I find that what a lot of people do is spend, spend, spend. Without realising what their money is being spent on.
Not knowing where your money is going is a sure fire way for you to end up being in a situation where you are spending more than you’re earning therefore, losing control of your finances. Leading to you utilising credit facilities in order to keep up with your spending.
That’s why it is always important to get into the habit of regularly taking stock of your finances.
Here’s an exercise I like to follow that helps me to keep my finances in check and can help you to do the same.
Print the last 3 to 6 months bank statements and start going through your debited transactions line by line. When I say debited transactions, I am talking about all the lines on your statements that show money leaving your account.
Identify regular payments
Start looking at your direct debits, if you have any and identify regular payments going out each month that you don’t recognise. Jot them down and jot the company down that the payment is going to.
By the way if you do have any direct debits, you need to watch my direct debit vs standing order video https://youtu.be/wkUa0L_ZGH8.
Know every spend
Call up all of the companies you noted from step two and ask them, what is the payment for? These transactions are important – you should know what every payment leaving your account is for. If you don’t know what it is for, why are you making the payment?
When you speak to the companies, check if it is a service you actually still need. The amount of people paying for services they do not need is outstanding and it’s all too easy to do.
Let me give you an example. I had self employment insurance to protect me if I was to have a serious accident or illness which meant that it would cover my wages. I called and spoke to the company and asked them to explain it, that’s how I found out. Now my circumstances have changed I don’t need it, so I cancelled it saving myself around £40 per month.
Once you’ve tackled your regular payments, move on to payments that you are aware of but are “dead” services, services that you know you don’t and won’t use. Netflix subscriptions when you don’t watch netflix, magazines subscriptions, phone insurance for a phone you don’t have, gym membership when you don’t even go etc. if you can, cancel them.
Now, move on to contractual payments, are you still in the contract?
If you don’t know simply call them to find out. Mobile phone contracts are the perfect example. A lot of people have a mobile phone contract that they took out to pay for the phone and the service over a fixed period of time. When the time period is up call them and ask, what sim only deals do you have? You’ll end up paying half or less than half of what you are currently paying.
These types of savings can be made on your broadband, satellite subscriptions and utilities.
Always make sure you know when or if you are out of contract, these companies will cut prices to keep you as a customer.
What you should be left with are payments that you know about, dates of when contracts are due to end and most importantly, you could have saved a decent sum of money by cutting unnecessary costs.