Cash advice
Are you worried about your pension? Out of money by the end of the month? We’re on a mission to empower YOU to take control of your financial future and lead the life you want to – in short, to become Financially Fabulous! Whatever you need to know – from budgeting and saving to mortgages and credit cards – we’ve got it covered. To get you started, our finance editor, Kalpana Fitzpatrick, answers the questions she gets asked most frequently…
Q I find it difficult to budget – are there any apps that can help me keep on top of it?
A If you have multiple current accounts and credits cards, it can be tricky to stay on top of each one and keep track of your spending. Rather than downloading an app for every bank account you have, the Yolt app securely brings all your accounts together in one place, allowing you to view them on a single dashboard. You can see all the money coming in and going out, average spends on things such as eating out and petrol, as well as set budgets. Money Dashboard also allows you to link all your accounts so that you can view them in one place. It’s very visual, with colour codes for different types of spending, making it easy to keep a track of your money at a glance. Onedox is great for keeping an eye on household bills. You can see how much you’re paying for utilities in one place, and when there’s a better deal available.
Q Should I try to overpay my mortgage?
A Overpaying your mortgage is a great way to reduce its length, but there are things to consider. If you have other expensive debt, such as loans or credit cards, it’s best to pay these off first. Most lenders allow you to overpay by around 10 per cent of your mortgage a year, but check if your lender has restrictions, or you could incur an early repayment charge (ERC). You’ll find details on your mortgage agreement, or you can ask your lender about ERC. Typically, ERCs vary between one per cent and five per cent. Q My food bill is always high, how can I cut the cost? A Food waste is a major issue for most of us, and is probably costing you hundreds of pounds a year. Meal planning can help you reduce the cost of your weekly shop, as you only buy what you need. Try to shop online if you find it difficult to resist multi-buy offers. And don’t be afraid to switch brands – supermarket brands aren’t only cheaper, but also do well on taste tests.
Q How much money should I be putting into a pension?
A The simple answer? Probably more than you’re putting in at the
moment! Most people underestimate how much money it takes to have a comfortable retirement. According to one major UK insurer, those over 50 expect to need around £1,360 a month to live comfortably. This would require a pension pot of £311,000 – yet the average pot is just £71,342. But don’t panic – you can pump more money into your pension at any time. If you’re in employment, the good news is that you can also benefit from additional employer contributions up to a certain amount. As a rule of thumb, take your age, halve it and the resulting figure is the percentage of your income that you need to put away. So, if you start at 20, you’ll need to put 10 per cent into a pension; if you’re 50, it should be 25 per cent of your income.
Q Is it worth switching savings accounts to get better deals?
A Banks offer a decent rate to lure you into opening a savings account, but this usually only lasts 12 months. So, switch savings accounts after a year (or when a deal ends) to bag a better interest rate. Some current accounts offer higher interest rates than savings accounts.