Couch to £5k: How to get your finances fighting fit in 2022
It’s the time of year for self-improvement, whether it be getting fit, eating healthier or reining in your spending.
But however well-intentioned, we may struggle to stick to those New Year's resolutions - in fact, a study by Hargreaves Lansdown showed that nine out of ten resolutions are destined for failure.
It may just be that when it comes to turning over a new leaf, the old adage “go big or go home” is the reason we fall off the wagon. In other words, we fail to achieve our goals because they were too big or drastic.
The key to success is building up your stamina slowly. Take your finances: You just need to adopt our “Couch to £5K” approach.
Much like the successful fitness approach that coaches non-exercisers to mastering a 5k run in just 12 weeks, when it comes to getting your finances fighting fit, you need a schedule that delivers early and achievable victories in order to get the ball rolling while you gain momentum.
Our plan for battling your budget is one that is slow and steady – and will save you more than you’d think.
1. Start by signing up for a cash back website. SAVINGS: £322.50
Sign up for cashback and get paid when you shop at retailers such as Argos, Wilko and Marks & Spencer.
Websites, such as Quidco.com and Topcashback.co.uk, list retailers that pay commission when shoppers click through to them. In turn, the website rebates some commission to the consumer.
And the cashback can soon add up, with TopCashback reporting that their members earn, on average, £345 a year, while Quidco reports their members rake in an average of £300.
2. Analyse your budget. SAVINGS: £600
Just as nutritionists advise dieters to take stock of the contents of their kitchen cupboards and fridge freezers, a key step to being good with money is to give your budget a thorough spring clean.
Worth a look is Emma, the money management app.
This free-to-download app uses open banking to combine your information from your bank accounts, savings accounts, credit cards and any investments, meaning you’ll soon be able to cancel those wasteful subscriptions, avoid overdrafts, track debt and increase your savings.
By analysing your personal finances, it’ll recommend ways to conserve money so that you can get back on track.
The best bit? Setting it up is fairly straightforward and takes just a few minutes.
Knowing what people with a similar-sized property in your neighbourhood are spending on household bills could save you around £110 a year
3. The only time comparing yourself to others is a good thing. SAVINGS: £159
Research shows that the psychological effect of knowing that others are paying less than you can spur you on to change your own spending habits.
And knowing what people with a similar-sized property in your neighbourhood are spending on their household bills may spur you into comparison action, meaning that you save you around £159 a year on your home insurance[1], according to Comparethemarket.com.
[1] Based on online independent research by Consumer Intelligence during November, 2022. 51% of customers could achieve this saving on their Buildings and Contents insurance through Compare the Market.
4. Get rid of unwanted payments. SAVINGS: £265
Streaming services, online music memberships and takeaway delivery subscriptions were an essential part of most of our lockdowns.
In fact, six million households signed up to a paid streaming service during the first lockdown, according to Ofcom.
But according to research by Comparethemarket.com a fifth of us are paying for subscriptions we’ve forgotten about or no longer use (known as zombie subscriptions), wasting a huge £265 a year on services we don’t want or need.
Now is a good time to take a fresh and thorough look at your bank statements, highlighting any direct debits leaving your account you’re unaware of, or subscriptions you no longer require.
Don’t forget to check your mobile for subscriptions too.
Many apps will ask you to pay a monthly or a yearly subscription and automatically deduct that money from your financial account of choice.
To view and manage your Apple subscriptions, head to the Settings app on your iOS device, then tap your name, followed by iTunes & App Store.
Hit the Apple ID link at the top, then View Apple ID, and Subscriptions.
To view and manage your Android subscriptions, open the Google Play Store app on your device, then tap the menu button (the three horizontal lines in the top left), then choose Subscriptions.
5. Cut the cord. SAVINGS: £240
Have you thought about the last time that you used your landline? My guess is that it’s been a while – and you’re not the only one.
Research from Compare the Market found that a third of households have an unused landline, with many of us only having the service because our broadband package requires it.
