Financial bad habits – and how to break themThursday, December 13, 2018
We all have bad habits. But when it comes to our finances, a bad habit can have a huge effect on our everyday lives. Here’s our list of common financial bad habits that you need to break.
Ignoring your finances
Debt can build up quickly. If you don’t keep an eye on your finances you could find yourself in a financial hole. Don’t hide from it. Take some time to sit down and work out exactly what you owe and make a plan to pay it off. Also, make sure you open and pay your bills as soon as they arrive to avoid extra charges.
Relying on credit cards
According to debt charity Stepchange’s mid-year report, the average credit card debt in the UK per household is £7,603. While a credit card can be a huge help for paying for larger items, using it daily for small, unnecessary purchases is a dangerous trap to fall into. Use cash wherever possible. It will make you think harder about what you’re spending and help you to avoid paying off large interest charges.
Paying back the minimum amount
When you’re struggling with money, paying off the minimum amount on credit cards and loans can feel like the best option but in the long run it just means you build up more debt. When you’re thinking about creating a budget, try to include a higher payment on your loan or credit card. While in the short term it may be difficult, it will cut down on long term interest.
Using short term, high-interest loans
Payday loans can often feel like the only option. They’re supposed to be a short-term solution to a problem – your boiler breaks down a week before payday leaving you with no hot water, for example – but if you can’t pay off the interest, they can cause more problems than they solve. If you’ve taken out payday loans in the past, you could be entitled to get some of your repayments back. In recent years, it has come to light that some lenders didn’t carry out the appropriate checks to ensure their customers could pay back the loan and high levels of interest, often leaving them in a debt spiral. If you ever found yourself rolling over your loan for another month or borrowing from one lender to pay another, you may be entitled to a refund. Give us a call on 0800 231 5871, text ‘CLAIM’ to 80039, or fill out the short form on our website today and we’ll check if you have a claim. The service is no win, no fee, so if you don’t have a claim, you won’t pay a penny.
Impulse buying comes in many shapes and sizes. From grabbing a treat at the till to buying a new TV in the sales. It’s easy to justify these purchases to ourselves – ‘it was on offer’ or ‘it’s only 60p’ – but by making impulse purchases it’s much harder to keep track of where you’re spending. Before buying anything, consider whether you need it or are just buying it because it feels like a good deal. If you’ve been on the hunt for a new TV and there’s a sale, great. But buying something just because it’s cheaper than normal isn’t a deal, it’s a waste of money.
As for those little treats, they soon add up. That daily coffee may only be £3 but if you pick up your latte five days a week, you’ll spend almost £800 over a year on something you could make at home.
Not taking advantage of offers and coupons
Cutting coupons can be time consuming and feel like a lot of work. However, that doesn’t mean it’s not worth the effort. Of course, there’s no point cutting coupons for items you won’t use, but if you see a coupon for an item you usually buy anyway, why not take advantage?
As bad habits go, this is the big one. If you don’t know what your disposable income is, how can you expect to live within your means? Work out the essentials (rent, mortgage, bills, loan repayments) then look at what’s left. It takes a little planning but there are plenty of tools out there to help you. This budget planner from the Money Advice Service is easy to use and will really help you to get your finances in order.
Not checking what you’re owed
It’s been impossible to miss the PPI scandal but have you checked if you’re entitled to a refund? The Financial Conduct Authority (FCA) has imposed a deadline on PPI claims of 29 August 2019. This means that if you don’t check if you’re entitled to a refund before this date, you will lose your right to claim. Refunds vary, but on average we see settlements for our customers of around £2,000. Our service is no win, no fee so you won’t pay anything unless you have a valid claim. Why not check today by calling us on 0800 954 0817 or filling out the form on our website.
We’ve already mentioned payday loans, but did you know you could also claim back unfair charges on packaged bank accounts? These accounts include extras such as travel or phone insurance for a monthly fee, however, many of these accounts were mis-sold with account holders finding they were unable to use the perks associated with their account. We offer a no obligation, no win, no fee check. Fill out the form on our website or call us on 0800 458 0873 to start your claim today.