It’s always important to keep an eye on your finances, especially in the current living climate. Whether you spent too much money on something you wish you hadn’t or you’re paying too much on bills, budgeting and saving money will help you stay in control of your money for when you need it the most. Here are our top tips on how to be money savvy and be in control of your personal finances.
1. Know The Basics Of Finance
Reading and keeping up to date in the world of finance can help you understand and manage your money better. From what the government offers to what your local bank branch provides there is a wide range you should know.
The most important key information is knowing your standard rate of pay and how much tax you pay. This is called your Personal Allowance Tax and is the amount anyone can earn before being taxed. For 2023/24 the Personal Allowance Tax is set at £12,570. The basic 20% tax rate is anything up to £50,270 and the higher tax rate of 40% if you earn up to £125,140, with an additional rate of 45% if you earn more than that. Of course, the Personal Allowance Tax can change every year so make sure you keep up to date with the Government’s Income Tax Rates.
2. How To Save Money
You also need to know how much you can save without paying taxes and how to save. Check with your bank on ISAs and savings accounts to see what is offered, or even shop around at different banks as some may offer better interest rates and deals. Savings accounts are where you can transfer money and the rate you earn from interest is better than a normal banking account – helping you be more money savvy. Some – like the Lifetime ISA or the ‘Help To Buy’ ISA encourages longer-term savings and you can save as little or as much over a tax year and the government will top your pot with a 25% bonus.
Most people can earn interest from their savings without paying tax, this depends on your Personal Allowance, starting rate and your Personal Savings Allowance. For up-to-date information, always check with the Government’s Tax-Free Savings.
3. Savvy Saving
From creating a savings account there are other ways that you can start to save money. From cutting back on takeaways, finding deals when shopping, buying second-hand, and even selling things you don’t need. Or try making your lunch or coffee at home so you don’t buy them while out at work.
Another easy tip is to switch companies – maybe you can find better deals and save on phone bills or cut down on energy bills. If you’ve got subscriptions, it could be simple to look through and cancel the ones you don’t need anymore, that £10 a month does add up when it’s a few of them. For more tips, take a look at our Simple Ways To Save Money post, or to help you stay in control we’ve got an article about How To Stop Overspending.
4. Budgeting
Key to being money savvy is creating and sticking to a budget. Sticking to one isn’t always easy but once you’ve established one it can help your money stretch further and help with saving. Easy ways to budget include writing down and tracking spending or by using a money management app. Start with how much your income is and then work out your expenses for the things you pay every month – such as rent, subscriptions, bills, etc. Make sure all your needs are accounted for including food shops and then anything extra in your budget should go to savings and any wants. Make sure to keep track and challenge yourself with financial goals. For more on being money savvy, check out our 50/30/20 Rule for Managing Money.
5. Know Your Retirement Benefits
Whether you are hitting retirement soon, or you’re not even thinking about retirement yet there are some things you need to know. A part of your tax which comes out of your salary is towards your retirement fund, also known as your pension. You may be able to get a pension from the government, also known as State Pension or money from pension schemes that you or your employer pay into. The retirement age and pension can change regularly as well so be sure to check the Government’s retirement income information.
6. Be Smart With Money
A final way to be money savvy is to just simply work smarter and not harder. Always pay off debts on time and only borrow or pay for what you can afford, this makes it easier to have and keep a good Credit Score [SH1].
Always compare prices for items and services – is it cheaper in-store or online, what about second-hand or different shops? There are many comparison sites for energy companies or insurance quotes which make it easier to see which policy and deal is right for you.
And finally, being smart doesn’t mean you can’t treat yourself. You can buy nice things or go away on a holiday, just shop for deals. You can even use comparison websites for comparing flights and packages for the cheapest airlines.
Just make sure that no matter what you avoid making snap decisions when spending money. To be financially savvy, it’s important to focus on your long-term saving goals and be smart where you can. Make sure you keep up to date with the government and your bank in terms of financial information to what you can benefit from, and stick to saving, budgeting, and spending wisely.
For all tips and life hacks on staying money savvy, check out the rest of our helpful articles on our Sunny Good Vibes blog.
