The basics of personal finance are easy. Spending more than you earn is not a good idea! Getting into good financial habits, and planning your money, should help you make the most of your cash. Our simple checklist helps identify the key things you may want to consider.

Plan

• It may seem obvious, but planning is key to having healthy finances.
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  Make sure that you know how much your income and outgoings are - You can use our household budgeting calculator to help you.

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  If you really want to find out where your money goes on "extras", write down everything you buy - no matter how small for a week. It is amazing how much the extras such as coffees, papers etc add up.

Consider your biggest outgoings first

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  Look at what you spend the most on each month first as these may be the areas that you can make the most cost savings from. For most people, paying a mortgage or running a car are two of the biggest outgoings, so it makes sense to look at these first.

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  Remember when it comes to mortgages, you don't need to be stuck with the same lender for 25 years! It pays to shop around for your mortgage, as you could save money by switching to another lender.

  
  
  Consider:
  
  • The type of mortgage that suits you - there are lots of different types from flexible repayments, fixed interest rate, to capped rates.
  • Some lenders will pay the fees you incur, like a new survey or a repayment fee if you switch to them. There are lots of online mortgage finder sites you can visit to see if you can save money.
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  On the car front, why not check out our car running calculator to see how much your car really costs you each month, or if you are thinking about buying a used car, our buying a used car checklist to help you get the best deal.

Make sure you are getting the best deal

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  Its easy to check that you are getting the best deal on bills such as electricity and gas, by visiting websites such as xelector.com (opens in a new browser window).

Credit card, loan or overdraft?

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  Think about consolidating any debts you have. If you talk to your bank and agree an overdraft figure, or take out a loan, you may pay a lower rate of interest than a credit card. But you may get a better deal if you just need the money for a short period by taking out a credit card with a free introductory offer period. Do your sums and compare rates and time periods.

  
  
  Consider:
  
  • Any loan or overdraft arrangement fees you might be charged.
  • How long you need the money for.
  • The interest rates being charged.
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  If you do opt for a credit card, choose the best one for your needs. Some credit cards offer great introductory rates of interest, but always check (1) how long the discounted rate will last, and (2) what the long-term rate will be.

  
  
  Consider:
  
  • The introductory rate and standard rates being offered.
  • The length of the introductory offer or interest-free period.
  • Whether you need to pay an annual charge, and what additional benefits it brings.

Review your loans and other debts

• Try to be careful with your borrowing. If you are thinking about a loan.
  
  Consider:
  
  • Monthly loan repayments that are guaranteed to stay the same over the length of the loan, so you can budget in advance.
  • Loan repayment protection which covers payments if you can't work due to injury, unemployment or ill health.

Make sure you're insured

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  Insurance is there for the unexpected, when you couldn't possibly hope to cover costs of emergencies. Let someone else take the risk for you, by making sure you've got adequate insurance for your home and its contents, your car, your loved ones, your holidays, and even your pets!

  
  
  Consider:
  
  • You can reduce the cost of many insurance policies if you pay a larger part of the claim. For car insurance you may also be able to get cheaper premiums if you drive under 8,000 miles per year, have a car with a smaller engine or store your car in the garage or on your driveway.
  • Check that your travel insurance covers you for 'high risk' activities like skiing or adventure trips.
  • Try combining your home buildings and contents insurance and switching from your mortgage provider to see if you could make extra savings.
  • Shop online as some insurance companies including Tesco offer online discounts for motor, home and pet insurance.
  • Think about if you need life insurance to maybe provide a lump sum for your loved ones if the worst was to happen to you.
  • If you think you would financially struggle right away if you or your partner lost your jobs or couldn't work through ill health you may want to think about taking out insurance which would cover your main outgoings like your mortgage payments. You can often take out this type of insurance as a standalone product or as additional options to life insurance policies.
  • If you have a pet, consider taking out pet insurance so you don't have to deal with any hefty unexpected bills.

Plan for the future

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  No matter whether we're spenders or savers, we all need to put some money aside for a rainy day, or long term for our retirement. Even if you can only afford a few pounds a week, get into the habit of saving so that you're not tempted to spend it all.

  
  
  Consider:
  
  • An account with interest rate tiers that offer the best rates for your savings levels.
  • Direct debits so your money goes straight into your savings account.
  • Using your ISA tax-free savings allowance.
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  Whilst it may seem ages away, its really important to start thinking about a pension as early as possible, unless you want to survive on the state entitlement. Remember the younger you are when you start saving for a pension the better, and the longer you put it off, the more money you'll have to set aside each month to provide the same pension amount.

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  There are lots of things to think about with pensions, from different types of pensions to specific things depending on if you are self employed/unemployed or employed by a company.

  
  
  

  • The different types of pension include stakeholder pensions where you can invest from £20 a month to personal pensions. You may even have a company pension as part of your pay and benefits.

  • For more information you could visit www.stakeholderhelpline.org.uk (opens in a new browser window) or call Occupational Pension Advisory Service (OPAS) on 020 7233 8080.

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