How to Improve Your Finances

Written by Karen Bryan

Price of Houses in the UK2013 isn’t looking like a great year for UK consumers finances; interest rates on savings accounts are falling, many people have either had pay freezes or rises lower than inflation for the last couple of years, and auto enrolment to the National Employment Savings Trust will see some worker’s take home pay decreasing. I don’t see inflation falling much, so spending power is down for many people. There’s some respite in the rise of the personal tax threshold in April 2013, announced in the Chancellor’s Autumn Statement.

So what can you do to save more money in 2013? You may already be employing the standard money saving tricks such as saving on food, shopping around to find the lowest home loan rate, compare insurance quotes, gas and electricity, broadband and mobile phone prices, buying through cashback sites and paying for as many goods and services as possible by cashback credit card. But if you still find that there is more money going out than coming in, here are five other options to investigate.

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Invest in Stocks & Shares

If you have savings which are earning a rate of interest below inflation, you may decide to try your hand at share trading, where the potential return is much higher than in a bank or building society savings account, but there’s risk to your capital.

I already have quite a lot of cash invested in the stock market in my stakeholder pension, so don’t want more exposure to stocks and shares.

Earn More Through Employment

You can search for a better paid job, seek promotion, work overtime, find an additional part time job or set up a business. That’s partly dependent on your skills, the availability of work and other commitments that you may have.

Looking for a part time job would be my preferred option if we needed more money, but the local job market is pretty dire.

Become a Landlord

You could use some of your savings, or take out a low rate buy-to-let mortgage, to buy a property to rent out. Again, there is some risk if house prices fall and you may not have tenants in the property all the time.

I’m not keen to tie up even more money in property than there already is in our present home. I’d like to move to another area in the medium term and don’t want to have to sell two properties when we move.

Downsize

You could move to a smaller home, paying less for your mortgage/rent with lower heating and council tax bills.

We did that when our sons left home. As my husband is retired and I work from home, I feel that an even smaller place would feel rather claustrophobic. However, if we were cash strapped, that’d be my second option.

Let Out a Room in Your Home

If you have a spare room in your home, you can rent out a room and earn up to £4,250 tax free.

While that’s quite a nice little earner, I’d rather not share our home; I would prefer to move to a smaller home than have a lodger.

 Do you you have any other ideas on how to improve your finances in 2013?

 

2 Responses to “How to Improve Your Finances”

  1. Hmm. I’m not sure about becoming a landlord though. Students are a poor bet with high fees, immigration nonsense and universities building their own and the legislation you have to obey these days makes it far from a passive income source.

  2. John – We’ve were landlords for a year in the past and it wasn’t great. Our tenants were two working guys in their 30s, one of them didn’t always pay his rent on time. We didn’t know if they vacate the property at the end of the 12 month tenancy, as they didn’t repy to our phone calls or letters. They did get out, but left the place in such as state, I don’t think they’d done much cleaning over the year.