17 million British people admit to neglecting their financial well-being, according to a new report – and of these, 21% say their debt levels are too high for them to feel financially secure.
The study, by insurer Scottish Widows, found that Brits are ‘burying their heads in the sand’ when it comes to money. 32% of the 17 million who admit they aren’t focused enough on their finances feel they are not paid enough, while 25% say they simply try not to think about money in their everyday lives.
19 million people, the firm claims, say savings are not a high enough priority for them – even though they understand the importance of putting money aside for the future.
Iain McGowan, Scottish Widows’ savings expert, says: ‘Although the recession may be officially over, the importance of having a financial cushion to fall back on is at the front of a lot of people’s minds – but time and money constraints prevent them from being able to do the things they need to in order to feel as secure as they would like.’
Five steps for improving financial security
‘Worrying about money is both unpleasant and unhealthy,’ says Which? money expert Martyn Saville. ‘Financial stress can actually lead to physical and psychological illness if it goes unchecked – so if you’re worried about your financial security or feel your debts are unmanageable, it’s important to tackle the issues you’re facing sooner rather than later.’
Here are five steps that could help you feel more in control of your finances – and should therefore help promote your peace of mind.
1. Deal with your debts
If you have debts that worry you, like many of the people Scottish Widows questioned, it’s important to look at how affordable your monthly repayments are and review the interest rates you’re being charged.
If you aren’t experiencing problems paying back your borrowing but would like to clear it more quickly and easily, you could consider using a 0% credit card balance transfer, a long-term, low-rate credit card or even a competitive personal loan depending on your circumstances. Our credit card switching advice and credit cards review could help you to choose the right deal.
On the other hand, if you’re struggling to cope with paying off your debts you should seek advice from a free debt charity such as the Consumer Credit Counselling Service, Citizens Advice or National Debtline. Our How to deal with debt guide contains all the contact details you need.
While tackling your debts may seem difficult, it’s a crucial step on the road to feeling more in control of your finances.
2. Build an effective budget
If you’re not sure where all your money is going each month, you’re bound to feel stressed about your financial situation.
Avoid shocks at the ATM and keep on top of your cash-flow by creating a proper spending plan with the help of our online guide to budgeting.
If you follow it in full, you’re bound to spot opportunities for cutting back your spending without depriving yourself. For example, your morning coffee-shop latte could be costing you hundreds of pounds a year. How badly would you miss it if you didn’t have it every day?
3. Get the best deals on essential financial products
Over and above switching your credit card provider, there are other ways you can save money on financial products such as insurance and utilities.
Car insurance is among the biggest outlays many of us make each year – so don’t simply accept your current insurer’s renewal quote. Shop around for a better deal with the help of the Which? car insurance review – and do the same when it comes to renewing your home insurance policy.
In addition, sticking with the same gas and electricity supplier for too long is likely to mean you get a far worse deal than if you switched regularly – and if you’ve never changed your provider, you could cut your bill significantly by doing so. Visit Which? Switch to compare utilities tariffs and select a new supplier.
4. Shop smarter
If you’re looking to cut the cost of groceries, eating out, driving your car or even shopping for clothes, the Bills and Budgeting section of the Which? Money website has a wide variety of simple 10-point guides that could help you.
Check it out for top tips on enjoying life without breaking the bank.
5. Start saving
Even if you can only afford to put a small sum aside each month, knowing that you’re beginning to build a nest egg is bound to make you feel good.
A cash Isa is a good place to start saving as you won’t have to pay any tax on the interest you earn. Check out the best deals in the Which? Best Rate cash Isas review.
Alternatively, depending on their how interest rates compare with those available on cash Isas and whether or not you are a UK taxpayer, you could consider a regular savings account. With these, you commit to saving a certain amount each month and will be asked to set up a standing order to your account – so they’re good if you lack discipline, provided you know you have enough cash coming in each month to put some away.
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