If you had something unexpected to pay for, where are you planning to get that money from? 

One mistake people make when it comes to emergency funds is relying on credit cards. 

While credit cards may seem like an easy solution to cover unexpected expenses, relying on them can be a costly mistake. Credit cards sometimes come with high-interest rates and fees, which can add up quickly, making it challenging to pay off the balance. 

Additionally, if you already have a high credit card balance or other debt, adding more debt can damage your credit score and create a cycle of debt.

In life, unexpected events and emergencies can occur at any time, such as job loss,, car breakdowns, or home repairs. These events can cause so much stress, which is why it’s essential to have an emergency fund.

What is an emergency fund? 

An emergency fund is a pool of money set aside to cover unforeseen expenses. It’s like a safety net to help you navigate tough times without needing to take out debt or experience financial hardship. 

Building an emergency fund is crucial for everyone, no matter what your age or income is, because emergency situations don’t discriminate!

Having an emergency fund available in cash (and not cash under your mattress, but money available in a savings account) can provide you with peace of mind, knowing that you have money readily available to cover unexpected expenses.

Building an emergency fund doesn’t have to be scary! 

The aim is to save at least three to six months’ worth of living expenses.

Work out how much it costs to be you every month (the cost for necessities such as rent, mortgage, essential bills etc.)  and multiply it by three for a three month emergency fund, or six month emergency fund. 

If that seems too overwhelming, start by setting aside maybe £25 or £50 each week or month from your paycheque. Consistency is key and prioritising your emergency fund like any other bill or expense can help you grow that pot of money!

Building an emergency fund is essential for anyone looking to secure their financial future. It provides peace of mind, protects against unexpected expenses, and offers financial flexibility.

It’s crucial to avoid relying on credit cards as an emergency fund, as it can lead to a cycle of debt and financial stress. Instead, aim to save and invest in cash reserves that will provide you with the security and financial freedom you need to achieve your goals.

Photo Credits: Unsplash

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With the new year kicking in, after a big-budget Christmas break, it’s time to focus on your money matters again.

The cost-of-living crisis and inflation are going nowhere so it’s essential to stay on top of your finances.

Here are some of our favourite stories from around personal finance this week to help you get your head around money.

30 easy ways to earn £1,000s in 2023

For anyone looking to make quick cash after a costly Christmas, Esther Shaw writes for The Sun, coming up with 30 ways to make cash in 2023. Here are some of our favourites from Esther’s list:

• Take part in surveys

Surveys are an easy way to make money in your breaks, typically taking 10-15 minutes to complete. Try free sites like Swagbucks i-Say and PopulusLive. With consistency and discipline, you could earn up to £100 a month.

• Have a wardrobe clear-out

The start of the year is a great time for a spring clean and instead of throwing out clothing, try listing them on sites like Vinted and Depop. You can earn a few £100s depending on the quantity and condition of your items. Look out for any seller-side fees on these sites as they might eat into your earnings.

• Earn rewards for exercising

Kill two birds with one stone when you earn as you walk! Cash in your steps with sites like Sweatcoin and earn almost £5 per 5,000 steps you take.

• Claim the Married Tax Allowance

More than two million couples miss out on claiming this allowance. This could reduce you (and your partner’s) tax bill by up to £252 in the current tax year ending April 5, 2023. To claim, the lower earner must usually have an income below the Personal Allowance of £12,570.

• Turn your car into a billboard

Sites such as CarQuids let you sign up to brand campaigns by advertising with vinyl stickers on your vehicle. You can earn up to £150 a month depending on your model, areas where you drive and park and the type of ad.

Divorce and money- everything you need to know

January, also known as ‘Divorce month’, often sees lawyers receiving the biggest number of splitting up queries each year. With a divorce comes discussions around the couple’s financial positions.

John Fitzsimons writes for MoneyWeek, all the things you need to know if you’re splitting up, including:

Mortgage: Your property will be the trickiest asset involved in the division. You can choose to sell the property and divide the proceeds or one partner can buy out the other. Discuss with your lender, who may help you out by offering payment holidays or other allowances.

Savings and Investments: Savings can be easily transferred from one account to another. However, with investment transfers, there will be fees and taxes you must be aware of, such as the Capital Gains Tax. For joint account holders, it is worth informing your bank to avoid any misuse of account funds.

