How to Budget When You Don’t Earn a Steady Income

Whether you’re a freelancer, have a casual job, or are a student, not earning a steady income can prove challenging when it comes to getting your finances in shape. A successful budget normally depends on a steady income and good planning. So, how can you budget when you don’t earn a steady income?

Know what your biggest spends are

When it comes to creating a budget, you need to know what your biggest outgoings are. If you earn a steady income, you can allocate a specific amount for each of these. When you don’t earn a steady income, you need to consider how much you’ll need to cover these costs. The first thing you need to contemplate is your groceries. Consider the lowest cost of your supermarket spends – this includes all the basics you’ll need for the month ahead. Don’t take into account any other food items like coffee shop spends or takeaways. Try to be realistic about the amount you’re going to be spending – if you’re not sure of how much you’ll need, try to track your spending for a few weeks.

You also need to factor in any household bills and other outgoing payments. Consider the minimum payments for your rent, mortgage, phone and any credit cards. If you work from home, you’ll need to add internet bills and electricity on top.

Finally, consider any other costs. This may include transport (whether you travel on public transport or own a car, you’ll need to come up with a minimal amount for this), medical costs, such as prescriptions, and any other outgoings that may arise- it may be worth delegating an amount for surprise outgoings.

Know what your goal income is

Now you’ve established a budget, you can work out how much you need to earn for the month to cover your outgoings. You’ve probably realised that budgeting when you don’t earn a steady income works in reverse to budgeting on steady pay. This method makes it much easier to determine your finances and ensure you have enough money for your overheads. While it can be challenging to ensure you’re earning enough money per month, its advisable to put any spare monthly income into a savings account. That way, if you don’t earn enough to cover your budget, you’ll have a back-up plan to assist you.

Open separate bank accounts

To keep your finances organised, it’s best to open separate bank accounts. One account will cover your savings, while your other account will cover outgoings for bills, groceries and other spends. Finally, open a business account for your incomings. From this account, you can make two transfers per month – one to cover your outgoings and one for your savings account. If you wanted to separate your savings into lifelong savings and a back-up fund, you could always set up two savings accounts – an ISA or high interest savings account can give you a better deal on long-term savings.

5 Easy Ways to Boost Your Credit Score Today

A great credit score can make life a whole lot easier, especially if you’re looking to rent, buy a property or make another significant purchase. If your credit rating isn’t looking healthy, don’t despair! There are plenty of ways to improve your credit score and here are 5 ways in which you can do so today!

Bulk up your profile

Those with little to no credit history may find they have a tough time applying for credit. Even if you’ve had credit in the past, increasing your credit history will have a better impact on your score. Before you go applying for every type of credit possible, be aware that the best ways to boost your score include a credit card or phone contract. Only apply for these if you have no to little credit history, otherwise its best to focus on paying off your outstanding debts first. If you are applying for credit, don’t apply to several lenders in one go as this can have a negative impact on your credit rating. Do your research first to find the best rate and your chances of acceptance.

Extend your credit limit

One way to boost your credit score today is to ask to extend your credit limit. This is an effective option if you can’t financially afford to pay off all your debts. For example, if your current credit card balance is £1000 and you ask to extend your credit to £2000, you’re cutting your credit use in half. Just ensure that you don’t put anymore credit on your card.

Don’t miss another payment

Make sure you don’t miss another payment by organising your finances. Write down your income every month and expenditures, before considering how much you can realistically afford to pay off your debts. Instead of making one monthly payment, try making two as your credit report is updated every month, so two payments will bring your credit down. Furthermore, if you need to make a big purchase on credit, it won’t affect your score as much.

Cancel unused store or credit cards

Ensure you cancel unused store or credit cards as these have an impact on your overall credit score. While different lenders look for varying aspects, having unused credit can be a turn-off. There can also be a greater risk of fraud as you’re unlikely to check these accounts.

