Cutting back on your spending

In a recent survey of members, almost everyone we spoke to said that they wanted to save more.

But that can be hard on a low income. Where does the money come from? Cutting back on spending is hard. To help you, here are four tips to help you cut back on spending.

Pause big purchases

When you’ve got the urge to spend on something relativey big, walk away from the shop. Write down what you wanted and how much it costs. Stick this somewhere obvious; like the fridge or notice board. Wait 30 days. If the urge remains, then go and splash out but avoid using credit if you can.

Grocery shop with cash

In times of plastic it’s easy to forget the benefits of notes and coins. For this tip you’ll need your best maths skills, so you don’t overspend. On the otherhand if you’re watching every penny you’re budgeting on the go.

More often than not you’ll be worrying about overspending and end up under-spending. Pop the change in a jar. Build it up. Pay it into your credit union savings account.

Set a spending goal

Start small. Spend £10 less over the next four weeks compared to last month. At the beginning of the month put a tenner in an envelope in a safe place. Leave it alone. Don’t be tempted to spend.

At the end of the month put that £10 in your savings account. Next  time aim for £15.

Cancel unecessary direct debits

Subscription services often rely on people not getting around to cancelling payments for things they no longer use. Have a good look through your bank statements. See if there’s anything you’re spending on that you no longer need and cancel it.

More tips

If you want more tips of cutting back on your spending, the consumer site Which? has another 50 ideas.

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How to set a money goal and stick to it

If your New Year resolutions include a money goal, this quick and simple guide will help ensure you achieve your objectives.

Perhaps your money goal is to save more, go on a decent holiday, pay down debt or just spend less. When setting a money goal, the SMART approach is best. Your goal should be:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-framed

Specific

Instead of simply “saving for a holiday”, include a date, venue and cost. It gives something solid to aim for. For example, “I will save £1,000 for a holiday in Spain in September 2020.” If you’re paying down debt it might be “I’ll pay £50 off my credit card every month, clearing the balance by the end of the year.”

Measurable

This helps you track progress. Instead of thinking you can afford to save for a holiday by cutting down on spending, a measurable goal adds a real cash amount. This might be “I’ll save £50 every month by halving the number of times I visit coffee shops.” Perhaps its something like “I’ll get the bus instead of a taxi which should save me £60 every month.”

Achievable

Can you meet your goal? There’s no point thinking you can amass 10 grand for a Vegas blowout if you struggled to scrape together £500 for last year’s holiday in Wales. Can you really save the desired amount each month?

Nothing will put you off your target if you fail to achieve the steps required. If you need to save £100 every month to reach your goal but can only manage £50, then adjusting your target date or goal amount might be a better option.

Use the Money Advice Service’s Budget Calculator to help you work out what savings you could make.

Relevant

If your goal doesn’t inspire you, then chances are its not going to be achievable. Aim for something that will make a difference; a holiday, paying off debt, saving for Christmas 2020. Think about what achieving the goal will mean; a chance to relax (holidays), sleep better (pay off debt), feel in control (save for Christmas)

Time-framed

Setting an end date for your goal gives you a timeframe to work towards. It makes it easier to see how much you need to save on a regular basis and lets you monitor your progress towards your goal from month to month.

Don’t forget your Credit Union offers regular savings as well as Christmas and Prize Saver accounts.

New year, new finances

New Year is a great time to take an honest review of recent spending. Here’s a 7 step plan of action to improve your finances durng 2019.

Step 1: Assess the situation

You’re probably underestimating how much you’ve spent this Christmas. Property website Zoopla reckons four out of ten people do not know how much their monthly outgoings are. One in three admit to having ‘no idea’ how much they owe.

Step 2: Put your credit cards away

It takes 12 months to pay off a £1,000 (36% APR) credit card debt at £100 per month. That leaps to almost seven years if you only pay £30 each month.

It’s easy to overspend on plastic. But remember – credit cards do give some protection when buying goods; read more here.

See how long it will take to repay your cards off using the Money Advice Service credit card calculator:

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Credit card calculator

Step 3: Set a budget

Use the Money Advice Service Budget Calculator to get a realistic picture of your income and outgoings.

Budget Planner
Step 4: Seek advice if you are overspending

If your budget shows that debt repayments are causing real problems, remember to pay the priorities first; rent, mortgage, utilities, council tax etc. And then seek debt advice.

Step 5: Consider consolidating your debts

If you need to spread your debts over a longer period of time, or are paying very high interest rates on credit cards and loans then a consolidation loan might be the answer. Before considering such a course of action you can find some useful tips from the Money Advice Service.

Central Liverpool Credit Union may be able to provide a consolidation loans to help you repay your debt at a more affordable rate over a period that suits your budget.