Pensions: The most commonly overlooked aspect of a divorce, has several options for dividing pensions such as pensions offsetting, pensions sharing or attachment orders.

Divorces have additional costs like lawyer fees, filing fees, child arrangement needs that will need to be considered.

Credit card rates hit record highs as Britain goes on a borrowing binge

Lauren Almeida writes for The Telegraph as average credit card interest rates jump 4.2% from last year.

Credit purchases spiked before Christmas with consumers spending £1.2 billion in November, triple the amount spend in October, according to the Bank of England.

This increase came despite a fall of 0.4% in November retail sales with the cost-of-living surging.

With higher interest rates burdening their debt repayments, borrowers have lesser time before interest is charged. Experts are now urging borrowers to use cheaper options as they reach closer to the end of their interest-free periods.

Nationwide found that one-third of the purchases in 2022 were processed with credit cards or ‘buy now, pay later’ schemes.

Shoppers are left with little choice other than spending further on credit interests after low cash savings following the pandemic and high-Christmas budgets.

Photo by Gabrielle Henderson on Unsplash

The post Must-know money: 30 ways to earn, divorce and money, and Britain’s borrowing binge appeared first on Mouthy Money.

Half of Brits don’t know their credit score, with 18% wanting to improve their score but don’t know how to do it, according to a new study by NerdWallet.

One in seven Britons (14%) says that their credit score is a source of stress and anxiety, with an equal number believing that their credit score is currently holding them back from making major life changes.

Benefits of a good credit score

A good credit score can be beneficial in getting better interest rates on loans, access to the best credit cards, housing, and insurance.

For example, lenders consider a potential buyer’s credit score to determine whether they are financially trustworthy.

Thus, credit scores are proof to lenders of responsibility, or good accountability, and of paying bills on time.

Brean Horne, personal finance expert at NerdWallet says: “It is worrying to see that so many people are in the dark over their credit score.

“Our credit scores can influence our chances of being approved for new credit, such as a mortgage or credit card.

“So it is really important, and very possible, to keep on top of it. It is vital that people keep track of their credit scores regularly.”

How do you check your credit score?

Each lender may have a different way of calculating your credit score, depending on what information they have access to and their lending criteria.

It’s still good to have an idea of what your score is to assess your home-buying opportunities before speaking to a lender.

Bethh Oliver, digital producer at Asda, says: “It’s only been important to check my credit score recently when buying my house – I’ve always had a relatively good credit score but to me it’s always felt a bit backwards that having a credit card boost helps you get a mortgage.

“I’d also say it’s important to check it to make sure it’s correct. My partner rarely checked his and had an error on his credit score that was significantly affecting it that didn’t actually belong to him.”

You can request a free copy of your credit report from each of three major credit reporting agencies, such as Equifax, Experian, and TransUnion.

Each credit reference agency (CRA) holds a file on you, although your rating might differ from company to company.

It’s worth getting a copy from all CRAs if you haven’t checked your credit score in a long time.

How can you improve your credit score?

If you want to take out a loan, such as a mortgage for a house, then your credit history helps your lender assess how much of a risk lending to you will be, depending on the quality of your credit score.

There are some ways you can boost your credit score, and make your house application stand out:

• Register on the electoral roll at your current address
• Make regular credit and other essential payments such as bills on time
• Keep your credit utilisation low
• Monitor your credit file and report mistakes or fraudulent activity as soon as you see them

Photo by Anete Lusina from Pexels

The post Half of Brits in the dark over their credit scores – how to check and boost your rating appeared first on Mouthy Money.

Over 17 million shoppers have used Buy Now, Pay Later (BNPL) services to make an online purchase, according to new company data.

BNPL is a relatively new way to buy goods on credit and pay for them later, either through regular interest-free instalments or after an interest-free period.

Such firms allow customers to pay for their shopping in bitesize instalments, slicing their full bill into segments with no interest. It has become a common option for payment at many online retailers, particularly in clothing and electronics sectors.

BNPL may seem like an easy option, but the agreement can affect your credit rating if you are unable to pay for the items you bought on time.

Christmas Now Pay Later?

With Christmas approaching BNPL schemes are an obvious option for families on tight budgets to purchase expensive Christmas gifts.

Almost one in 10 people were planning to use BNPL to help with Christmas shopping, according to a recent survey by Citizens Advice.

