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How to save money in 2014

POSTED: 18th December 2013
IN: Personal Guides
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The New Year is the perfect opportunity to take stock of your finances and plan how to make the most of your money in 2014.

undefinedIt offers the chance to introduce sensible financial habits that will help your finances throughout the year. If Christmas and New Year has been expensive and your wallet has taken a severe pounding then now is the time to fight back.

With wage growth still running well behind inflation and energy prices going up again, the squeeze on household income is still very evident for many people as we head into 2014.

Our guide shows you how to save money month-by-month and in all areas of personal finance.

Mortgage

For homeowners, a mortgage represents their biggest financial commitment each month so being on the best deal is vital.

The good news is that with base rate remaining at a record low of 0.50 per cent, there are great deals available, such as five-year fixed rates available from under three per cent if you have a deposit of 40 per cent. Switching a £150,000 mortgage from a standard variable rate (SVR) of 4.99 per cent to a fixed rate deal of 2.99 per cent will save you around £2,000 each year.

Government and Bank of England schemes such as the Funding for Lending Scheme (FLS) and Help to Buy have helped reduce rates for first-time buyers and homeowners with little equity too, so review your mortgage and switch to a better deal if you can.

Savings

Savers have had a tough year but there are signs that rates are starting to edge up again. If you have any spare cash available consider using your cash ISA allowance to save money that earns tax-free interest.

The best easy access savings accounts are now paying 1.50 per cent or you could earn up to 1.95 per cent on the best variable rate cash ISA’s. If you are prepared to put your money away  in a fixed rate, there are higher rates available but you are usually unable to make withdrawals until the end of the term.

Personal Loans

If you have a personal loan it pays to make sure you are on the best rate because rates for loans between £7,500 and £15,000 are the cheapest for over a decade.

The best deals allow you to borrow money for up to five years at a rate of 5.0 per cent. This means you could borrow £10,000 over four years and end up paying back just over £11,000, meaning the cost of credit is just over £1,000.

If your personal loan is uncompetitive see if you can swap the loan to a better deal with a lower rate.

Current Accounts

There are lots of ways you can save money by using the right current account in 2014.

If you regularly go overdrawn at the end of the month before payday then you should look to switch to a current account that offers either an interest-free overdraft or a buffer zone that means you don’t get charged as long as you stay within the agreed limits.

Alternatively, if your current account balance is usually in the black there are a number of accounts that pay credit interest on positive balances.

Another good current account option is to opt for an account that pays cashback on purchases or even household bills.

Credit cards

If you have debts on a credit card you might be able to reduce your interest payments by switching to a cheaper credit card.

Check to see what rate of interest you are paying and consider switching to a zero per cent interest balance transfer credit card.

If you have a debt of £2,000, that you are paying a rate of 17 per cent on, by switching to an interest-free balance transfer card, you will pay no interest for the first 12 months and you would save £300. If the balance transfer fee was three per cent, it would cost £60, still a saving of £240.

If you plan on making some large purchases as we go through 2014, you could opt to take out a credit card that offers no interest on purchases for a period up to 30 months. This is a good way of spreading the payments over a longer period without paying extra.

Car and home insurance

Insurance costs have retreated in the last 12 months, especially for car insurance but this followed on from 2010 and 2011 when, according to the AA Insurance Index, the average cost of a car insurance policy went up by 38 per cent in 2010 and 15.4 per cent in 2011 and home insurance also went up but by a lower amount.

However, the costs are still high and like any financial product it is essential to shop around to find the best deal for the right level of cover for your circumstances.

Simple tips to help lower your premiums are not to insure for too much because there is no point in paying for cover you don’t need and if you are a young driver, consider adding an older driver as a named driver on your policy as this can lower costs.

Utilities

If you have never switched utility suppliers it is almost certain that you will be able to lower your bills by doing so.

There is around £300 difference between the cheapest and most expensive annual energy deals so take a look and see what is available in your area because prices do vary from region to region.

You can either choose the cheapest variable rate deal or lock in to a fixed rate deal that could protect you from future price rises.

One of the best ways of saving money is to use less energy. Just by turning the thermostat down by 1 degree, you can cut your annual energy bill by almost 10 per cent.

Loft and cavity wall insulation will also save you money over time. Another quick fix to reduce bills is to turn off appliances at the socket rather than leaving them on standby.

TV, phone and internet

Finally, another important check that can save you money on household bills is to bundle your TV, phone and internet together in one package from a single provider.

Take advantage of one of the many special introductory offers from a variety of providers and you can save money but remember to keep your eye on the market 12 months later and switch to a cheaper deal if there is one available.

Here are 12 great ideas to help you save money month-by-month as we go through 2014:-

January – Start saving for Christmas to ensure next Christmas will be less of a financial shock.

February – Switch current account providers and earn a cash incentive or cashback on your bills.

March – Start a tax-free investment and set aside any spare cash before the financial year ends.

April – Spring clean your home and make some cash by selling unwanted items online or at a boot sale.

May – Switch credit cards to a zero per cent balance transfer card or a card that charges zero interest on purchases.

June – Make sure you are covered for your overseas holiday by buying the right type of travel insurance.

July – Hit the summer sales and grab some bargains.

August – Save money on back to school clothes and equipment for your children.

September – Scour the market for the best energy deal and switch before prices are raised before winter.

October – Ditch a luxury – Save yourself a few pounds each day by making a packed lunch or avoiding a high-priced coffee from the High Street.

November – Sign up to a grocery points card to earn money on essential shopping or take a look at a discount or voucher codes website if you have not used one of these before.

December – Get into the festive spirit and save yourself some money by making some last minute presents or decorations.

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