Negotiate your balance

If you’re in a position to settle some outstanding debt, negotiating your balance with your lender can be an effective method of improving your credit score. Some lenders are happy to settle debts at a reduced cost if you pay it off in one go. If you’re happy to negotiate your outstanding debt and receive an offer over the telephone to reduce the amount you pay off, ensure you ask for it to be sent to you in writing as confirmation. Alternatively, if you’re struggling to pay your debts, ask if a payment plan can be set up so you can meet the minimum payment each month.

How to Protect Your Credit Score as a New Parent

Having a baby is a wonderful experience but it’s also very costly. If you’re a new parent, getting your finances in order may not be your top priority, however, it’s important to consider the impact a new baby will have on your finances. Purchasing baby clothes, nappies and bottles can all mount up and before you know it, your credit score has been dented. Protect your credit score as a new parent by following these steps.

Set up direct debits

Life is going to be hectic in the first few months with a newborn. Juggling visitors, appointments and other things alongside a lack of sleep means payments may be missed. Instead of trying to think ahead when making payments, set up a direct debit for each lender to make your payments on time and keep your credit score intact. You’ll have one less thing to worry about and your credit score won’t suffer in the process.

Set a budget

Forget about your old budget. Having a new baby can mean your outgoings go way beyond what you initially intended. While a newborn is expensive, purchasing baby supplies and arranging childcare doesn’t need to be beyond your means. Once your baby has arrived, sit down and create a realistic budget, taking into account what you need to buy each week, as well as your incoming funds and other outgoings.

Only apply for new credit if you need it

While it can be tempting to apply for credit to cover big purchases like a cot and pram, only apply for new credit if you really need it. Unused credit can affect your credit score negatively, while applying for too much credit at once can also have a negative impact. Write a list of all purchases you require and set a strict budget for each one – you’ll know how much credit (if any) you’ll require. If you’re searching for new credit, try looking for one with low interest – some lenders offer zero percent interest on new purchases for a limited amount of time.

Check your accounts

Check your accounts regularly to ensure that no unconfirmed purchases are being put on your credit or store cards. Fraud can occur at any time and while you’re undoubtedly busy with a new baby, spending five or ten minutes checking your accounts every month can be worthwhile.

Don’t put small purchases on credit

Small purchases like a few groceries at the local supermarket may not seem like much but they can add up over time. Instead of using a credit card for goods like food and toiletries, ensure you only use cash or your debit card – this will prevent your credit card bills soaring as well as protecting your credit score.

Make additional payments

If you’re in a position to make additional payments, reducing the amount of credit you own will protect your credit score. Making an extra payment per month will help to significantly reduce your debt and put you in good stead for future purchases, such as buying a house or car.

How to Feed Your Family on A Limited Budget

If you’re on a strict budget, buying food for all the family can be a challenge, especially if you need to feed the family for an entire week. However, despite differing tastes and limited funds, sometimes thinking outside of the box can ensure you don’t go hungry. Here are some effective ways of feeding your family on a limited budget.

Coupons

Living on a low budget doesn’t mean you can’t indulge. For example, collecting coupons from newspapers, magazines and online gives you endless ways to stretch your budget. You could also get friends and family to collect these for you too. This way, you can have all of your favourite food items at a fraction of the cost! Another way to get coupons and even free food is to contact your favourite brands. For instance, if you and your family love a top branded pasta sauce, try emailing that brand and stating that you love their products and wondered if they had any free samples or coupons of new products that you could try, and recommend to you friends and family. They may say no, however, they may offer you money off coupons as a thank you for taking time out of your schedule to complement them.

Mystery shopping

Becoming a mystery shopper at food outlets or grocery stores allows you to eat for free while making money. You can find mystery shopping companies by googling them and usually it’s fairly straightforward to sign up. Generally, mystery shopping involves agreeing to spend a certain amount instore and giving feedback on customer service. You get reimbursed for your purchase and are normally given a fee on top. It’s a great way to save money and eat out for free!