Myron Jobson, personal finance campaigner, Interactive Investor, says: “The main advantage of BNPL arrangements is it provides the flexibility of purchasing and receiving items without the need to pay for them in full right away, but in instalments over a given period without incurring interest.

“However, this type of borrowing feeds into the consumerist culture we live in. The ‘YOLO’ culture that seeks instant gratification which does really factor in how that might affect your financial position in the not-too-distant future.

“While it might be tempting to delay payment – and the adverts can often be very enticing and sometimes misleading – it often can be a slippery slope to being tangled in debt.

“If you don’t clear your debt before the delayed period is up, some providers will ask for a settlement fee or a lump sum of interest may be added to the debt. Missed payments could also be recorded on your credit report and affect your credit score.”

Find out more: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

“Not clear enough”

The recent rise of Buy Now Pay Later firms such as Klarna and Clearpay has caused much debate among money experts. But the fact 17 million of us have now used such services suggests it has quickly become a popular option.

Spreading the cost of a big purchase over instalments can be useful for budgeting and convenience, but anyone looking to use the option needs to think carefully whether they can afford to.

The other issue arises where different firms have different ways of operating. Companies such as Clearpay insist if a customer fails to make repayments, their information isn’t sent to credit checkers so it won’t affect their rating.

Klarna says its products don’t impact on customers’ credit scores and it only conducts ‘soft’ checks when assessing their eligibility.

Anthony Morrow, founder of Open Money says: “It’s just simply not clear enough to the customer that they are taking on short-term debt and what the consequences are if they can’t pay their debts on time.”

The idea of paying in interest-free instalments is enticing for many people. Morrows adds that it’s seemingly a lot less hassle to use BNPL than it is to apply for a credit card.

He adds: “Let’s not forget the bubblegum pink advertising, the influencer endorsements or, even worse, the way they incentivise debt. We’ve seen retailers offer ‘Clearpay day’ where if you pay with Clearpay, you’ll get a discount on your order.

“From a customer’s point of view, when the BNPL is incentivised, they get their order for cheaper and therefore might feel it’s the more financially sensible option.”

But the providers themselves contend that BNPL doesn’t function in the same way as other forms of debt such as credit cards or payday loans. Mouthy Money reached out to some firms who offer such services.

A Klarna spokesperson says: “Klarna is only easy to use if you’re able to repay. We don’t offer an open line of credit with a staggering APR of up to 100% like traditional credit cards do.

“Rather, we assess our customers’ ability to repay on every purchase, have limits on how much they can spend, and restrict the use of our services if there’s a missed payment. The average outstanding debt is a mere £48 with over 40% of Klarna customers repaying early.

“The sector needs to be regulated so high standards are consistently applied across all providers — especially as more traditional banks, who have a long history of using dirty tricks to bury their customers in debt by charging double-digit interest, enter the space.

“Done well, buy now pay later regulation will protect consumers, promote competition, mobility and choice, and position London as a world leader in financial innovation post-Brexit.” 

Mouthy Money also approached Clearpay for comment, but at the time of publication has not received a response.

Photo by rupixen.com on Unsplash

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Former navy man Jamie Jamieson believes his simple thumbprint trick could stop people becoming victims of ID fraud.

Sometimes you get an idea so incredibly simple that you wonder how you didn’t think of it earlier.

That’s what happened to me when, in 2004, I devised a way to combat identity fraud that almost anyone can use – and for free.

Around that time, identity fraud was rife and was very much a hot topic of discussion in the money pages of the national press, perhaps even more than it is today.

But despite this, I remember asking myself why nobody had come up with an effective solution to help people protect themselves against this sort of crime.

Banks didn’t seem to want to talk about it, the government didn’t have any solutions and the credit reference agencies wanted to charge you a monthly fee for what was, in my opinion, sub-standard protection.

It was then that I came across a pilot scheme in Inverness, Scotland, whereby local retailers were asking people to leave their thumbprint when they paid by card or cheque.

The beauty of that scheme was that if the card or cheque turned out to be fraudulent, the shopkeeper had the con’s thumbprint on record for the police to investigate.

It was like a eureka moment for me… I could use my thumbprint to ensure I didn’t become a victim of identity theft

The Inverness results were amazing. Within 6 months the scheme witnessed an 84.3% fall in credit card fraud, a 71% slide in cheque fraud and handbag swiping had plunged 54.5%. While only 30 or so shops put this in place to begin with, the whole city benefited.