Step 6: Avoid a debt hangover in 2019 – start saving

Stashing away £10 per week is an easy way to build a £500 budget for Christmas 2019. Giving up just a few bags of crisps or an alcoholic drink each week is probably enough to put aside a tenner.

Step 7: Sign up for more money tips

The Credit Union has a remit to promote financial education amongst our membership. Sign up for regular money tips to find more ways to improve your finances during 2019.

You may also find these tips from the Independent useful. The Money Advice Service provide an online health check too.

Christmas money saving tips

Christmas just around the corner. Central Liverpool Credit Union has produced 5 tips to help you budget this festive season.

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1. Work out your budget. The average household will spend £475 on gifts, £110 on food and drink, £30 going out, £20 for travel and £17 on decorations.

The Money Advice Service has produced a calculator to help you work out how much you will need.  Its important to agree (and stick to) a spending limit.

2. If you will be travelling by train, book tickets in advance now. You’re guaranteeing yourself a seat during the busiest time of year and can save up to 50%.

3. UK shoppers face most expensive Christmas dinner in a decade. Use a supermarket comparison site to find where to get the best deals. Although they are becoming harder to find, independent greengrocers can work out cheaper than big retailers.

4. Shop at outlets. Money Saving Expert has produced a handy list of 50 big name discounters

5. Plan for next Christmas. Your Credit Union provides a Christmas Club account. If you started saving in January just £5 per week would net you £235 by 1st December 2019. Double that to £10 and you’ll have almost £500 to spend.

 

 

 

 

Talking about money: planning for a funeral

Funeral costs are rising. Here’s some information to help protect you and your loved ones.

You probably already know funerals are expensive. The most straight-forward funeral can cost £1,000s. There are unavoidable expenses that are easy to overlook, such as burial fees.

Thousands of people are left unaware that funeral costs continue to spiral. One of the biggest scandals in recent years is how the unregulated funeral industry is driving up prices beyond inflation. 

In the past decade, the cost of funerals has increased more than petrol, electricity, wages and house prices.

The average funeral cost in the UK is now £4,078. The total cost of dying is an alarming £8,802 per person.

Grieving relatives are being ripped off with the hard sell when they’re at their most emotionally vulnerable. Often they are too caught up in the moment to consider the final cost.

Understandably, this staggering cost is beyond the budget of most people. If you’re not protected, your family will be left struggling to pay the bill at a very difficult time. Funeral poverty is a real problem.

Type of funeral Average cost* Includes
Direct cremation £1,600 Collection of the deceased, a simple coffin, and return of ashes
Cremation using a funeral director £3,311 Collection and care of the deceased, a basic coffin, hearse and managing a simple service; but does not include an elaborate ceremony
Burial using a funeral director £4,257 Collection and care of the deceased, a basic coffin, hearse and managing a simple service; but does not include an elaborate ceremony
SunLife Cost of Dying report 2017, and the Royal London National Funeral Cost Index Report 2017.

10 tips to help you plan better

The following tips have been reproduced from the Fair Funerals Campaign, from Quaker Social Action

1. Talk about it now. Discussing your funeral wishes with friends and family can provide clear plans and save unnecessary costs.

2. Slow down, take a breath. Don’t feel rushed into making funeral arrangements when someone dies. When we feel rushed we can make bad financial decisions

3. Shop around. Costs vary hugely between funeral directors. Get three itemised quotes – you could save a lot of money.

4. Ask about a ‘simple funeral’. Ask for the funeral director’s most affordable funeral package. Often this will be called a ‘simple funeral’

5. Are you eligible for financial help? Call the DWP Bereavement Service line on 0345 606 0265, or the Citizens Advice Bureau, to check if you’re eligible for financial support.

6. It’s your choice. There is no legal requirement to hire a funeral director, hold a ceremony, or pay for flowers or special vehicles.

7. Cremation or burial? It is a personal choice, but it’s worth noting a burial is often more expensive than a cremation.

8. What makes ‘a good send off?’ At a funeral, people remember thought and goodwill rather than lavish expense.

9. If no one can pay? Ask about a simple, dignified funeral paid for by the hospital or council.

10. Need help now? For free help and advice on arranging a meaningful affordable funeral call Down to Earth on 020 8983 5055.

For more details help and support, Down to Earth have a guide called Planning an affordable and meaningful funeral. (.pdf, 196k)

Prepaid funeral plans

With the cost of funerals increasing beyond inflation, you might consider a prepaid  funeral plan?

These plans allow you to freeze funeral costs at today’s prices. Contributing towards the cost they help protect your family, emotionally and financially, when they are at their most vulnerable time.

A funeral plan means your family won’t be hit unexpectedly with a considerable bill when the time comes.