Buy food staples

Being in a family environment can be challenging, especially when it comes to food, which is why you should aim to get the most out of the money spent in your weekly shop. The best way to ensure you can stretch those meals out for a week is to buy raw food, vegetables, raw meat etc. This way, you can make multiple meals for a fraction of the cost. Just ensure that you plan your meals in advance and have food containers to store any leftovers in your fridge or freezer.

Bargain buys

Always keep an eye out for food bargains. Most supermarkets have clearance shelves offering short dated items at discounted prices. You’ll also find many items on buy one get one free or 3 for 2 offers. Some stores promote bargain items at the front of the shop, around the tills. However, this is normally done to generate spur of the moment sales, so make sure you really need or want the item before purchasing. Another way to grab a bargain is to buy at pound stores or discount shops – just make sure you check the size or volume of the item you’re buying to ensure you’re getting a great deal!

9 Ways to Treat Yourself Without Spending Money

Whether you’re on a fixed budget or you’re at that point in the month when your purse strings are tight, not having a bulging bank account doesn’t mean you need to go without. In fact, there are plenty of ways to treat yourself without having to spend a penny. Are you wondering how? Take a look at the following ways to give yourself a little pick-me-up without splashing the cash.

Exercise

Don’t have enough money for the gym? No problem! Going for a jog or learning a new workout routine can be a great way to get in shape without spending any money. YouTube has an array of free workouts you can do in your home and many of these are from professional trainers so you know you’re getting effective exercise that will whip you into shape.

Go for a stroll

Going for a leisurely walk is a great way to relax and burn off a few calories. What’s even better is that it’s completely free to do!

Read a good book

Reading can be a highly relaxing pastime, especially if you’re looking for a little quality ‘me time’. If you don’t have any good books at home, join your local library. You can also find many free digital books online to download.

Have a Netflix and chill night

Why not watch some of your favourite movies and tv shows on Netflix and have a chilled evening. If you don’t have Netflix, you can sign up for a free 30-day trial. Amazon Prime also offer a free trial too.

Visit a museum

Day trips don’t have to cost money. Did you know that there are many free galleries and museums open across the UK? Why not take some time out of your busy schedule to unwind and learn a little more about the arts.

Take a warm bath

Relax after a long day with a warm bath, candles and soothing music. You may also want to pamper yourself with a face mask, body treatment or whatever you have in your beauty cabinet.

Whip up a treat

You may already have a few ingredients in your kitchen cupboards. A quick google or Pinterest search will bring up thousands of delicious recipes. You could make something you’ve never cooked before or create an old favourite. The choice is yours.

Get creative

If you’re feeling creative, you could use your skills to make something from scratch or upcycle an old piece of furniture. All you really need is some paint, fabric and a few tools. If you don’t have any equipment at hand, see if your family, friends or neighbours can lend a few items.

Volunteer

While volunteering may not seem like a way to treat yourself, it can actually make you feel great! Giving back to the community is a great way to spread joy, whether you’re helping people or animals. Look online or in your local newspapers to see what opportunities are available in your local area.

Payday Loans – Is money really the root of all evil?

Initially originating from the USA, the ethics surrounding pay day loans have certainly been under scrutiny – but more particularly since 2015 when the Financial Conduct Authority massively clamped down on what were referred to as “Wonga-style” loans.

So what exactly is a “payday” loan?

Payday loans are exactly what the name suggests.  They’re typically a low value amount loan (ordinarily up to £500.00) and are then repaid within a month – or on the borrower’s next ‘pay day’.  Of course, they also come at a price and with a typical payday loan costing as much as £25.00 for every £100.00 borrowed they’re certainly not for the faint-hearted.  In fact, many lenders will charge a typical APR of anything between 1,355% and 2,225% – not to mention their standard broker fees.

The market has previously been dominated by three key players – Wonga, Dollar Financial and CashEuro Net.  However, Wonga recently a reported a revenue loss of some 64% last year whilst Dollar Financial have been forced to sell “Money Shop” and CashEuroNet has been massively stung by regulatory fines.  So in real terms, there are no winners.

