Over 2020, people throughout the UK have faced challenges and concerns unlike anything else ever experienced before.

Most polls and research conducted over the pandemic suggest that well over half of the population have significant concerns about making ends meet. When I talk to people about the things that worry them most, finances almost always at the top of the list.

There’s a reason for this. Most of us – myself included – worry about what we actually spend. This might be because we don’t want to see what we’ve wasted cash on (you’re allowed to treat yourself!) But often there’s a deeper concern. Taking a clear look at your spending makes your financial situation a reality – you can see what you can and can’t afford in plain terms. But it’s also the first step towards taking back control of your finances.

The best bit is it doesn’t have to be a nightmare or even take that long to get started – and the psychological benefits outweigh most concerns you might have about your cashflow.

Here’s how to get stated.

The budgeting basics

Take a deep breath turn on the computer or grab a pad and have a look at your bank accounts. But set yourself a time limit of no more than 30 minutes. Just getting started is the most important thing.

You can download free apps, watch flashy guides on YouTube or check out lifestyle blogs from ridiculously organised people. But budgeting is best when it’s basic. A simple spreadsheet is all you need – or a blank piece of paper.

If you have online banking, you can get a list of direct debits and standing orders with one or two clicks. List out when your regular payments are due and total up the cost, then compare it to what’s coming in. In a separate column, include things that you pay as you go, like the food shop, travel (when we can again) and lifestyle spending like entertainments and takeouts.

You’ll be amazed how quick this is to do – however, you’ll be left with the sum of money you have left over each month in rather stark terms.

Now that’s out of the way, let’s get some cash back

Go back 13 months through your bank statements and note down anything that you don’t recognise. Many people are spending hundreds, if not thousands of pounds each year on sneaky annual debits for things they neither wanted nor needed. These might be free trials for goods or services you signed up to, or more obvious things, like Amazon Prime or iCloud storage. Why 13 months? Many businesses sign you up to annual payments that might have slipped under your radar. So go back a year and overlap by an extra month and you should spot everything.

Ask your bank to cancel anything you don’t want or need straight away – and claim back the money if you haven’t authorised the payments. You can dispute unauthorised transactions through your bank or card provider or take it up direct with the firm that’s debited you – it’s up to them to prove you said they could take the cash.

Contact your creditors

If you’re worried that your household income is tight or you’re struggling to stay on top of things there’s a lot you can do to tackle the problem before it gets out of control.

The rules about financial difficulties are clear. If you’re struggling to meet your financial commitments and ask the business for help, they should come up with some solutions for you to help you buy some time while you get back on your feet again. They should also consider suspending interest and charges for a short period if it’s making your situation worse. This doesn’t mean money you’ve spent will be refunded, but it does mean that money you’ve been charged on top might be refunded if there’s a good reason for doing so. Loan and credit payment holidays are available too so ask and explain if you’re struggling.

Mortgage and loan holidays buy you a bit of time to regain control of your finances but bear in mind the money you owe just gets tacked on to the end of the mortgage or loan period and extra interest may still apply.

If you don’t need it, cancel it

Not using that gym membership? Do you rarely tune in to that TV streaming site? How about that healthy lifestyle app that’s £5 a month? Every little bit adds up – so ditch what you don’t need. You may be surprised what you find. Online statements and busy lives mean we don’t often notice or realise we’re overpaying for contracts that have ended, been billed for subscription traps after free trials or have forgotten to cancel things like old mobile phone insurance policies.

Now hit those free apps!

Now you’ve got to grips with your finances, and started making savings, you don’t have to worry about prevaricating – you’ve done the hardest bit. Why not pop online and have a look at the huge range of Open Banking apps that offer free ways to manage your finances.

In January 2018, Open Banking was officially launched in the UK. This allows data about key things like your spending, what you spend money on and – crucially – how you could make savings, to be shared. But only with your permission, of course.

What this means in practice is there are now hundreds of money saving, budgeting and finance apps, websites and software available, often for free, that are designed to make life easier. Of course, always do a bit of research before signing up! Many of these apps allow you to bring all of your accounts and financial things under one roof so you can see what you spend and get tips on how you can make savings too.

Get a (free) plan.

If your financial difficulties look like they might be longer term, then speak to a free service like StepChange, a charity set up to help people get back on top of their finances. They’ll contact your creditors for you and negotiate payments you can afford. It’s not easy, but it’s a solution. Never pay for a debt management service – there are free options out there. And bankruptcy and IVAs are very much a final option. Don’t go there unless you are all out of other solutions.

Be realistic

There are times when you look at your finances and it’s apparent you can’t afford your property. If that’s the case, speak to your mortgage provider about your options when the pandemic has calmed down a little. You may find downsising to a cheaper property is a better option than defaulting on your mortgage. No-one likes dealing with problems that threaten your security. So if you’re worried about paying your mortgage then speak to the lender early on so they can come up with solutions for you.

Switch and save

Energy use will have gone up considerably if you’ve been working from home, but this is the time of year to switch providers before the price reviews that tend to happen around this time too. Take your own meter readings and call your provider asking for a revised bill. Then have a look at the options for switching. MSE have a good switching club for energy here: https://clubs.moneysavingexpert.com/cheapenergyclub

Now is also a good time to check and see if you are out of contract on your mobile, broadband or other annual subscriptions. Check to see if you’re being charged for an old mobile handset that you’ve paid off too.

And finally…

Dealing with difficult decisions about your finances can seem overwhelming. But once you tackle them head on, the pressure is much less than the burden of worrying but not knowing. There is help out there. And [client] is here to help you too.

Featured in Mirror – Martyn James

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