments, you should only use money that you can afford to lose, as the value can go up as well as down.
You should also look to tie up your money for at least five years in case the stock market goes down.
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