How are payday loans regulated?

The Financial Conduct Authority is responsible for regulating all lenders across the UK and under the Consumer Credit Act 1974 all lenders are legally required to have a licence from the Office of Fair Trading.

What’s more, the Consumer Credit (Advertisements) Regulations 2004 also lay down the requirements surrounding the way within which payday loans are advertised.  This means that the “typical APR” must clearly be stated in adverts and that potential borrowers are made fully aware of the agreement they’re intending to enter into.

The Consumer Credit Act 2006 also specifically requires the Office of Fair Trading to consider irresponsible lending so, although there are currently no restrictions on the amount of interest payday loan companies can charge, the Financial Conduct Authority have now imposed a cap with a view to preventing consumers from getting into further debt.

That said, just two years after the cap was first introduced, leading debt charities and associated industry groups have already been forced to consider the negative impact this has had.  In fact, whilst welcoming the initiative, Jane Tully from the Money Advice Trust was quick to point out that: “You can regulate away the supply but you can’t regulate away the demand.”

What this essentially means is that the need to lend is still very much evident and the cap has only served to push borrowers into a different direction as opposed to alleviating the issue altogether.

Recent criticisms

With the industry already under massive scrutiny there have also been some specific incidents leading to further speculation over payday loan ethics.

In 2013, payday broker Cash Lady were slammed over their decision to use Kerry Katana as part of their marketing campaign.  Hardly surprising given that, by then, she was already being declared bankrupt for the second time yet all at a time when the company were promoting “Fast Cash for Last Lives.”

A year later, 247 Moneybox were also penalised for using excessive default fees with a view to cutting their headline rates of interest.  Whilst these fees were previously averaging £25.00 (or above), the Financial Conduct Authority have now capped default fees to no more than £15.00 per missed payment, with the amount a borrower is liable to repay not to exceed 100% of the initial amount loaned, inclusive of fees and interest.

More latterly, only last year, Wonga were awarded with the “Worst Consumer Credit Provider” at the Consumer Credit Awards – and perhaps not surprisingly so.  Not only have Wonga faced widespread criticism over their extortionate interest rates and unethical collection methods but they also entered into a £24 million shirt sponsorship deal with Newcastle United football club, leading to much controversy over whether this “promoted” the idea of getting into debt to younger fans of the club.  Although legislation dictates that under 18’s can’t apply for loans, the Wonga’s automated system was also targeted by identity theft and enabled minors to apply for their 4,214% APR loans.  Hardly the image any reputable club would want to promote, surely?

So what is the likely impact of deregulating pay day loans?

The harsh reality is that, in today’s economic climate, more and more people are struggling to pay everyday bills; hence the tendency to rely on payday loans for essential spends such as food and utility bills, despite the added cost of doing so.

One of the UK’s leading debt charities, StepChange, has in fact identified that some 40% of their clients miss a bill payment or are forced to take out other short-term credit solutions if they’re turned down for a payday loan.  So, although the Financial Conduct Authority have seemingly acted in the consumer’s best interest, consideration now needs to be given as to where consumers can turn when faced with a financial crisis.

The obvious “solution” – if ever it could be called that – is that consumers will now be more likely to rely on pawn brokers, logbook loans and unauthorised overdrafts as a means of getting by and making ends meet.  In the meantime, there’s an increasing market presence for companies such as Brighthouse, PerfectHome and Buy as you View; all of whom offer rent-to-own loans on household goods such as televisions, settees and white goods.  But yet again, their typical APR is around 70%.  It’s a vicious circle.

In direct response to obvious concerns from the likes of the Financial Services Consumer Panel and associated industry groups, the Financial Conduct Authority now intend to finalise it’s ‘post-cap’ policy in the summer but the end result, it has to be said, certainly remains to be seen.

