Consumer finance expert: How to fix finances for Summer

Relaxed restrictions in Scotland offer the chance to make the most of many of the much-missed activities that the pandemic put a stop to, from concerts to theatre trips and holidays abroad. But before you splurge on some much-missed activities, consumer finance expert PAUL WILSON explains ways you could get your finances in order first. 

With over 20 years experience in consumer finance, Paul has highlighted common pitfalls that consumers often fall into and the simple ways that consumers can get their finances in check whilst still making the most of the summer. 

“Many Scots will be excited to make the most of the things that they’ve missed out on in the past year, from concert tickets to holidays abroad. But, whilst there’s temptation to splurge and ‘go all out’ this summer to make the most of the relaxed restrictions, it’s important to make sure that spending doesn’t get out of control.

“Having worked in the finance industry for 20 years, some of the most common money management mistakes I see people make are not actively monitoring and striving to improve their credit score, not setting and sticking to a monthly budget and spending beyond their means on what often turns out to be frivolous.

“As things open up more, it’s important for consumers to enjoy their money, without falling back into bad habits they may have broken in lockdown. There are simple tricks and spending behaviours that can be adopted to make sure people keep their finances in check.”

Cancel those unused, or under utilised, subscriptions

“For many of us, TV and entertainment subscriptions were an essential part of getting through lockdown. But as restrictions lift and it’s easier to do more of the activities that used to fill your time, you may find that some subscriptions go unused.” 

“Check your subscriptions. It’s easy to sign up for a new subscription service – particularly when many companies offer free trial periods or low cost sign up offers – and then forget to cancel it. Or perhaps you have a number of subscriptions that you do use, but you could ask yourself how essential they really are. If you can live without it then you could save money by cancelling the subscription or choosing a cheaper alternative.”

Update your utilities providers

“The summer months are a great time to review your insurance and utilities providers. As things open up more, life admin tasks like this can fall by the wayside, so set aside some time to check your spending and see if you can get a better deal.” 

“Shop around for all of your insurance and utilities. Generally speaking, loyalty doesn’t pay when it comes to products such as insurance, energy, broadband and TV, and there are usually cheaper deals for an equivalent product out there. So when it comes time to renew one of these products, don’t just accept the renewal price – use a price comparison service to check for the best deals available.” 

Budget for your new lifestyle

“As tempting as it is to splurge this summer, make sure you properly budget all of your new spends, from setting aside a budget for going out and leisure activities to factoring in how much you want to spend on drinks at the pub or online shopping.”

“Calculate how much you have coming in each month and how much your essential financial commitments are (e.g. mortgage/rent, transport costs etc.) and therefore what you can afford to put away into savings and what your disposable income is. Once you have your budget – stick to it! Post it up somewhere in your house where you will regularly see it or set reminders on your phone to prompt you to check how you are tracking against your budget.”

Get on top of the weekly food shop

“For many of us, staying at home more often in lockdown meant spending more money on food and treats. So, the relaxing of restrictions is a great time to get on top of your food bill.”

“Save money on your weekly food shop by planning a menu and a shopping list to ensure you only purchase the items you need. Embrace batch cooking and freeze portions to be eaten at a later date – this may help avoid being tempted to use costly food delivery services when you haven’t got anything in for dinner. Consider choosing one of the budget supermarkets such as Aldi or Lidl for the bulk of your shop and downshift from brand name items to own-brand.” 

Spend savvy

“With more people getting out and about and making the most of the summer, there’s more incentive to buy new things, from new holiday clothes to treating yourself to see a band you haven’t been able to see live since 2019. So, if you’re planning on treating yourself, try using comparison sites that offer savings incentives in order to get your money to go further.”

“There are a number of ways you can save money when you are purchasing online. Firstly there are cashback sites that offer money back in your pocket when you purchase via a special tracked link – it costs you nothing extra, takes just seconds longer, and if you were going to buy the product anyway it’s a no brainer. Secondly there are browser extensions and apps you can use to hunt out bargains. For example, InvisibleHand is a chrome extension that runs in the background of your browser and automatically notifies you if it can find the product you are shopping for at a lower price on another site. Similarly, Honey is an extension that automatically finds and applies discount codes at the checkout when you shop online.”

