What do the Scottish Parliament and Wembley Stadium have in common? Is it the fact that they are two of the most ambitious architectural projects of the last decade?
Sadly for most of us, what we will remember is that they were both budgeting disasters. Initial expense sheets flew out the window to be replaced by something three times as large.
The media were quick to blame anyone and everyone for these mistakes, but are we really any better when it comes to our own money?
A study out this week revealed that Brits pay out £48.7 billion pounds worth in unexpected bills every year, or £1,375 each. And with celebrities such as Britney Spears apparently losing $21.5 million of her in $32 million fortune over the past couple of years, maybe it’s a little easier than we thought to let these unexpected expenses rack up.
Keep on top of the little things
Make a monthly budget and stick to it – even the small things can add up. For example, a recent study by MoneyExpert has found that Brits spend around £62 each on gifts for their partners every month. We can plan for birthdays, Christmas and anniversaries but in it looks like month to month present giving and romantic gestures are a must! So don’t get caught out.
For the small items, like gifts and extra treats, the secret lies in the plastic in your pocket. Most of us end up putting these kinds of expenses on to our credit cards as we don’t feel the immediate impact on our bank balance. But if you’re on an uncompetitive interest rate or APR, these simple pleasures could end up hitting you hard.
With so many 0% introductory APRs available, there is no excuse not to be on one. Barclaycard’s Platinum Visa card for example offers 13 months at 0% before you jump up to a 14.9% APR after the term ends.
Your APR may not seem like a big deal, but in the long run it could save you a huge amount of cash. There is no shame in being a rate tart as it’s so easy to switch – and providers certainly won’t be loyal to you, so don’t bother being loyal to them. Remember however that with most switches, you will have to pay a balance transfer fee of around two percent of the debt – so in the long run the best option is certainly to pay off the debt, not just maintain it.
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Could a payday loan get you through the month? This allows fast cash when you need it the most! The costs are generally cheaper than bounced payments/direct debits and unauthorised overdraft fees on your bank account.
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But what about the big costs? If your plumber does condemn your boiler to the scrap heap then you might be able to get away without a shower for a few days, but it’s certainly not a long term solution. Household repairs can costs thousands and a credit card may not cover such expenses.
If you don’t have the cash sitting around for a big surprise, then an unsecured loan is likely to be your best bet. For a £10,000 loan with a rate of 6.9% over five years you’d only have to find £197 per month to pay it off. There are so many to choose from that you’re bound to find one that suits you – as a rule of thumb APRs of 8% or less represent good value for money.
It important to budget month to month but often we are faced with unexpected expenses that we could not have foreseen. The trick to handling these costs if to have your finances in order in the first place, make sure your financial products are working hard for you. If you do have a big expense to pay for, don’t panic. Have a look at the loans market, and work out what it is you think you can afford to pay back each month.
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