That was like a eureka moment for me. If these firms could use thumbprints to stop fraudsters conning them then, surely, I could use mine to ensure I don’t become a victim of identity theft?

And that was when my own thumbprint system was born. From then on, I instructed the credit reference agencies to reject any applications for credit or to open a bank account in my name unless it was accompanied by my thumbprint.

To do this, I added something called a notice of correction to my credit file with each of the major credit reference agencies – Equifax, Experian and TransUnion and recently Crediva.

A notice of correction is a 200-word note that you can leave on your credit file and have it flash up every time a lender or bank pulls up your record.

Typically, they are used to explain an error in your file, or why you may have missed a payment, so the lender can factor this into its decision making when deciding whether to approve your loan.

But as I found out, they can also be used to add extra layers of security to protect yourself against identity fraud.

The best part about this system, apart from how effective it is, is that it is absolutely free to do. The only cost is the ink pad for your thumbprint, costing between £4 – £10 from the internet and pads last for years.

I am walking proof that adding your thumbprint to your credit file protects against fraud

While some firms offer insurance to protect identity theft, in my opinion some of these policies are not worth the paper they are printed on.

And, another thing, why get an insurance policy to help clean up the mess after you fall victim when you can stop becoming a victim in the first place?

With my system, if someone did successfully open a bank account or take out a loan or, say, a mobile phone contract in my name, I could hold the credit provider responsible as they had accepted the application without my thumbprint.

I know that to some people my method may sound a little strange or that it sounds like a lot of hassle. But I am walking proof that it works.

And arguably it has never been a better time to protect yourself, with new cases of identity fraud hitting an all-time high of 190,000 last year, according to CIFAS, the national fraud prevention service.

I put my technique in place in 2004. Since then I’ve taken out a mobile phone contract at the Carphone Warehouse branch in Scarborough’s Brunswick shopping centre. I’ve also used it to open a bank account with Santander and a Debenhams store card, among others.

While the process takes a little longer – say three or four minutes, while the company consults credit control – that is a small price to pay for peace of mind that you are protected against someone stealing your identity.

I understand my system may not be for everyone and that some people will be sceptical about leaving their thumbprint on an application.  But just think about it, your prints will be on a genuine application anyway.

I’m now in a position to force a crook to leave their print if they wanted to pretend to be me, or turn tail and run. More than anything it proves I didn’t make the application. I know the powers in my hands – or thumb.

But if you are worried about having your identity stolen, then I can’t think of a better way of doing so that won’t cost you the earth.

And if there is a better way, then of course I will be the first to try it out.

Photo by Pixabay

The post How my simple thumbprint trick can stop you becoming a victim of identity fraud appeared first on Mouthy Money.

Perhaps that’s a bit strong – but that “free” money can be financially lethal, if not literally so. To this day, I see it as one of the most irresponsible things any business has ever done to me. Yet, it was commonplace at the time and for that reason I won’t name and shame the lender.

Oh screw it, it was Northern Rock.

I’d been working as a journalist for a national newspaper in London. This time I’m really not going to name names due to sheer embarrassment – the paper used to support the Nazis and is the only paper in the world to be banned as a credible source by Wikipedia. You know the one.

The rabbit hutch I’d been living in near Kensington High Street was being sold and, as a friend of mine – a biscuit designer – lived a short commute away in Brighton (this was before Southern Rail abolished the concept of achievable commutes), I decided to do a bit of sofa surfing on the south coast.

Once more, you’ll notice, I’ve declined to name a name – this time, the biscuit designer’s. I will continue unapologetically in this manner as I have no wish to keep London’s libel lawyers in gin and funny wigs. And if you think the people in this blog post are you, there’s an outside chance you’re wrong. But it’s slim.

I was a card-carrying, flag-waving, ocean-going member of the UK’s large subprime community.

They call Brighton “The Graveyard of Ambition” because when Londoners move there (it’s always Londoners), they never move away. But they carry on working in the capital before eventually getting sick of the unachievable commute and taking much poorer paid jobs locally so they can continue living by the sea.

I was immediately bitten by the Brighton bug and suggested buying a flat with my biscuit designer friend (I’m going to call him ‘Dave’ because I can’t think of any other names). At that point, house prices were rising as quickly as the credit was flowing.

