Let’s be honest, now isn’t the easiest time to save money. The world’s economies lay in tatters, the euro is in ruins, and government tax increases are right around the corner. Add expected job cuts to the mix, put everything together and a bleak picture begins to form.
However, away from the well documented issues we all face, there are also silent costs, areas where you are wasting money that you probably haven’t even realised. Each year the average household spends thousands of pounds on financial products that simply don’t need to be purchased. Here are a few areas where you could save a bit of cash.
For a start make sure you don’t have any additional insurance packages that are already covered by home insurance, a chief offender being phone insurance. Phone stores are always quick to detail the multitude of ways your phone could come a cropper, but of course they never mention the fact that if you have home insurance your phone will be adequately covered already, getting rid of this cost could save upwards of a hundred pounds per year.
Sticking with personal electronics it’s always tempting to take out an extended warranty on items such as an exciting new television, but do you really need it? Extended warranties lead to costs of around half the price of the product itself, and in today’s fast moving world of consumer electronics, if your flash telly were to break a couple years after you bought it, you could probably buy a new one for the price of the extended warranty.
Another popular topic for insurance scare-mongers is the terrifying world of identity fraud. We’re always being warned that a card can be cloned at any cash machine, or that visiting the wrong website can give you a computer virus that’ll leach your computer of all your precious details in seconds. Whatever the tale of peril is the outcome remains the same each time, a massive loss of funds. So for this reason you should take out cover for ID theft right? Wrong. Again, why spend up to £70 a year on something that almost all banks cover as standard? If you are unfortunate enough to have your account targeted by fraudsters then your bank will make up the loss, you don’t need a separate insurance plan for it.
Banks might be good at covering ID fraud but they will also try and milk you for money you don’t need to spend. Ignore their offers of packaged current accounts, the bonuses they come with are often either covered elsewhere, like phone insurance, or you just won’t need them. To top it off the costs of these accounts can often be very high, and you could waste up to £300 per year if you take one out. Be wary of things like secured loans and structured products, structured products are some of the most labyrinthine investments available, they are often very expensive, and come with little security. The well documented fall of Lehman Brothers led to around 6,000 structured product holders being left with nothing. The dangers of secured loans are in the title, fail with payment and you can lose your home, if you need to borrow go for unsecured loans.
If you are in debt then debt management plans can often seem attractive, unfortunately in the long term they can cost you thousands of pounds on top of your existing debt. If your debt worries are too much to bear then get advice from the Citizens Advice Bureau, the CCCS or the National DebtLine, all free sources of advice that won’t make your problems worse.