Take advantage of time at home and be better off by £7,182
The next few months are likely to see most of us spending extended periods at home while we wait for the coronavirus, and associated advice on social distancing, to pass.
We’re yet to see the full effect of the pandemic on our finances – and it won’t be good. However a positive impact could be that spending more time at home is the perfect opportunity to give your finances a spring clean and tackle those money-related tasks you don’t normally have time to do.
Getting a grip on your finances will not only give your bank balance a boost, but your mental health too as it may help you feel in control of something in an uncertain world.
Switching cash in a low-paying savings account to a better account is fairly straightforward.
Anna Bowes, co-founder of Savings Champion, says: “Many of the best savings accounts can be applied for online, so you don’t need to leave the house to post an application – unless you have to supply ID and sometimes you can even supply this online.
“Most accounts will tell you at the end of the application, if you have been accepted and if you have, you can add funds immediately if they will allow money to be sent electronically. And the end result can be really worth it.”
According to Savings Champion, if you had money languishing in an account paying 0.10%, a balance of £10,000 would earn just £10 in interest a year. However, the best easy access account is paying 1.31% (Cynergy Bank’s Online Easy Access) – so your £10,000 would earn £131 in interest instead.
How much can you save?
£121 by switching a £10,000 balance from an account paying 0.1% to one paying 1.31%.
The stock market has been on a dramatic ride for the past couple of months. You can’t do much about the share prices of the companies you’re invested in, but you can check the charges you’re paying.
“Recent stock market falls will be worrying, but people should remain calm and rational, take a long-term approach and not be panicked into selling out and crystallising their recent losses,” says Patrick Connolly, an independent financial adviser at Chase De Vere.
If you invest in a fund through a fund supermarket or broker, the platform will levy its own fees in additional to the fund’s ongoing charges. By switching to a cheaper platform you can save on these charges.
How much can you save?
Connolly says holding the same funds on a cheaper platform would save you about 0.2% of your balance each year – £20 if you have a £10,000 investment.
Now is the perfect time to go through your subscriptions and direct debits and strip out those you don’t really need. Even if you’re binging on boxsets, you won’t need Netflix, Amazon Prime, Hula and Britbox – so pick which one you use the most and ditch the others.
It’s also worth assessing whether music streaming services, gym memberships, paid-for phone apps, and diet clubs are worth continuing to pay for. Ditch the ones you haven't been using for a while anyway.
How much can you save?
Marcus by Goldman Sachs found Brits spend £120 a year on unwanted policies, subscriptions, and memberships they forgot to cancel.
If you’re self-isolating, a decent broadband connection and a range of TV channels is money well-spent. But it’s possible you’re spending too much on your telecoms set-up.
“Most people start a broadband/TV contract on an introductory price and over the years, the price rises. If it has been a while since you switched or checked your payment, you may be surprised by how much it is now,” says Anders Nilsson at GoCompare.
If you’re out of contract, you could potentially save a packet by moving to a similar package with a different company or re-negotiating your deal with your existing supplier.
How much can you save?
According to Which?, broadband customers who either negotiate a new price with their provider or switch suppliers save an average of £120 a year.
Insurance customers might also be unknowingly paying their insurer a “loyalty penalty” by not shopping around at renewal time.
According to the Financial Conduct Authority, six million home and motor policyholders are being overcharged about £200 a head every year by insurance firms.
In a report published in October 2019, the regulator found that elderly and low-income people were among the worst hit groups overpaying a combined £1.2 billion in annual premiums because insurance firms don’t give their best deals to loyal customers.
You’ll only be able to switch a car or home insurance policy at renewal time but there are a couple of things you can do anytime to make sure you don’t pay too much.
Firstly, make a note of when your insurance expires. Secondly, make sure your policy doesn’t “auto-renew” – this will stop your insurer automatically taking next year’s premium from your credit or debit card.
How much can you save?
£200 a year between your home and car insurance policies, according to the FCA.
If you’re not tied in to your mortgage, now’s the perfect time to check you’re on the most competitive deal possible and remortgage if necessary. This is particularly the case since the Bank of England cut the base rate to 0.1% in mid-March.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “If you would struggle to pay your mortgage if rates were to rise, then a fixed rate makes sense. But if this isn’t the case it may be worth looking at a base-rate tracker as these are currently more competitively-priced, at least for now.”
How much can you save?
If you switched a £100,000 mortgage repayable over 20 years on a SVR of 4% to Barclays’ two-year fix at 1.21%, your payments would fall from £606 to £469 a month, saving you £137 a month or £1,644 a year.
It might sound dull but a good long-term plan to stay in control in your finances is to have a budget.
