Off the top of your head, could you list all of the regular payments you have coming out of your account this month? Do you know who your money is going to and how much is going to each one? If you’re currently shaking your head, then having a check through your bank statements should help to give you a better understanding of where your money is going to each month – and hopefully help you to free some of it up.
To help, we’re going to take you through how to conduct a quick audit of your bank balance step-by-step.
Step 1: List them all!
Before you do anything, go through your bank statements and list the details of all your regular payments, including any Direct Debits and standing orders that you have set up. To avoid any confusion, Direct Debits are something you give permission for, allowing a company to take a fixed or variable amount out of your account on an agreed date. A standing order gives the bank an instruction to pay a fixed amount regularly. If you want to know how Direct Debits work, check out our blog on the subject here.
Any regular payments that aren’t listed as Direct Debits or standing orders could be continuous payment authorities. These are often be used for paying subscriptions like magazine or dating memberships and give permission for regular payments to be taken when needed. They can be hard to spot as they tend to look just like any other payment on your statement.
Step 2: Go through them
Once you’ve got everything listed, the next step is to go through and evaluate whether each payment is worth what you’re spending on it. If you were surprised at the amount of regular payments to your name, now is your chance to try and cut these down.
When you’re looking at each expense, ask yourself whether you actually use the service that you’re paying for. Do you get full use out of that £30-a-month gym membership? Or read every single magazine that comes as part of your monthly subscription? If you don’t use these services consistently, then it may be worth thinking about cutting them out.
Some decisions are going to be easier to make than others – for example, cancelling insurance for an item that you no longer have is a no-brainer but other decisions may be more difficult. If you’re not sure about cancelling a payment, look to see if you could reduce the cost of it instead.
When it comes to gym memberships you could look into a no-frills gym, or opt to try pay-as-you go if you know you’re only going to be an occasional visitor. You don’t even have to go to the gym at all to work out – why not try these free workout ideas? Choose to buy magazines individually if you only read them every other month and look for the best deals or cheapest packages when wanting to switch your TV streaming service.
For regular payments that are a necessity like energy bills, or broadband and phone payments, you could make a huge saving by switching. Read about how to switch your utility provider or mobile phone network on our blog.
Step 3: Cancel payments
You can cancel Direct Debits or standing orders whenever you want to. But for a continuous payment authority, you’ll have to get in touch with your card provider and request that they cancel it for you.
No matter what payment you’re cancelling, make sure that you’re not going to be breaching a contract. Depending on the situation you may be required to pay a penalty for cancelling the contract early or make alternative arrangements to pay off the rest of whatever you owe. Think long and hard before cancelling any type of insurance as well – you might find that the moment you cancel may just be the time that you need it.