5 easy ways to manage money effectively

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When it comes to managing our money, there’s always a little voice in our heads telling us that we could be doing better, saving more, investing more intelligently...

We’re inundated with information about money-making schemes that promise to change our financial fortunes, and it can all feel a bit overwhelming. Managing money effectively is often about the simple things, like ensuring we’re not overpaying for services like car insurance and broadband.

From better ISA investments to checking you’re getting the best deal on your energy bill, here are some tools you can use to your advantage to help manage your money better (you might even end up with some extra change in your purse).

1. Let tech tools help you save

Technology can help you organise your finances without much effort: a whole host of useful apps and tools have popped up in recent years. Some online banks offer virtual piggy banks that encourage you to save with visual cues and will automatically round up the difference on your purchases, so you can put money aside without having to remember to do it. There are now various apps that can get you into the habit of growing your savings with a few simple taps.

Organising your financial admin so it’s all in one place can be useful when it comes to managing accounts, tracking bill payments and seeing what you’re spending money on.

2. Get creative with your savings

The perception that you need a lot of money to start putting away money does exist - but it’s simply not true. You can start investing with tiny sums: it’s about creating a lifelong habit as much as saving money for a future goal.

That’s where ISAs come in: cash ISAs offer a flexible way to start saving without paying tax on interest, and there are different options to suit your needs, whether you’re saving up for a home, retirement or your child’s future. You can compare ISAs to check which ones will give you the best rates, terms and flexibility at Compare the Market.

3. Consider a new budgeting technique

Whether your financial goals are large or small, immediate or 20 years into the future, budgeting is key to reaching them. While 50/30/20 used to be the hard and fast budgeting rule (you’d spend 50% of your income on needs and essential expenses, 30% on things you enjoy and 20% of your earnings would go into savings), new techniques are becoming increasingly popular. Take the 70/30 plan, where you divide up spending and savings so 70% of your income at the end of each month is for spending (on essentials and non-essentials), while 30% of your earnings go straight into savings.

Another (more extreme) method that combines frugality and investing is FIRE, which stands for financial independence, retire early. It’s especially popular with younger generations. The premise is one of aggressive saving, where you try to put away as much as 70% of your salary in your 20s and 30s, while investing wisely in ISAs to boost your income. The goal is to save 25 times your annual expenses to retire sooner.

These might not be the right techniques for you, but simply illustrate that there’s no one right way to save and budget for your goals. Try a couple out and see which one works best for you.

4. Make sure you know what you’re spending on

The past year-and-a-half of adjustments to our daily lives has meant all kinds of changes, from spikes in subscription boxes to shelling out on various streaming services for 24/7 entertainment at home. Now’s the time to take stock of your outgoings: it’s all too easy to link a free trial with a credit card and forget about it, or to keep paying for services that were useful during lockdown but aren’t essential now.

Household bills are another area where you can save quite easily: first, you need to know how much you’re paying compared to those in your neighbourhood. Compare the Market’s bills calculator is a handy online tool that shows you broadband and home insurance costs for homes in your area. Once you see how much you can potentially save, start comparing and see where you can trim your bills.

5. Switching can equal saving (a lot of the time)

Admin doesn’t have to be a drag, especially not when you reframe it in your mind to equate comparison shopping with cash. Auto-renewing car insurance is just one example of taking the easy road… and you could lose money as a result.

Compare the Market’s Good Things hub will direct you to deals on the best home and car insurance ahead of renewal, as well as comparing household bills like broadband and energy. If you take out a qualifying product, you could benefit from rewards like discounts on takeaway and delivery, restaurant meals and 2 for 1 cinema tickets.

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