A useful budgeting technique often overlooked is the “envelope” method of budgeting. This involves taking your monthly income, dividing it into different categories, and trying to stick to your limit for each category each month.
Whenever you spend money, it needs to come out of the relevant “envelope” – and when it’s gone, it’s gone.
There’s no need to use physical envelopes for this exercise – smartphone apps such as You Need A Budget, and banking apps such as Monzo and Starling do it all for you.
How much can you save? You Need A Budget claims new budgeters typically save up to £4,957 in the first year.
Other ways to make or save money at home
Declutter and sell
Self-isolation is the ideal opportunity to declutter your home and sell anything you don’t need online. Jo Threlfall, 27, is a thrift and budget fashion blogger (www.ldmv.co.uk) from Leeds. She has used extra time at home to sell old clothes on eBay and Depop.
Jo says: “I’ve sold old leather jackets, dresses and shoes which don’t fit me or I no longer wear. I made £35 from selling a pair of old school Vans trainers which I wore once and £70 on a pair of Dr Martins which were too big for me. I’ve also earned cash on eBay from selling old Topshop jeans which don’t fit me anymore for around £10 to 20. Overall I have saved £200 and put this cash into Moneybox account.”
“Meal prep” has long been a buzzword used by dieters and fitness experts. It’s the art of batch cooking meals and freezing or refrigerating portions until you’re ready to eat them. You can keep costs down by cooking from scratch, bulking out recipes with in-season vegetables, and using tinned food.
Jack Monroe’s website Cookingonabootstrap.com has pages of recipes including turkey and chickpea burgers that work out to 21p each, mushroom rogan josh at 31p a portion, and roasted carrot, chickpea and garlic soup at 20p a bowl.
Workout at home
According to the Money Advice Service, the average gym membership is about £40 a month. Council-run gyms and budget chains can be cheaper but neither option is as cost-effective as working out at home for free.
YouTube is perfect for finding HIIT (high intensity interval training), weight training, cardio and bodyweight workouts. Check out Joe Wicks on The Body Coach TV – he guides users through more than 250 workouts that can be done at home regardless of fitness level.
Shore up your finances for the future
Extra time on your hands is the perfect opportunity to think about how you will handle any future financial or health problems.
Most people who have a joint mortgage with their partner, or who have children, should consider life insurance. A life insurance policy pays out a lump sum to your beneficiaries if you die during the term of the policy. Some policies also pay out on the diagnosis of a terminal illness.
It’s also a good idea to make a will, especially if you have a partner but you’re not married. If you were to die intestate (without a will) while cohabiting, your estate would pass to your blood relatives and your partner wouldn’t get anything.
Many people set up a lasting power of attorney (LPA) alongside a will. A LPA gives another individual the legal authority to look after specific aspects of your financial affairs or health and welfare should you lose the mental capacity to do so. LPAs aren’t just for the elderly as younger people may also become incapacitated through accident or illness.
Now could also be a good time so check in on how your pension is doing. Are your workplace pension savings on target? Should you increase your contributions? You can also check how much State Pension you are likely to get on the Gov.uk website.
Making money while in self-isolation
There are several ways you can boost your income without leaving the house.
Become a “comper”
Radio stations, magazines, websites and companies run thousands of competitions each year offering prizes and cash. Compers dedicate their time to entering as many of these as possible.
If you like voicing your option, survey websites such as Panelbase.net, Swagbucks.com, Toluna.com, and Yougov.com will all pay for your thoughts, either with cash or gift vouchers.
Become a TikTok influencer
Forget YouTube and Instagram, the smart kids are making money on TikTok in 2020. TikTok users upload short videos to the site with the creators of the most popular clips paid by brands to endorse products.
"How I put quarantine to good use"
Tom Bourlet, 32, from Brighton, runs the Spaghetti Traveller blog (spaghettitraveller.com) alongside his job as a marketing consultant.
He’s used extra time spent at home to make a few changes to his finances.
Tom says: “I originally had the Sky TV package as well as BT Sport, however BT Sport certainly seems pointless right now with everything cancelled for the foreseeable future, while I only watched the Liverpool matches around once per month, so it certainly wasn’t worth the spend. That was a saving of £30, while I reduced the Sky package by £12.”
Tom has also frozen his £20 a month gym membership in favour of working out with weights at home.
He says: “I already miss the gym, but I know this is a key place where germs can be spread, plus your immune system is lowered when exercising so I didn’t fancy workout out in a gym for much longer. My membership costs £20 a month, whereas the YouTube videos I’m using are completely free and are really interesting to try out.”