So Dave and I decided to buy a two-bedroom flat together on the sort of whim that might persuade you to change up from Debenhams to Calvin Klein boxer shorts.

They gave us money for nice furniture. A year later we were still watching TV in two fishing chairs.

In terms of risk, I wasn’t 100% prime or even near-prime. I was a card-carrying, flag-waving, ocean-going member of the UK’s large subprime community. I viewed cash machines in the way normal people view fruit machines, whooping with joy on the rare occasions they paid out.

But no-one at the bank seemed to care about my credit-worthiness. In fact, the heart-warmingly generous lending manager reminded us we’d need something to sit on and asked us whether we might want a few extra grand for some nice furniture.

Fast forward a year and we were still watching TV in two fishing chairs – you know the ones with beer holders. There was no nice furniture.

So where had the money gone?

In the mildest of salutes to responsibility, we’d both paid off credit cards – and then started using them again. We’d also shrunk our overdrafts to almost nothing – and then watched as they rebounded enthusiastically into the red.

I asked Dave just yesterday if he remembered how poor we were.

“Don’t be stupid,” he said. “We were loaded; we lived like kings – well, for a while anyway. I was the only biscuit designer in East or West Sussex who had a plasma TV on my bedroom ceiling.”

He really did. No girlfriend – but a plasma on the ceiling. Class.

We also had the most expensive Sky TV package, the fastest broadband, and the most luxurious health club membership. We were living a bit like Withnail and I. Dave was the decadent and devil-may-care ‘Withnail’ and I was ‘I’, the worrier who reluctantly participated in the high life, nonetheless.

But reality soon caught up with us. We began missing payments on bills. Letters from phone companies, banks and credit card companies became a daily occurrence. Honestly, we had more mail than the BBC at one point. Luxury items, like the gym and Sky TV, were cancelled.

Everything turned to shit. You don’t realise how depressing it was until you look back at it.

I remember a particularly sad moment when we both ended our contract with the Grosvenor fine wines club. But the fiscal environment had worsened too. Dark clouds were gathering.

Interest rates had risen and the mortgage repayments, which were variable, climbed sharply. I was forced to change jobs and took a £10k pay cut. Everything turned to shit. You don’t realise how depressing it was until you look back at it. For the next few years, money was a constant worry. And it drove a wedge between Dave and me.

As I’ve implied, Dave was a little bit more irresponsible – or Withnailish – than me and always seemed to owe me money. Communication broke down until it was conducted almost exclusively by half-smudged Post-it notes.

If we’d just rented, like we should have, we wouldn’t have gotten into that mess.

And we *were* in a mess. Dave got really close to bankruptcy and eventually became the shamed-faced owner of an Individual Voluntary Arrangement.

Credit wonks will know what that is but, for the cooler kids, it’s a way of avoiding bankruptcy and involves brokering deals with all your creditors to come up with a single monthly payment that’s shared between them. You commit to pay consistently and, in return, they stop levying interest and charges.

Things took a turn for the (even) worse when Dave moved to Casablanca, saddling me with the whole debt.

What saved me from that was the mortgage holidays we took. Mortgage holidays, you say? Oh yes! You can stop paying your mortgage for a few months. But, of course, that too has its downsides. The interest from the monthly payment you’ve decided to take as a payment holiday gets added to your mortgage. If you’ve ever taken one of these holidays or inquired about them, you’ll have noticed that they add a few pounds a month to your future mortgage payments.

Oh, and then things got even worse. Swaggering like a modern day Humphrey Bogart, Dave literally moved to Casablanca, in Morocco, where the biscuit design industry was booming. He somehow persuaded me to take legal ownership of the whole negative-equity-ridden flat, saddling me with the entire debt.

Helen put a stiletto up my behind and told me to get a proper job.

But, look. I’m still here. I’m a survivor! So how did I pull through?

Love, actually.

Yes, I met my then future and now current wife, Helen, and moved in with her, enabling me to rent out the Money Pit so that it paid for itself. I also got a great job – in Brighton. So much for The Graveyard of Ambition. I think, looking back, that was Helen’s doing too, since she put a stiletto up my behind and told me to get a proper job.

So I was able, slowly, to pay off my debts and now, 14 years later, I owe roughly what the asking price of the house was when we bought it in 2005. But, of course, it’s worth a lot more – about £70k more – and provides a good rental income.