Ofcom analysis shows that residential line rental prices range from between £10 and £20 a month, depending on the provider - meaning we're forking out up to £240 a year towards a service we never use.
Ouch.
If you don’t use it, lose it.
6. Make the most of your connection. SAVINGS: £135
Research shows that 44% of UK households switch provider rarely, and a fifth (21%) have never switched.
For those outside of their contract’s minimum term - usually between 12-24 months - it’s a good idea to see what deals are available in your area and whether you can get a cheaper deal with a broadband speed that works for your household.
Research from Comparethemarket.com reveals that the average household currently spends £356 per year on broadband.
However, by switching to one of the cheapest deals available, households could cut the cost of broadband to about £221 per year - a £135 saving.
7. Transfer your credit card balance. SAVINGS: £1,068 (based on 12 months of minimum repayments of £89 per month)
If you have hefty credit card debt, make sure you aren’t forking out more money on interest than necessary.
According to data from the Bank of England, the current average APR for UK credit cards is 21.43%.
For instance, those with a credit card balance of £5,000 and who repay just the bare minimum amount each month, would take 32 years and 2 months to clear the balance – paying £7,955 in interest in doing so. Yikes.
Avoid these charges altogether and move your debt to an interest-free credit card and in the first year alone, you could save £89 a month in interest – which could total as much as £1,068 over 12 months.
With these cards you pay no interest on the balance you’ve transferred for a set period of time.
There will typically be a balance transfer fee though – which varies but we haven’t included in the savings above - and you will need to pay off what you owe within the time period; otherwise you’ll be charged interest.
Also, you must make your monthly minimum repayments on time. If you don’t, you could lose the interest-free terms and damage your credit score.
Comparethemarket.com offers a credit card eligibility checker so you can check to see what type of credit cards you could get from selected providers, without impacting your credit score.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
8. Reduce food waste. SAVINGS: £720
In the UK, we throw away 6.6 million tonnes of household food waste a year in the UK, and almost three quarters is food we could have eaten.
We’re not talking eggshells or chicken bones either.
Did you know that every day in the UK, we throw away nearly six million potatoes? Or that the equivalent of 3.1 million glasses of milk are poured down our kitchen sinks every day in the UK?
An average family of four can save £60 a month simply by reducing the amount of food they throw away, according to Love Food, Hate Waste.
Use the charity’s portion planner to work out how much food you and your family need to buy to eat healthily.
Before you throw “out-of-date” food in the rubbish, carefully check the dates on the packaging.
According to the Food Standards Agency, the ‘Use By’ date is about safety and the most important date to remember. You can eat it right up to the Use By, but not after - even if it looks and smells fine. The ‘Best Before’ date is just about quality and the food will be safe to eat after this date, but may not be at its best.
Stick one of your weekly food shop receipts on your fridge. As you throw food away, take a pen and cross it off the receipt. By the end of the week, what you crossed off is the food you wasted – and what’s left is a list of the only food you need to buy.
9. Meals for less. SAVINGS: £1,200 (based on a pizza once a week)
While there is no such thing as a free lunch, it is possible to eat out for less. What’s more, you could even save on takeaways delivered straight to your door.
With Meerkat Meals, you can get 50% off your favourite pizzas from Papa John’s and Pizza Hut Delivery when you spend £30, seven days a week. Min spend applies. Excl. N.I.
According to research by Comparethemarket.com, this means an average savings of £25 a week. If you’re a pizza lover who orders a takeaway once a week, this could mean a savings of £1,200 a year.
Dining out offers include 2 for 1 starters, mains and desserts for up to six people at chains such as Prezzo and Pizza Hut, while some chains such as such as Toby Carvery, Harvester, Sizzling Pubs, Ember Inns and Stonehouse pubs offer 25% off your total bill for up to six people.
Days available vary by outlet and terms and conditions apply.
To claim 2 for 1 Meerkat Meals, you’ll need to purchase a qualifying product via Compare the Market.
Don’t forget that this deal also includes 2 for 1 on cinema tickets (cheapest free) for two people every Tuesday or Wednesday with Meerkat Movies. Winner.
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Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.
