Finding the time and energy to sort out your finances can seem impossible. No one I know wants to deal with bank statements and price comparison websites when they get home from work. And weekends were made for more exciting things. So how about using your lunch hour? Here are three ways you can sharpen up your finances before the end of this week, and still have time to enjoy a sandwich.
Day One – tackle your direct debits
Half an hour spent sorting out direct debits is well worth it. Look out for regular payments going towards stuff you don’t use frequently – expensive gym memberships and film rental services are classic examples. Then cancel them. Next, if you haven’t done it, set up direct debits to pay your utility and credit card bills. That way, not only will you never miss a payment and incur charges but, when it comes to utility bills, you may even get a reduction. For example, many energy and phone companies offer a 10% discount on payments by direct debit as it reduces non-payment risk and administration. Now you are ready for day two.
Day Two – find a better current account
A current account switch is a great starting point. If you’ve never done it, chances are you are receiving a paltry interest rate on any money you have, whilst if you are in the red, you are probably being robbed via a penal interest rate.
Before you switch, estimate the average balance in your account. If you are often overdrawn, opt for an account with a low overdraft rate – for example Alliance & Leicester’s Premier Current Account charges 0% for the first year, and 50p a day capped at £5 a month thereafter.
If you are in the black most of the time, but your balance is never very high, then the Halifax and Bank of Scotland’s Reward Current Account may be for you. It pays £5 a month in interest, regardless of the balance on the account, provided you pay in at least £1,000 (say your salary) every month.
If you tend to have an average balance of over £1,000 in your current account, then go after the highest interest rate – currently 5.84% with the Abbey Current Account or Alliance & Leicester’s Premier Direct Current Account.
Visit Moneyfacts for a round up of the best current accounts out there.
Day Three – organise your savings
Having sorted out your day-to-day banking, tackle the emergency fund. As a rule of thumb, it’s a good idea to have three-months’ worth of wages saved up in an easy access account for an emergency. That way you are cushioned should you be made redundant or fall ill.
The easiest way to build up savings is to discipline yourself to save a little bit each month into a regular savings account – if you haven’t used your individual savings account (Isa) allowance, do that first to earn interest tax-free. After that, Halifax, Royal Bank of Scotland and NatWest all offer regular saver accounts paying 5% interest. However you can’t withdraw any money for twelve months from opening the account.
If you already have a savings account, then talk to your bank or building society about setting up a sweep facility from your current account. This allows you to select a day of the month on which any surplus money in your account will be moved into your savings account to earn the higher interest rate. Set it up for the day before you get paid and it’s a nice way to boost your savings without risking a penalty charge for going overdrawn.
Day four – enjoy a well-earned lunch break!
• This article is taken from our weekly MoneyWeek Saver email.
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