So what did I learn?

First, avoid mortgage holidays. In fact, if you need one – and there’s no serious change in your circumstances – you probably shouldn’t have a mortgage in the first place.

But, actually, you should think about whether a mortgage is right for you in the first place. Renting would almost certainly have suited Dave and me better.

Finally, be careful who you buy with. I don’t mean Northern Rock, in my case. I mean Dave. If you’re going to buy with someone – if you have a Dave or Davina in your life – make sure they’re not the sort of person who thinks a ceiling-mounted plasma TV is cool.

My experiences and the lessons I learned inspired me to pass on that knowledge that now seems embarrassingly obvious – but never was – to others. This was one of the motivations I had when creating Mouthy Money alongside the site’s editor, Amy Rowe.

As you can see (you’re on it now), it’s a money blog – or digital magazine – with some 20 writers telling inspiring stories about their every day money challenges and successes. There’s loads here about mortgages and house buying so, please, take a look around. Touch things, if you really have to. But don’t break anything.

We’re different from the typical money blogger site because we don’t target people who think they need financial advice. Our audience is people who enjoy reading about other people’s lives and learning from their mistakes and successes.

They’re people who hate reading about finance but love reading about people’s financial decisions.

Before I go, I’ll leave you with another quote from Dave. I asked him what advice he might have for people thinking of getting a mortgage.

He thought for a minute, took a swig from what I now imagine to have been a Malibu and Coke and said: “If you can afford it, do it. If you can’t, do it anyway. It’ll be all right in the end.”

And, speaking as Dave’s chief creditor, that is most definitely NOT the moral of this story.

The post Like giving crack to a cocaine addict: my life with a 110% subprime mortgage appeared first on Mouthy Money.

I have a credit card that I pay off in full every month (it costs me nothing in interest, but I do get a lovely cash back kick back once a year of around £300). I put all the regular spending on it from petrol to groceries to things for the boys, anything Christmas related went on there too. That bill is just about to hit my current account so needs to be paid next week. It is coming in at £2,000, this is £1,000 more than a regular month. Ouch. Double ouch.

I estimate that Christmas has cost around £1,500 in total and this is even with us agreeing with the wider family and friends to not buy presents. I know that many people are in a similar, maybe worse, position and are feeling the pressure now the festivities are all over. Many people cannot afford to repay the Christmas bill in full.  

Why not do something different this year. Save up for Christmas starting now and have a nice fund built up that will cover the costs and you can start January afresh with no debts from Christmas.

Automated savings

I have been trying out a couple of automated savings tools. Chip is an app on my phone that automatically saves money for me every week depending on my spending habits and balance. Plum is a Facebook messenger tool which again saves money for me depending on my spending habits and balance.

Both tools are link to your bank account, and transfer amounts depending on rules you have set up. For example, you may want to have savings switched off when you are overdrawn.

I have been using Chip for around 6 months now and really love it. I don’t even notice the money leaving my account and when I do remember to check there is a nice balance sat there. There was £500 in there to help pay for my Christmas after the six months of transfers. The other great thing about Chip is that my interest is set at 3% and this can grow up to 5% if friends join.

Plum is slightly different as it helps me with budgeting and spending awareness. I get a message every day telling me my balance and a weekly message telling me what I have spent, categorised as well. I really like this daily awareness of how much is sat in my current account. Plum also make automated savings for me, albeit at a much smaller amounts than Chip.

A year of these two automated accounts working for me saving money is going to create a fund that will pay for Christmas 2019.

Manual cash/coin methods

I have seen lots of ways of saving up cash over the year using a coin jar. A good way to save if you can trust that you won’t dip into the jar if you need the money throughout the year!

There is the penny method, where you save every day starting with 1p for day 1, 2p for days 2, £3.65 for day 365. If you do this consistently for 1 year you will have £668 saved, not bad at all! But you must remember to put the money in the jar every day.

Or what about a weekly method with you start saving £1 in week 1, £2 in week 2, working up to £52 in week 52, this method means you will end up with £1,378 saved! Although its going to be tough at the end of the process when you need to be saving £50/51/52 per week!

Whichever method you choose I urge you to start saving now for next Christmas and relieve yourself a huge amount of pressure for next year that you may well be experiencing now. It will make a huge difference to know you are starting January afresh without the debt from Christmas hanging around your shoulders.