Credit Scores? Improve Yours Using Our Top Tips

How to improve your credit score

If you’re intending to apply for credit – for whatever reason – then it’s imperative that you have a good credit score since lenders will use this information to decide whether or not you’re ‘creditworthy’.

What is a ‘credit score’?

Your credit score is made up of certain information retained by credit reference agencies, such as Experian and Equifax.

If you apply for credit, the lender will look at your credit score to ascertain whether you have an adverse or poor credit rating – for example, if you’ve defaulted on previous arrangements with other lenders.  If they identify this from your credit record then they’re unlikely to extend credit to you; hence why it’s really important to keep this information up-to-date.

What does a poor credit score mean?

A poor credit score will tell the lender that you’re not a responsible borrower.  It might also mean that you have a County Court Judgment registered against you.  These stay on record for a period of six years and can make it extremely difficult for you to obtain credit during that time.

If you get a County Court Judgment issued in your name then, if you’re able to, make payment in full within 28 days and then apply for a Certificate of Satisfaction from the Court.  This means that the CCJ will be removed from your record and won’t have an adverse effect on your credit file.

If you’ve already got a poor credit score then you might well be limited in terms of who will lend to you (although remember that many lenders may simply decline your application outright).  That said, some lenders might offer credit but will only do so in return for a much higher interest rate and may also ask for a guarantor in case you then default on the arrangement.

How can you improve your credit score?

There are various ways to improve your credit score for example:

  • By registering on the electoral roll. This will prove to your lender that you have a regular home address and generally speaking, the longer you’ve lived there, the better.
  • If you’re financially associated with someone else (such as a partner or spouse) then the lender will consider this information too. This usually happens when you take out a joint product – for example, a loan or a mortgage.  Remember, if the person you’re financially associated with defaults on any arrangements then this could have a negative impact on you too.
  • If you’re not currently responsible for the repayment of any utility bills then it’s always a good idea to take on at least one since this will prove to the lender that you’re able to make repayments on time. Sometimes having ‘no’ credit history is just as bad as having a ‘poor’ credit history so the more you can do to establish a working credit history, the better.

Responsible lending

If you enter into any type of repayment plan then it’s imperative to keep it up-to-date.  You can regularly review your credit score by joining Experian and if you notice anything unusual you should enquire about it straight away.

Unfortunately, there are never any guarantees in terms of interest rates being increased so always ensure you understand exactly what you’re going into and don’t be afraid to ask questions before you commit to anything.

Fortunately, credit card companies have now made certain pledges to protect the consumer which include:

  • Not to increase your credit card rate within the first 12 months of taking it out (provided that you don’t breach the account’s terms and conditions of business). Beyond that, however, the rate can only be increased once every six months.
  • To inform you if your rate is due to be increased. If you get notification of this, always be sure to check your credit rating in case they’ve based this decision on some recent activity on your credit file which you might not be aware of.
  • Giving you at least 30 days’ notice of any increase in their interest rate which provides you with the opportunity to repay it beforehand.
  • Not to increase your interest rate if you are suffering financial difficulty. So if you’ve fallen behind with your repayments then be sure to seek advice at the soonest opportunity.  You can either talk with your lender directly or speak with one of the many debt counselling agencies (details of whom can be obtained from your lender upon request).

If you want further advice on how to improve your credit score then don’t be afraid to ask and/or speak with the credit reference agencies directly.  Suffice it to say, you want to ensure that your credit rating stays strong, regardless of whether you’re planning to lend money either now or at some point in the future.

How To Save Money Like a Pro

How to maximise your money with minimum effort!

Let’s be honest, we could all do with saving a few pounds and as that old familiar saying goes, “Look after the pennies and the pounds will take care of themselves”.  So what’s the best way to do it?  Here we’ve got the top 10 tips to get you well on your way to a healthier bank balance!

