Eight ways to make yourself richer

Published by Rob Goodman on 24 February 2014.
Last updated on 24 October 2014

Money in hand

With the long dark winter months behind us and the joys of spring arriving, now is the perfect time to give your finances a thorough spring-clean and see how much you could save.

So whether you want to get a grip on your debt or find a better savings account, our handy guide will tell you all you need to know.

1. Get rid of your debt

Almost nine million people in the UK are dealing with serious debt problems and only a small number is seeking help, according to the Money Advice Service. If you're worried about an outstanding balance you have on a credit card, how can you whip it into shape?

Firstly, work out exactly how much debt you are carrying on your cards plus the interest you are paying. Do this for every card you have. Only once you know how much you owe can you work out how to get rid of it. It might sound obvious but remember that only paying off the minimum balance each month will result in you remaining in debt for longer.

For example, if you have a balance of £500 on a card with an APR of 17% and only pay off the minimum balance of 3% every month, it will take you a startling three years and eight months to clear the balance - and you'll repay £162 in interest.

If you are paying a high interest rate on your credit card, only paying the minimum balance or are unable to up your repayments, the next thing to do is consider a 0% balance transfer card.

2. Don't ignore your credit report

Checking your credit file is a quick way to keep on track of any accounts held in your name. You can access it through any of the UK's three major agencies; Experian, Callcredit and Equifax.

By law, they have to provide you with a copy for just £2. As well as information about your credit agreements and any repayments you may have missed, your credit file also includes personal details and whether you are on the electoral roll. All of these things affect your credit score, which lenders take into account every time you apply for credit – whether for a storecard, mobile phone contract or even a mortgage.

So if you spot any errors, contact the credit reference agency first to log the issue and then contact the company concerned and ask them to amend its records. The credit agency will then be able to update your credit history or include a note explaining the error.

Used correctly, they can be great for tackling debt. That's because once you've paid an initial fee for transferring your debt on to your new 0% card, as long as you don't spend anymore, your debt won't get any bigger for as long as the interest-free period lasts. That will buy you some time to get the money together and clear your balance.

At the time of writing, Barclaycard had just launched the longest-ever balance transfer deal, at 31 months. It comes with a six-month interest-free period on purchases too – not that you should be spending if you're trying to clear your debt – and a standard APR of 18.9%.

But before you apply for the deal – or any other balance transfer card – always remember to make sure you check out the fees you'll pay – which are usually around the 3% mark. Depending on the size of the balance you wish to move, this could impact on the appeal of the 0% period.

The Barclaycard Platinum card has a fee of 2.99%, although Moneywise discovered customers will actually be charged 3.5% upfront, and then receive a credit taking the effective rate down to 2.99% within two working days.

To find more information on the best credit card deals, go to moneywise.co.uk/compare.

3. Make a budget

A surprising amount of households don't sit down and check their statements. And while it may not be the most fun exercise, there's no real excuse for this now, with the ease of internet banking. Going through your outgoings over a month will give you a clear indication of where your money goes.

Check all your standing orders and direct debits. Only by doing this can you spot the things you're paying for but no longer need such as a film-subscription service or an under-used gym membership.

There are a number of websites and apps that can also help you plan your budget, including Toshl Finance, the Money Advice Service's budget planner, and MoneyWhiz, which is available for £2.99 from the App Store.

4. Switch to a better deal

Too many of us are content to remain with the same old companies we've always been with for our phone, broadband, energy or bank account. Instead, we should all be finding out what's on offer from rival firms and working out if we'd be better off by switching to them.

For example, despite the Big Six energy firms putting their prices up last year, the vast majority of us – 98.5% – still use them. However, there are a number of alternative providers, such as First Utility and Co-operative Energy, that aim to offer a simple alternative to the dazzling array of tariffs which the Big Six offer, and at competitive prices.

Tom Lyon, energy expert at uSwitch.com, says there are big savings to be made."You could be richly rewarded by looking beyond the traditional Big Six suppliers - currently the most competitive plans on the market are held by the smaller suppliers," he says. Whether it's the cheapest tariff or long-term protection from price rises that they seek, the small suppliers have plenty to offer."

It's not just our energy supplier we've been getting too comfortable with – even when our bills seem to climb ever higher. Many of us are also guilty of staying with the same mobile provider year in, year out, and some of us forget to act to find better deals when our fixed-term contracts come to an end.

And those who steer clear of phone contracts altogether and instead opt for pay-as-you go may also be unable to escape wasting money on their bills.

Ernest Doku, telecoms expert at uSwitch.com, says: "Around 10 million Brits on pay-monthly mobile contracts overspend each month - adding an average £100 a year to their mobile bills. Whether you are going over your limit or under-using your allowance every month, you are throwing money down the drain."

So if you're on pay-as-you-go, stay on top of what you're spending by checking your average monthly usage – which should be on your bill, says Doku – or call your network to ask for the information.

Doku has another good tip for contract phone customers: "If you've taken out a pay-monthly contract with a 'free' handset, the cost of the mobile is included in your monthly bills. If you're happy with your current phone, switching to a Sim-only deal once you're out of contract will mean you cut your bills and avoid spending more on a handset you've already paid for in full."

5. Don't double up

Always make sure you don't pay for anything twice. For example, there is no need to pay for a packaged bank account for the sake of the mobile phone insurance it offers if you have a decent home contents policy. Mobiles are typically covered both in and out of the house by most policies.

6. Boost your income

A thorough spring-clean of your home as well as your finances can unearth all sorts of unwanted and discarded items - many of which have the potential to boost your bank balance.

Websites such as eBay can be useful for selling pretty much anything. You can set a minimum price you're happy to sell for but you'll usually pay to list the item if you secure a buyer – although the site runs free listings days every so often when it waives the selling fees.

There are plenty of other free sites you can try. In a modern twist on newspaper classifieds, sites such as Gumtree and Preloved allow you to post adverts for your items. Musicmagpie is a good way of turning unwanted CDs, DVDs, video games and clothes into cash as well.

However, if you don't have anything to sell, you could boost your income by giving up some of your free time. More and more of us are taking on a second job as a way to make ends meet. The Debt Advisory Centre says more than 8.5 million Brits are now working in two jobs.

If you are considering taking on another role, then childcare, cleaning, baking and gardening are popular money-spinners, as these jobs offer a fair amount of flexibility. But remember that a second job can affect the amount of tax you pay and potentially your National Insurance contributions, so check the rules at HM Revenue & Customs.

7. 'Sweep' your current account

One way to boost your savings pot without really noticing is to get your bank to set up a ‘sweep' on your account. At the end of each month your bank will take whatever is left in your account after you've paid all your bills and pop it into a savings account for you – a simple but effective way of ensuring you're saving every bit of disposable income you have.

8. Build up your savings

When you've decided on how much you can comfortably save, the next decision is where to put it so you can get the most out of your rainy-day pot.

With interest rates remaining paltry, it is more important than ever to try to make your savings work as hard as they possibly can. And for many of us, the best way to do this is to put our cash in an Isa.

For a complete up-to-date list of all the available cash Isas, visit our best cash Isas page.

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