What if the debt is too much?

If your debt levels, feel out of control and you are unable to make payments please don’t despair. Make it a priority to speak to one of wonderful debt charities who can help you to get in control and work out a plan. Speak to Step Change, Citizens Advice Bureau or Christians Against Poverty. All are wonderful organisation who can help.

The post This might sound weird but…start saving for Christmas 2019 now! appeared first on Mouthy Money.

If there’s one resolution that you should make – it’s to start saving.

A recent study found that 30% of adults have less than £300 in savings and wouldn’t be able to pay their next month’s rent or mortgage if they were to lose their job.

It’s not just those on low salaries, as you might think. Another study found that one in 10 people earning more than £75,000 a year don’t save.

Some might not be able to afford anything if they’re busy clearing debts. Any disposable income might be better off put towards clearing those debts before building up savings.

Those with seemingly large salaries might have hardly any disposable income if they’re mortgaged up to the hilt and used to the finer things in life – and are unwilling to give them up.

But for those who can, putting a little something away every month is better than doing nothing. Everyone needs some core savings as an emergency fund for those unforeseen events.

Here are five steps to adopting a healthy savings habit for 2019 and beyond.

1. Stop splashing the cash

Spend some time with your bank statements and receipts from your purse or wallet. They may not make the greatest companion, but they will definitely prove an interesting read as you finally pinpoint where your money really goes each month. Highlight the items that you regularly buy, but that you could live without. Even if you just saved the amount you stop frittering each month, you will start to see a nice fund building in time.

2. Set savings goals

There is no hard and fast rule on how much money should be squirrelled away in a savings account as an emergency or rainy day fund. But it should at least be enough to cover essential outgoings for around six months. There are lots of budgeting and savings apps that can spur you on – they can help you keep track on how your savings pots are building up. Tandem, an all-digital bank, has just launched an auto-savings feature which will scan your other accounts and work out how much you can afford to save based on what goes in and out. It will then automatically move what you can afford into an account that pays interest.

An app called Chip works in a similar way. It will scan your current account every few days and calculate what you can afford to put away. The cash is then deposited in a Chip account hosted by Barclays. 

The golden rule of saving is not to dip into any pot unless it’s totally unavoidable, so resist, resist, resist.

3. Hunt down the best rate

There’s a huge menu of savings accounts to choose from. Easy access, fixed rate accounts, regular savings accounts and then there’s cash ISAs. Whichever one you choose depends on if you think you’ll need access to the money. Ideally you won’t touch it in which case you can choose a fixed rate account where rates are higher to reward you for leaving your money for longer. There are one, two, three and five year options. Don’t assume ISAs pay the best rates – they often don’t. And we each now have a personal savings allowance which means you can earn £1,000 a year in interest tax-free if you’re a basic rate taxpayer – £500 for higher rate. Use a comparison website such as moneyfacts.co.uk to help you find the best account and rate. There are still a number of good accounts on the market despite the low interest rate environment.

4. Get paid to save

Getting paid to save sounds too good to be true. But actually you can earn as you save, using one of the Government-backed ISA schemes.

If you’re saving for a deposit for your first home, go for a Help to Buy ISA or, if you are aged between 18 and 40, a Lifetime ISA monthly savings plan to earn the generous 25% bonus on your savings from the Government.

With a Help to Buy Isa the most you can put in is £200 a month – or £1,200 a year – with no limit on how long you can save for. The maximum bonus is £3,000 on the first £12,000, giving you £15,000. 

With a Lifetime Isa you get the 25% bonus, too, but you can put in more – £4,000 – each year. You can use your savings towards your first home as long as the plan has been running for at least a year.

5. Think longer-term

It is only when this emergency pot has been built up, and disposable income increases, that it’s right to start thinking about how to make savings work harder. Investing money in the stock market offers opportunity for better returns that are likely to exceed any interest rate a high street bank can offer. Historically speaking, stock market gains far outweigh cash. But you need to be comfortable with the prospect of losing money.

The post If you make one New Year’s resolution – promise yourself you will start saving appeared first on Mouthy Money.

I know that I, personally, have avoided credit cards like the plague, being all too aware of the potential dangers of having a large sum of money that you don’t actually own, but can spend anyway. I naively believed that as long as you stayed away from payday lenders, and other unscrupulous entities, you’d come out the other end with a shiny, perfect credit score. However, there are a number of things that you might not realise can knock it down.