Getting a funeral plan is an also a way of giving a final parting gift to your loved ones. You are lending them a helping hand when they need it most.

After that, you no longer need to worry about leaving your family with the burden of debts and stress, just happy memories and a legacy that isn’t eaten up by extortionate funeral costs.

Co-operative Funeral Care offer a Best Price Guarentee. If you find the same funeral plan at a lower price, they promise to beat it.

Talking to older people about money

Funerals are, of course, a hard topic to discuss. Older people may need to consider a wide range of financial topics, including wills, care needs and failing health.

The Money Advice Service have produced a guide to help you Talk to Older People about Money. (.pdf, 738k)

Talking about money for couples

One in three people say that support when talking to their partner about debt and finances would benefit them.

A recent poll found that UK adults are hiding a collective £69.6bn of secret debt from their partners. Accounting for most of the debt, 5.5m people were hiding an average of £2,000 on credit cards.

Nearly 2/3 of married couples said that they would prefer to talk politics than money.

Sharing your attitudes to money

“A conversation about your finances can be awkward and if you’ve got debt even somewhat distressing” says Jane Morgan, from Direct Line, which carried out the research. “But it’s important to ensure your partner is aware of your financial position. Having these discussions as early as possible to make sure you are prepared.”

Using these questions can help you understand you and your partner’s attitudes to money. Talking about your goals, it’s important to think about what you both want:

  • Do you prefer to live for today?
  • Are you confident in managing money?
  • Do you think it’s important to keep track of income and expenditure?
  • Do you like to shop around to make money go further or to buy on impulse?
  • Are you open to discussing money?
  • Do you feel it’s important to adjust non-essentials when life changes?
  • Do you ask for help with your money?

 

There’s more useful information to help you talk to your parner about money from the Money Advice Service.

Get budgeting

Drawing up a budget is a great way to be open about your money and debts.

A great place to start is with this calculator from the Money Advice Service:

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Budget Planner

If you found this article helpful, you can sign up for money tips here:

 

Young adults: talking about money

A poll of 1,000 18-25-year-olds found money worries were widespread. Young adults are spending a large chunk of their time  feeling anxious or under pressure.

Young adults wanted to budget. They need more information about savings accounts.

Here’s a video of 16 to 25 year olds sharing their thoughts about money:

Budgeting tips

In October we published budgeting tips using the 50/30/20 rule.

Recapping, 50% of your budget should pay for your needs – the kind of things you can’t do without. Like rent, bills, food and transport. 30% of your money should go towards ‘wants’. This is non-essential shopping like sweets, holidays and outings. The remaining 20% is for plans, especially saving.

We’ve produced an infographic to help you budget better. It can also be downloaded here

Before you start, the Money Advice Service has information about rent, running a bank account and how you are taxed when your start a job.

Your budget should allow you some spare money to start saving. The Money Advice Service has produced a useful guide to savings accounts, including opening one with your credit union.

Why not kick off now? Here’s a budget planner to get you started:

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Budget Planner

If you found this article helpful, you can sign up for money tips here:

Talking to children about money

Teaching young children about money makes them better-off in the long-run.

A research project running since the 1970s found kids who were taught about saving were more likely to have a decent pension in later life. Budgeting skills meant less debt. Awareness of real-life costs makes people shop around.

For the under 5s

You can improve the financial knowledge of a child by involving them with financial decisions as soon as possible.

In the supermarket and need to buy ketchup? Ask a child to help choose, based on your budget and the price of the different brands. You could also allow them a set amount of money to pick something from the shop. Be clear that ‘when it’s gone it’s gone’. Talk about the choice they made and what they might do differently next time.

Here’s a video with some real-life examples:

Children in this age group can also learn to recognise different coins. Notes are worth more than pennies. Money should be kept safe.

For the under 10s

With some maths under their belts, kids can now learn the correct value of coins and notes.

You can show children that some things cost more than others. Toys. Buses. Chocolate. They vary in cost. They all have different benefits. What’s the advantage of spending on certain things over others? If you spend all your money on toys and have nothing left for the bus, what are the consequences? A long walk home in the rain?

This is probably the age when your children might think about a bigger purchase. As a result, they may develop savings goals. A toy or football kit might be out of reach today. But saving small bits of pocket and birthday money can help them reach their goal. How long will it take to have enough money? What are the consequences of temptation and an early spend on something else?

If the youngster doesn’t have a savings account, why not open a Junior savings account with the Credit Union?

Teenagers

If older children have started earning pocket money, can they keep track of their hard-earned cash? A recent survey found only half of 15-17-year olds who receive money keep track of their income and spending.

