Retiresavvy presents money-saving tips that could help you save pennies and pounds
Spring is in the air and it’s the perfect time of year to take a look at your finances. Whether it’s getting your savings and investments in order, looking to clear any debts you might have or you just want to save some cash, our money saving tips could help you get your finances on track.
Make the most of ISAs
Are you making the most of your ISA allowance? You can save up to £15,240 tax-free in the 2016-17 tax year (rising to £20,000 from April 2017) in ISAs. The good news is recent changes to the rules have made them more flexible.
If your provider allows it, you can also pay into and withdraw money from a flexible ISA over the course of the year without losing its tax-free status.
For example, under the old system if you had £1,000 in an ISA and took out £500 during the year, then you wouldn’t be able to pay it back and your annual ISA limit would be effectively £500 lower.
If your ISA is flexible – check with your provider, as not all ISAs are – then you’d be able to withdraw the £500 and pay it back in without it affecting your annual ISA limit.
You can also split your annual ISA allowance between investments in cash and stocks & shares ISAs. For example, you could save £5,000 in a cash ISA and put up to £10,240 in a stocks & shares ISA, or any combination up to the annual allowance.
Have a clear-out and clean up
With Spring finally arriving, what better time than to have a bit of a declutter around the house? From unused kitchen gadgets to bric-a-brac, one person’s trash can be another’s treasure.
Selling on online auction sites is an easy way to help raise some extra money from your unwanted possessions. You’ll find lots of selling tips online and advice on how to get started. For specialist collectables like coins, stamps or medals, you may want to get an expert valuation before putting them up for sale.
In the recent Budget, George Osborne introduced two new tax allowances worth £1,000 each for ‘micro entrepreneurs’, due to come in from April 2017. People who make money buying and selling online or who offer property services like renting out rooms for holidays, driveways or loft space, will no longer need to declare or pay tax on that income if it comes to less than £1,000.
For earnings above this, you will need to fill in a Self Assessment tax return.
Prioritise your debts
Paying down existing debt should be a priority for most people. Start with the most expensive debt first – that’s usually credit cards or store cards with high interest rates. If you can, either pay off your full credit card balance each month or as much as you can afford.
For example, according to comparison site uSwitch if you had a credit or store card with a balance of £3500 charging a fairly standard APR of 18.9% and paid off £100 a month, it would take 50 months to pay off, with a total repayment of £4,925.
In other words, it would take more than four years to pay off and you’d pay £1,425 in interest – about 40% of what you’d borrowed in the first place. Pay £150 a month and the debt would be cleared in 29 months, with a total repayment of £4,306 – that’s over a year and a half sooner and more than £600 less.
If you’re able to, you may wish to over-pay your mortgage. There are two main ways to overpay a mortgage:
- Regular monthly repayments that reduce the amount you owe, saving interest helping pay off your mortgage early
- Lump sum overpayments that can help reduce monthly mortgage repayments, but usually don’t mean you’ll pay your mortgage off sooner
Some providers allow you to overpay a certain amount penalty-free – usually around 10% a year – but be aware that charges or fees might apply to amounts above this. Check with your mortgage provider.
What can you live without?
Cutting down a bit here and there on ‘treats’ and other small outgoings, can free up more cash than you might expect.
Retiresavvy worked out that ditching the daily £3 take-away cappuccino could save up to £700 a year. Similarly, cutting back on one £25 takeaway or meal out a month can save £300, while you could save as much as £35 from your monthly mobile phone bill by trading down from a flagship phone contract to a much cheaper SIM-only deal.
You could also make big savings by ditching expensive satellite or cable TV packages and signing up for online streaming services instead, quitting the gym and hitting the local pool or going for a run.
What money savings tips work for you? Let us know in the comments below or head to the Forum to have your say
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This article has been commissioned by retiresavvy and any opinions voiced are the author's own.