5 simple financial habits to get into for 2009

January is the most rubbish month of the year. Not only do you have to go back to work, but it seems like several billion years until payday. And you may have bought half a dozen new handbags and a new plasma television in the sales, but you're living on beans and urine for the next five weeks. Congratulations.

Since you can't afford to eat, drink or be merry, you may as well put the month to good use and prepare for the year ahead. It's going to be a stinker, so you need to be as financially sound as possible. Here are five habits you need to pick up - they're very basic and brain-rottingly dull, but they'll help you survive in the coming months.

1. Know how much you're spending

Do you know to within £25, how much you spend in any given month? If the answer is no (and it probably will be) you need to find out. As a starting point, you can use something as basic as the This Is Money household budget calculator. To compare what you're spending with what you think you're spending every month, you can download a free Excel spreadsheet here. If you're still confused and think budget is something washed from the bottom of a parrot's cage, watch this intensely patronising video:

2. Be realistic about your spending

Yes, you could live on pasta and soda water for the next twelve months, but then it shouldn't come as a surprise when your toenails fall out. Budgeting is far easier when in denial, but renders any attempt to live frugally a complete waste of time. If you're a social butterfly, there's no point trying to manage with no budget for entertainment, so try eating out less than cut it out altogether. Going on holiday in the Summer? That needs to be accounted as well. Be honest with yourself - it'll probably scare the living bejesus out of you, but you'll know where you stand.

3. Reduce your spending

Once you've realised exactly how much financial excrement you're wallowing in, what can you do about it? You can start getting a better deal on your bills. You don't have to do everything at once; every time you're due to pay a bill, look at whether you can find a cheaper alternative. Keep reviewing your expenditure all the time as new deals become available, and you'll save hundreds, if not thousands of pounds a year. As an example, last night I switched my phone line rental and call package from BT to Sky (shudder) and found a better quote on my house insurance - first using Money Supermarket to find the best deal and then applying for it through Quidco for £56 cashback. In half an hour, I nipped and tucked nearly £600 off next years' household budget.

4. Start saving

I have no savings whatsoever - I'll quite happily blow a small fortune getting beer goggles fitted three or four times a month, but I've never been able to justify putting £50 a side. That's because I'm an idiot and when I need a new boiler replacing, I'll be utterly screwed. Add a line to your budget for savings and stick to it; Alliance & Leicester offer an interest rate of 5% with their eSaver Issue 2 account, as well as the best cash ISA interest rates too.

5. Review your money daily, weekly, monthly

Looking after household budgets is boring as batshit, but it's more of a neccessity than ever before. Check what money is leaving your account weekly, if not daily. If the bank is applying charges you don't understand, call them. Watch your direct debits and standing orders; if you can see you're going to be short in a few days time, talk to the bank; arranging a temporary overdraft could potentially save you from a month of fees and other bogus nonsense. At the end of every month, review what you've spent against your budgets; if you're pissing money up the wall, you need to stop it or cut expenditure elsewhere. Yes, it's dull as ditchwater but all of it is vital if you're going to look after yourself and your family.


  • andy y.
    This one gets the award for most patronising piece of 2008.
  • ODB
    If people did this they would be so much better off...some good tips
  • Paul S.
    @andy of yarm - it's only patronising if it's so eye-bleedingly obvious that you do it all as a matter of routine already. I've only just discovered Quidco, for God's sake; there are millions and millions of people who haven't even heard of it. And if people did check exactly what was coming out of their bank accounts, stuff like this would never become the problem it does: http://www.bitterwallet.com/redsave-customers-still-seeing-red/3835 Ultimately, people are lazy; this post isn't meant to be change the world or offer ultra-sleek hacks, it's just another push to help people help themselves. I'm useless with money because I'm apathetic in my attitude towards it, something I can't afford to be in 2009. But obviously now we all know who to ask for a fiver when we're short, Andy ;)
  • andy y.
    Ah you missed Number 6 "Never lend a fiver to sob stores" Now back to my lonely tears
  • yep
    "I’ve only just discovered Quidco, for God’s sake" Well, keep looking, as there are better sites out there that don't charge you £5 a year. How many members of quidco do you think there are already, how many fivers do you reckon? People swear by Quidco, but sheep will be sheep.
  • bobby
    Sunday paper budgeting tripe written in the style of a 90's lad mag.
  • Yessum
    Quidco give full cashback, what other sites do that?
  • Jim
    @Bobby, should get the message across to a more broader spectrum then. I,m gonna take some of the advice onboard this year.
  • steve
    Yessum - well topcashback for one
  • Darren
    “I’ve only just discovered Quidco, for God’s sake” Well, keep looking, as there are better sites out there that don’t charge you £5 a year. How many members of quidco do you think there are already, how many fivers do you reckon? People swear by Quidco, but sheep will be sheep. Well name one that can offer the rates that Quidco can. Even after the fiver per year, anyone and everyone will be better off under Quidco.
  • mandy
    Also bookmark www.moneysavingexpert.com for further moneysaving ideas.
  • Ows
    Great article Paul, despite the naysayers. It's all sound advice, and I, for one, am glad I read it.
  • David P.
    @ Darren http://www.TopCashBack.co.uk/flyingflea/ref/index.htm They pay out more than Quidco, up to 110% cashback. There's no excuse to use Quidco now. In the few instances where Topcashback haven't got the same rate as Quidco you can simply submit an enquiry after your purchase and not only will they match it, but you get up to 10% more. For example, Quidco offers £90 cashback for Lloyds TSB Home Insurance. Go through Topcashback and you could earn an extra £9 because they pay up to 10% more cashback out of their own pocket. Who else does that?
  • Steve S.
    Good work, Paul. It is amazing how many people do not know the basics, and I hope many people read your article and act on it. It is great that there are so many converts/knowitalls already, but criticising you for spreading useful information and advice shows just how small-m,inded these people are. Keep up the good work. Steve Silver
  • How B.
    [...] to tell you to get your household budgets in order, but plenty of us are too damned lazy to bother; Bitterwallet has 5 simple financial habits you need to get [...]
  • John D.
    Only just discovered Quidco? That's strange considering Paul Nikkel, the Editorial Director of this site set it up. Big old plug shoehorned in eh?
  • Paul S.
    Or maybe I only discovered Quidco because I started working on this site, John?
  • UK B.
    I have been using cashback sites for some years now and I wouldn't be without them, saved and earned £100s. It's amazing how many people don't know about or use them though -- so always worth telling folks :)

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