Read between the lines: look after the pennies…

Each month we will be bringing you a regular column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. In his last piece, Simon looked at the effect rising inflation can have on your funds.

I filmed up and down the country for the latest series of Right On The Money for BBC1 and it proved a sharp reminder that there are lots of us that are a little careless with our cash.

By that I don’t mean to suggest that we drop notes all over the place (although my research in the streets of central London shows that many DO drop coins). But I have learned that many people spend without thinking. And by doing that, they waste money by overspending or paying too much for stuff.

I know that thinking about what you spend can be a bit tedious, but look at it this way; spend more wisely and you’ll end up better off by hundreds, if not thousands of pounds.

Then the only problem you’ll have is how to spend the money. Invest it? Take a good trip? It’ll be up to you. And that’s the point I’m trying clumsily to make. If you can be a savvy spender, it will give you choices. The more money you have, the more choices you have.

The key to all this is planning. Plan your spending. If you do that, you won’t overspend and you won’t waste money. I’ve been surprised when we’ve filmed with different families how many people don’t make a shopping list. Without it, as I know from experience, you wander around a supermarket snapping up what you think may be bargains. But that simply means you overbuy and overspend.

Here’s a truth: if you find what you think is a bargain at a supermarket, the happiest person is likely to be the supermarket manager. That’s because they know you’ve fallen for one of their marketing tricks, such as buy-one-get-one-free. All retailers are in the business of flogging you stuff you didn’t want to buy. If you leave a shop with a bargain, the shop is likely to have got the best part of the deal. If you plan your shopping then you should only buy what you know you need. If something on your list is on special offer, then give a little cheer as you actually have found a bargain. But buying a special offer because it’s a “bargain” means spending money you didn’t need to. In other words, wasting money.

If you think this sounds like saving a few pennies here and there, think again. Some of the people we filmed shopping without a meal plan and a shopping list wasted huge amounts. We helped them halve their monthly grocery bill and in one instance that cut a profligate family’s food bill from around £300 a week to just £150. That freed up an extra £7,200 a year – enough for a luxury holiday, a big step towards a deposit on a home, or a decent nest egg to invest for the future.

Look, I don’t want to teach you to suck eggs, just be a bit more sensible about how you buy eggs. Plan all your spending and you’ll end up planning a decent load of extra money for yourself as well as avoiding throwing away huge quantities of food. Think again about all your daily expenses and you could discover a fistful of extra cash you could keep for yourself.

A couple of coffees every day at £2.50 a pop, for instance, may seem like a small and justifiable expense. But if you can cut them out you could save around £1,200 a year. I love coffee, but just buy a £2.50 bag of ground coffee and make it last a week by using the hot water in the office. That costs me around £120 a year, saving me more than a grand on café-bought coffees.

Food for thought? I hope so!

To recap, Simon’s top tips to save you money are:

  • Plan in advance to avoid overspending (there are plenty of apps out there that can help, for example Money Dashboard which helps keep track of all your accounts in one place)
  • Beware of special offers – only get them if they’re already on your list
  • Cutting even the small purchases can make a difference – look at your regular outgoings and see where you can make savings   

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

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If you have any questions, please speak to your professional adviser or seek independent specialist advice

Simon Read

Personal Finance Expert