Teenage years are a great opportunity to teach the difference between wants and needs. Our earlier post about the 50/30/20 rule will help. To recap. 50% of your budget should pay for your needs – the kind of things you can’t do without. Like rent, bills, food and transport. 30% of your money should go towards ‘wants’. This is non-essential shopping  like sweets, holidays and outings. The remaining 20% is for plans, especially saving.

It is a good time to build on what they know about real life costs. If they dream of owning a car, explain the cost of MOTs, insurance and general maintenance. Could they budget for a week’s worth of food without overspending?

Part of teaching your teenagers how to manage their finances comes down to being strict with the money you give them. Not bailing them out if they overspend.

Here’s a video produced by teenagers kicking off a conversation about money with their peers:

But what about the parents or guardians?

Martin Lewis has produced 55 tips to save money if you’ve got kids.

We hope you found this information useful. You can sign up for more money tips here:

Talk Money Week

Central Liverpool Credit Union  is pleased to announce our involvement in this year’s Talk Money Week.

Launching today, Talk Money Week celebrates the work thousands of organisations are doing to improve money management across the U K.

What’s coming up?

Every day this week we will be providing money tips for members of all ages:

  • Tuesday: Talking to children about money
  • Wednesday: Young adults and money
  • Thursday: Working with your partner to meet money goals
  • Friday: Thinking about money as an older person

We will be send a summary by email on Friday. You can sign up to receive money tips directly into your inbox:

Next week we’ll be showing the benefit our services bring to employees. If you are an employer you can join our payroll deduction scheme.

The financial capability challenge

Unfortunately, levels of financial capability across the UK remain stubbornly low. Millions of people lack the financial resilience to deal with unexpected financial shocks.

Deadline to Breadline is a research project by Legal & General. It calculated the number of days households could survive on their savings if income was lost for example due to redundancy, long-term sickness, critical illness or death.

The average household had enough money to last them 19 days. Tenants in private rented accomodation had enough to keep them going for just 2 days. Social tenants fair worst of all. They could barely get by for 24 hours.

Talk Money Week provides an important opportunity to discuss life events. How collectively, we can support people at risk from uncontrolled levels of debt or suffering from other financial difficulties.

We’ve been helping for three decades

Next year Central Liverpool Credit Union will be 30 years old.

Since 1989 a lot has changed. How we manage our finances and, in many respects, the world, is unrecognisable from 30 years ago. No smartphones, internet, online banking or price comparison websites. Payday lenders didn’t exist. Nor did the Bedroom Tax and Universal Credit.

But some things remain the same.

When we first started, many of our members struggled to manage their finances. Not knowing how to manage a budget or plan for the future.

Many of the children and grandchildren of our first members still struggle.  The statistics highlighted below provide some indication of the extent of the problem.

We hope you find this week’s money tips useful. You can sign up even if you are not a member of the Credit Union.

Better budgeting with the 50/30/20 rule

Want a quick and easy method for budgeting? Then you can’t beat the 50/30/20 rule.

Elizabeth Warren, a U.S. Senator from Massachusetts, was named by Time magazine as one of the 100 Most Influential People in the World. She came up with the 50/30/20 rule.

After paying tax you split what you have left into the three different categories: essentials (needs: 50%), flexible spending (wants: 30%) and financial goals (plans: 20%).

Four steps

The first step is to work out your income. For most people that’s straight forward. If you’re self-employed you might need to guesstimate your earnings. HMRC have created a calculator to help you work out your tax bill.

Secondly allocate 50% of what’s left to living expenses. The essentials. Including housekeeping, rent, bills and transport. These are your ‘needs’. Absolute needs. Survival stuff. Even if you feel you need Netflix, a curry night or a holiday, these are not included in this category.

The third stage is to assign 30% of your money to ‘wants’. These are everything you buy, but don’t necessarily need. Basically all those little extras you spend money on that make life more enjoyable and entertaining.

Mixing the last two around is common. Spending half our money (or more) having fun and finding 30% isn’t enough for our essentials (needs). Consequently there’s nothing left for financial goals.

So the fourth stage is to put 20p from every £1 aside to help you meet financial goals. Too often that means paying back loans. You should be paying this into your savings account and pension

Putting into practice

Let’s say your monthly income is £1,000. Using the 50-30-20 rule, you can spend no more than £500 on monthly needs. That means if your housekeeping bill is £350, you’ve only got £150 left for bills and transport.

This leaves £300 a month for your ‘wants’. That’s your going out budget. And all the things you go shopping for but aren’t required to meet your basic needs. You might consider shifting some of this money back to meet your ‘needs’ if you’re coming up short there.

Now you have £200 left, that last £20 in every £100. You know what to do with it. Pay down on debt, save for an emergency. Plan for your future.

Try it yourself

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