  1. The most expensive purchase you’re ever likely to make in your life is your home – so make sure that the repayments really work for you. Whilst it’s easy to simply stick with the same lender, always remember that loyalty to your bank or building society only benefits them – not you – so be sure to shop around for the best deal every once in a while.Whilst it’s not always the most exciting thing to spend your money on (since it’s already most likely to be your biggest monthly outgoing), also consider ‘overspending’ on your mortgage.  Whilst at first sight this might appear to completely defeat the object of saving money it actually does the complete opposite. Let’s say, for example, that you’ve borrowed £100,000.00 at 6% over the usual 25 year period.

    You’re likely to be repaying this at £643.00 a month and the total charge for the credit will be £93,000.00.  However, if you can afford to overpay by just £100.00 a month then you’ll not only clear the mortgage in less than 19 years but you’ll also gain 6 years of mortgage-free living and save a staggering £25,000.00 in interest!

  2. Clear your credit cards! We all know that one of the golden rules of financial planning is to clear the most expensive debts first so make it your credit cards.  Whilst they offer a convenient way to spread the cost of goods and services, you should also consider a low-cost loan as a smarter alternative. Most credit cards carry a typical APR of 16.8% – so £2,500.00 over five years will cost you £1,212.00 in interest.  Compare that to a loan product with a typical APR of 7.8% and you’ll automatically save yourself £685.00!
  3. Reduce your food bill. Firstly, never make the mistake of going shopping whilst you’re hungry!  In fact, if you shop online you’ll soon find that you’re not tempted with the supermarket’s latest offers or get distracted buying things you simply don’t need.  The average household wastes over £500.00 of food each year through bad planning so make sure you don’t fall victim to it.  What’s more, if you aim to reduce your food bill by just £20.00 a week you’ll actually save £1,040.00 a year – the average equivalent of a family holiday in the sun!
  4. Be sure to use money comparison websites. Whether you’re looking for a home insurance policy, car insurance, pet insurance, in fact any insurance don’t commit yourself until you’ve logged on and looked online.  Most comparison websites will allow you to pick and choose the benefits you want to be associated with each product, making for a great way to get the right policy not only in terms of cover but more importantly, in terms of price.
  5. If you’re on regular medication then why not take out a three monthly prescription prepayment certificate (otherwise known as a PPC) for just £29.10. Since the current prescription cost is now £8.40 an item you could potentially save hundreds of pounds by simply switching over and needn’t compromise in terms of your health.
  6. Aim for a healthier lifestyle – not only in terms of your own health but also in terms of expenditure too! Let’s say, for example, that you currently smoke 20 cigarettes a day and drink 1 bottle of wine with your evening meal.  That’s approximately £14.00 a day x 7 = £91.00 x 52 weeks = £4,732.00 a year!!!
  7. Make your lunchtime work a little harder for you. The average worker spends between £5.00 and £7.50 a day in the staff canteen (combined with trips to the vending machine in-between!).  That equates to £1,800.00 a year or the average cost of a brand new £10,000.00 car after just five years!  Instead, take your own lunch into work and you’ll soon notice a massive difference!
  8. When it comes to enjoying time with the family, why not get a bit savvier in terms of the expense? For example, instead of eating out, take a picnic – and why not take public transport instead of paying car park fees?  What’s more, if you book in advance (particularly with trains) then you’ll make a massive saving too.  The expense of days out tend to make them less frequent so think and plan ahead!
  9. Why not have a go at growing your own vegetables? It’s not only fun but it’ll save you a fortune compared to supermarket prices.  If you’ve got children it’s also educational and it has to be said that home grown products are so much tastier!  Don’t be afraid to ask your local garden or other expert for advice on how to get started!
  10. Finally, with all those savings you’ve made then why not enjoy the benefits of an Individual Savings Account (otherwise known as an ISA) which will allow you to save up to £15,240.00 tax free. Whether you decide to save it for a rainy day or have something specific in mind they’re a great way of earning money whilst you save.  Be sure to shop around the main high street lenders to get the best deal and then simply kick back and let your well saved cash do all the hard work for you!