Looking After Your Pennies

Look after your pennies and your pounds will take care of themselves. It’s an old piece of wisdom and it still has a lot of value in a modern world. Even though it may seem pointless just to save a few pennies here and there, those pennies do add up and will make pounds. With that in mind and given that so many of us are keeping a close eye on our wallets these days, here are three tips for taking care of those precious pennies.

Pay yourself first If you know you should have at least a little money left over to save each month and yet you never seem to, then put this money aside first in a place where you can access it if you need it (like an instant-access savings account) and then do your level best to work off what’s left.

Track, budget and track again Get a year’s worth of bank statements and as a minimum look at what you spent in the upcoming month at the same time last year and what you spent over the last 3 months. Use these as a prompt to budget for any payments you know you are going to need to make in the forthcoming month, even if you decide to cancel them (many contracts require a notice period). While you are doing this, look at each payment and ask if it relates to a need and/or if relates to something you really love and which you can comfortably afford. Unless a payment can score at least one yes here, then it should be a priority to get rid of it. Even where a payment does score a yes, you can still look at ways to satisfy your need or want at a more affordable cost. Once you’ve budgeted for anticipated payments, you can then budget for anticipated living costs, such as groceries. Supermarkets and other large shops can be danger spots for budgeters because they often make it very easy to slip in discretionary purchases with the necessary ones, even when you have a shopping list and while this is a bit harder for them to do when you shop online, they will still try to upsell you items based on your shopping history. Start to keep your receipts so you can have full visibility of where your money actually goes and hold yourself accountable for discretionary purchases. If you hate paper, then use your mobile camera to take a picture of them.

Minimise your tax liability When cash ISAs first began, you were able to withdraw money from them but it was counted against your ISA allowance for that year. Now, however, you are able to replace any funds withdrawn as long as you do so within the same tax year, which essentially turns cash ISAs into super-efficient, instant-access savings accounts. They are therefore obvious places to put the money you need to keep available “just in case”. Once you have built up some savings, you may then want to think about taking out some investments. You can also keep investments in an ISA wrapper, this time a stocks and shares ISA. Alternatively, you may wish to look at one of the more specialised forms of ISA such as the innovative finance ISA or the Lifetime ISA (assuming you qualify). Choosing the right approach for your situation can be a bit of a challenge, so it can be worthwhile to get professional advice to ensure that you’re making the most of the money you save each month and building it into a fund which will really help you to achieve your life goals and make the most of your future.