Moving home

That moving property can negatively affect your credit score seems indirectly discriminatory, given the housing crisis that our country currently faces. It’s also well documented that my generation, the ‘millennials’ are frequently labelled ‘generation rent’, for the difficulty that we face getting onto the housing ladder.

The irony is that you need a good credit rating to obtain a mortgage and move somewhere permanently anyway!

Mobile phone contracts

This may seem like a no-brainer, but missing a payment on your mobile phone contract can also wreak havoc on your credit rating. Mobile phone companies, in particular, can be very ruthless when it comes to informing the credit agencies of a late payment, even if it’s your first time, so be careful!

I’ve been fortunate enough that this has only happened to me once, when I had my purse stolen and all my cards cancelled. However, I made sure to call my carrier, O2, straight away. Thankfully, they were very understanding as I’d let them know, and agreed to put a hold on my payment until I’d managed to sort the situation out. As this was the best part of a decade ago I can’t tell if this had any baring on my 18 year old self’s credit rating, but it goes without saying that honesty is the best policy.

Taking out lots of new credit cards all at once

Of course, lots of borrowing can look suspicious too. It’s never good to be in too much debt, even if you’re sure that you can pay it off. It’s recommended that you keep credit card borrowing below 25% of the total limit.

Unsurprisingly, there are also a number of things that, if you haven’t done them already, can help to boost your score.

Being on the electoral roll

Fulfilling your civic duty to vote can be seen as a great sign that you take your responsibilities seriously.

Keeping old accounts running

Recently, when I was on the phone to an RBS advisor, I decided to quiz him on improvements to credit score. Surprisingly, low income doesn’t affect your credit rating, also fiscal responsibility definitely does. One thing that I’ve definitely done correctly, is keeping my old account running- this includes my mobile phone contract with O2 that I’ve been taking out since I was eighteen years old, and my old Co-op, Nationwide, and RBS bank accounts.

Some people also utilise the technique of taking out a credit card just to pay it off quickly and boost their credit scores. Sometimes our situations are inescapable, but there are always work arounds!

The post The not-so-obvious things that can damage your credit score appeared first on Mouthy Money.

So, what’s stopping you switching? Do you have feelings of loyalty to your bank? If so, that’s totally misguided. It’s been many years since banks were trusted financial advisers, on the side of consumers. For the last few decades, banks have been profit-hungry businesses eager to squeeze every last penny out of hard-pressed customers. Why do you think it is that some charge so much to those who go into the red? Surely a decent and moral business would realise that it’s when people go overdrawn that they need the most help to get their finances back on track. Struggling folk don’t need to be slapped with outrageous charges and exorbitant interest, but that’s exactly what most banks do. Why? Because they care more about making profits than helping customers.

Surely a decent and moral business would realise that it’s when people go overdrawn that they need the most help to get their finances back on track.

Bear in mind that in the last decade banks were responsible for the biggest-ever misselling scandal to hit the UK when they flogged millions of unsuspecting people useless and expensive payment protection insurance. The bill for compensating all their victims has so far cost the big banks more than £30billion.

In short, your bank has no loyalty to you, so you should have no loyalty to it. Instead, you should focus on making the most of your money and finding the best deal for you. I can’t tell you what that is, you need to find out for yourself. To do that you need to be honest about how you use a bank account. Are you always in the red? Or do you keep a healthy credit balance? Seek out the account which has the lowest overdraft charges if you’re the former, and find the highest interest-paying account for the latter. If you’re a really savvy spender, you could even look for an account which pays cashback, although check carefully on the deal as some major banks are busy reducing the value of their offers.

You can find tables of the different offers at moneyfacts.co.uk.

You should focus on making the most of your money and finding the best deal for you.

If the reason you haven’t switched is that you think it’s too much bother, think again. It may take a little time to find the right account, but once you’ve done that then switching should be simple. Banks have all signed up to a seven-day switching agreement and if they fail to switch you in seven days – or mess up your direct debits or standing orders – they must compensate you. You simply need to contact your chosen bank and hand over your details, then they should be able to do the rest.

Soon after that, you should be feeling the financial benefits of lower charges, higher interest, or even cashback when you spend. The only question is, what will you do with that extra money?

The post How to switch bank accounts appeared first on Mouthy Money.