BBC Watchdog: Financial health check

Lots of you are trying to cut back on your spending at the moment. It's not always straightforward but there are simple ways you can cut costs.

We thought it was about time we shared some of these tips with the Watchdog viewers. So, we rounded up some experts in personal finance, mortgages, savings and debt and sent them to Milton Keynes to offer some face-to-face advice.

Click here to open the Watchdog financial health check factsheet.

Or you can watch the results in the four reports in our Consumer advice section.

We'll be taking Watchdog back out on the road in the coming weeks but for now here are our experts top tips on how you could start saving money now!

Personal finance
Clare Francis
Editor of MoneySupermarket.com

• First and foremost think - "Can I really afford it?" and "Do I need it?". Most of our impulse buys end up being the ones that topple a budget at the end of the month. If you can't afford it - simply don't buy it. If it's something you're desperate to have - then plan ahead, put a little money aside each month and budget for it.
• Consider how you spend money on a day-to-day basis. This includes simple purchases such as a coffee on the way to work. Do you need it or could you simply wait till you get to the office or perhaps even grab one at home? Cutting back on unnecessary spending can easily lead to having a hundred pounds extra at the end of the month.
• Get your bank statements out. You need to see where your money is going every month. You may find that there are some old subscriptions or direct debits that you simply don't need any more. Also, payments such as for your mobile phone, broadband service, insurance and utilities need to be regularly monitored to ensure you're getting the best deal out there. The market changes fast so make sure you're on the ball with what your company, and others, are offering at the moment. There are plenty of websites out there that can help you to gather information on the most up-to-date deals so it's worth checking online regularly (your local library may have free web services if you don't have home internet).
• There's plenty to be saved with gas and electricity in particular. If you're paying quarterly you may find that switching to direct debit payments saves you money each month. You may also want to check out one of the online tariffs as they tend to be the cheapest. It's possible to save £300 a year this way!
• Become a savvy shopper. The retailers are struggling at the moment but that's led to there being some great discounts for you on the high street. Look out for vouchers online, in the paper and also buy-one-get-one-free offers - but make sure it's something you really need first!

Mortgages
David Hollingworth
London and Country Mortgages

• Overpay, overpay, overpay! By maintaining your payments you could save tens of thousands on interest over the term of the mortgage. However, you MUST check that you won't suffer any penalty as a result of overpaying.
• Try and get together the biggest deposit you can afford. This has always been the case but never more so than now - the days of 100 per cent and 95 per cent mortgages are gone. It's recommended you have at least 10 per cent, but get more if you can as it will open up more options in today's mortgage market.
• Start shopping around for your mortgage early. You can secure a deal as much as six months in advance. This should help sidestep any issues around your equity disappearing as house prices continue to fall.
• Don't be drawn in just by a low rate. These days mortgage products can come with fees that amount to thousands of pounds. People with smaller mortgages may want to consider going for a deal with a higher interest rate and a lower fee, as it could cost less overall.
• Check what your existing lender will offer you but always shop around.
• If your payments become too difficult get in touch with your mortgage lender at the earliest opportunity, it's always good to communicate with your lender as they may be able to offer a solution.

Savings and investments
Danny Cox
Head of Advice at Hargreaves Lansdown Financial Practitioners

• First off, I think it's important to always keep a good "cash cushion". This is an emergency fund that you keep in an instant access bank or building society account so if you ever need money you can get it straight away. I would recommend that you keep six to 12 months worth of expenditure in that account.
• Make your investments work hard for you by paying lower charges and paying less tax. Choose investments where you'll get the best performance and interest rates.
• Spread your investments - don't put all your eggs in one basket. If you decide to invest in cash at any point then I would recommend only putting £50,000 in any one account. This is because the government will protect up to £50k but not beyond.
• When investing in shares I recommend buying unit trusts so that your investment is spread over several different markets and funds. The same applies for fixed interest funds, such as corporate bond funds. Purchasing in this fashion spreads the investment and also the risk (for more information on what Unit Trusts are visit the Direct Gov website).
• Think about why you're investing, set yourself goals. For example, perhaps you want to invest for extra income or maybe it's capital growth you're after. Maybe it's growth now and income later. These targets will help you decide which investments to go for.
• I would also recommend that once you've invested don't check up on it too often - people can become caught up in the constant changes in the market - remember investments are often long term and the minimum most people should be looking to invest, particularly for shares, is about five years (though this entirely depends on the individual situation).

Debt
Rob Sandalls
Consumer Credit Counselling Service (CCCS)

• Create a budget for your household showing all income and expenditure, including any benefits you receive. If this shows you have more money going out than coming in you need to acknowledge the problem and do something about it. Do not bury your head in the sand.
• If you're struggling to pay your debts talk to your creditors at the earliest opportunity. They're prepared to listen and can*often*agree to accept reduced payments, though this is entirely at their discretion.
• If you can't agree an affordable amount to pay back directly with your creditors then I would recommend*getting in touch with your local Citizens Advice Bureau (CAB), National Debtline or the Consumer Credit Counselling Service (CCCS) for free debt advice.
• With credit cards don't get*into the habit of making minimum payments. This will mean it will take longer to repay the debt and you'll*pay more interest. Always try and overpay if you can afford to.
• Don't be tempted to consolidate your debts as this will often result in a loan being secured against your property. In any case your monthly payments may be smaller but you*will pay back much more money over a longer period of time.

Please note:
The material is for general information only and does not constitute*specific investment, tax, legal or other form of advice. You shouldn't rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.



http://www.bbc.co.uk/blogs/watchdog/2009/01/financial_health_check.html