The seven deadly financial sins

Limiting small luxuries can improve your wellbeing and save you some cash in the short term, but can lead to permanent change too. If you want to see the bad habits that are costing you the most to try ditching this lent, here are seven of the worst:

1. Brand Loyalty. It’s easy to get complacent and stick to the same supermarkets, mobile phone providers and insurance companies you’ve always been with, but you could be missing out on some big savings. 

Most companies will give you introductory deals that expire, so to keep costs low it’s worth switching - or at very least haggling - once these deals come to an end. The market is extremely competitive and some companies offer price matching, so if you see a cheaper deal elsewhere, you could secure yourself a discount without even having to switch.

2. Impulse Buying. We’re all entitled to treat ourselves once in a while, but you need to make sure those treats don’t lead you into financial trouble down the road. The best way to do this is with a monthly budget. 

If you set aside a pot of cash for expenses like clothes, meals out and drinks, you’re free to spend that on whatever you like guilt free, while ensuring that your serious expenses like rent and bills are taken care of.

3.Subscriptions. Signing up to a new subscription service that offers £1 a month streaming and half-price snack boxes is incredibly tempting, but once the initial deal runs out you need to ask yourself if it’s still worth the outlay.

Take stock of the subscriptions you’re paying for to see if you’re using them regularly - and if they still offer good value. If not, cancel them. Remember, If you haven’t used the service since your last payment, the provider might grant you a refund.

4. BNPL schemes. If you’re an avid online shopper, you’re probably aware of Buy Now Pay Later schemes like Klarna, Affirm and Afterpay. It’s easy to see the advantages of no interest, no fees and no late charges, but what seems like a quick fix can result in significant debt.

The issue with BNPL schemes is that you’ll often end up spending much more than if you had just paid upfront. Meanwhile, spreading purchases out over several weeks or months and potentially a string of BNPL providers can make keeping track of your cash difficult. 

If you end up repeatedly missing payments, fees can mount - and even be passed on to debt collectors. 

5. Credit Cards. Like a beefed up version of buy-now, pay later, credit cards let you spread thousands of pounds of purchases over more than a year - often interest free.But if you don’t clear your debt on time, interest quickly starts to build up - especially if you’re only making the minimum payment each month.

If you have racked up a lot of credit card debt, it could be worth switching to a 0.0% interest credit card. You can transfer your debt across to the new card and pay it off without acquiring additional interest. 

Just make sure you have a plan to clear that debt before the 0% period runs out though, or you’ll just end up back where you started.

6. Late Bill Payments. Keeping track of all your outgoing bills isn’t always easy, but it’s really important that they are paid on time. Late bill payments often incur fees and negatively affect your credit score. One easy way of ensuring your bills are paid on time is by setting up a direct debit.

It’s also important to prioritise your bills, for example rent or mortgage payments are an absolute priority, whereas non-essential bills like gym memberships or subscriptions can more easily be cancelled or deferred to provide you with extra cash in hand.

7. Not asking for help. Outstanding debts can feel like a huge weight, affecting your relationships, mental health and threatening your financial security, but the worst thing you can do is try and tackle this on your own.

There are plenty of services, including Citizens Advice and National Debtline, which can offer free advice on how best to tackle your debt. Meanwhile, money.co.uk has an assortment of handy guides to help you get by financially. The most important thing to remember is that you shouldn’t have to suffer on your own. Help is always available - just ask. 

James Andrews, personal finance expert at money.co.uk, said: “Lent is a great time to give up bad habits, but it’s also worth picking up some good ones too.

“Many of us don’t bother to review our bank statements, but it’s a good idea to take 15 minutes out of your month to check them over. You’ll be able to see what your cash ends up, where you could make savings and even spot any unauthorised or incorrect charges. 

“If you feel like you’re on top of your finances, then you should start planning for the future. Putting money aside now can mean you won’t need to get into debt later if an unexpected bill arrives or simply be used for something you fancy you can’t afford from your monthly earnings alone.

“There are a range of different accounts you can open depending on what you need. ISAs allow you to earn interest tax-free, while regular accounts offer rewards for building up a savings habit and fixed-rate bonds pay you more if you promise not to touch the cash for a set period.

“To see the best savings account deals from all the top providers, use money.co.uk’s handy comparison tool here: https://www.money.co.uk/savings-accounts.htm.”

Press@money.co.uk