Think about your credit options for big purchases

“It’s great to see the travel corridor opening up and more countries being added to the green list so that everyone can get a much-needed summer holiday. But as tempting as it is to go away, it is important to properly review your finances before committing to a summer holiday.”

“Save up for big purchases wherever possible rather than putting them on credit. Taking the time to save the money can give you time to evaluate if the purchase is really something you want or need. If you have the cash up front it will save you money on paying any interest and avoids any potential damage to your credit score through missed repayments. And remember, it’s tempting to pay for the holiday of a lifetime on a credit card, but then you’ll be paying for that holiday many years after you’ve come back.” 

Track your spending

“It can be very easy to lose sight of how you are spending your money so use a money tracking app linked to your bank account to ensure you keep track of every pound leaving your account.”

“Many money-tracking apps let you categorise spending and easily set budgets for different categories, such as shopping, eating out and groceries. This allows you to properly keep track of your personal finances and stick to your budget, as helpful notifications will let you know when you’re close to your budget for each category.”

Put savings away

“Don’t let the excitement of relaxed restrictions stop you from putting money away for a rainy day. Try to put a small amount away as soon as you get paid, or try saving a few pounds a week to kick-start your savings pot.” 

“If you do have any left over cash at the end of the month, put it in a savings account and try to build up an emergency fund. As a general rule, you should ideally have 3 months worth of critical expenditure (rent, food, bills etc) in your savings account to deal with unforeseen circumstances such as a redundancy or replacing an essential appliance.”

Save on travel to work

“One of the best things that came out of the pandemic is the uptake of cycling, with millions of Brits getting on their bikes to enjoy exercise and space outside in lockdown. Whilst some offices are inviting staff back to work in the office, a blended approach of remote and office-based working has been adopted by many businesses, which takes the pressure out of travelling in peak commuting times.”

“If you can sacrifice the convenience factor, you can save some significant money on fuel and parking by ditching the car and walking or cycling whenever possible. For example, could you walk or cycle to work? Even if it’s just one or two days per week or even just when the weather permits, the money saved can quickly add up.” 

“If I were to choose one of these tips as the most important, I would say that the additional benefits of walking or cycling – both in terms of the benefits to an individual’s health but also to the environment – make ditching the car more frequently the most important tip.” 

Paul Wilson is a consumer finance expert at Financial Conduct Authority authorised and regulated credit broker Little Loans.

Deal,don’t cancel

Consumers are being advised not to cancel direct debits for services such as gym membership and pay TV during the coronavirus lock down period. 

Experts from personal finance website TheMoneyPig.com have urged the public to speak to their service providers and negotiate a discount rather than trying to cancel services.

Many customers are feeling the pinch financially and thousands are expected to give their finances an overhaul during the coming weeks and cancel any direct debits they feel they no longer need.

But experts from The Money Pig said that rather than just cancel direct debits with their banks customers should speak directly with their suppliers to see if they are prepared to offer discounts during this difficult period.

They said that speaking to providers was also essential to ensure they don’t fall foul of any penalties or early cancellation charges which may be incurred by cancelling the direct debit.

A spokesman for the Money Pig said services such as gyms and pay per view sports channels were particularly under pressure with so many sports events currently postponed.

But they said providers were often willing to give substantial discounts or even waive fees altogether for a lengthy period to ensure they retain customers.

They warned consumers to be patient though as the coming weeks are likely to see a very high volume of calls and waiting times are likely to be lengthy.

A spokesman for The Money Pig said: “Millions of us are currently taking a long hard look at our finances and many will be tempted to cancel direct debits for things like gyms and sports clubs we won’t be able to use over the next couple of months. 

“What we are saying to people is just to reach out and speak to the companies who provide these services and see if they can negotiate a discount or even if they are prepared to waive their fees altogether for the next few months.

“This is a time when the whole country is pulling together and many people are finding that service providers are being very accommodating with short term incentives in order to keep their custom in the longer term.

“We have seen reports of gyms agreeing to freeze memberships at no charge and companies such as Sky TV and Virgin media offering customers free sports packages for the next three months.

“By speaking to the service provider and discussing the options rather than just cancelling, customers can make sure they pay less in the long term by avoiding any cancellation charges or having to fork out for re-joining fees at a later date.

“One word of warning though: holding times are currently very high so try emailing or lie chat options first to relieve as much pressure from call centres as possible. If you do need to call then first thing in the morning or later in the evening may work best.”