FOOL'S EYE VIEW
Eight Ways To Turbocharge Your Finances

By Cliff D'Arcy
August 19, 2004

I've never been a big fan of the 'Rich Lists' that newspapers and magazines churn out every year. I see these lists as another symptom of the culture of envy and celebrity that has captivated the UK in recent years. For example, I checked leading search engine Google to see how many times "keeping up with the Joneses" (or "Jones's", as it is often misspelled) occurs in UK websites. The numbers were 1,620 and 287 respectively, a total of 1,907. Thus, it appears that our obsession with this imaginary family is flourishing healthily online!

But, seriously, why settle for keeping up with the awful Joneses when, with a little bit of planning and patience, you could cruise pass them in the fast lane? Here are eight tips that will help you to do just that, at least in financial terms!

1. Learn to budget

Successful businesses and people have one thing in common: they carefully manage their spending and maximise their income. The golden rule of finance is: have a budget and stick to it.

If you get into the habit of constantly spending more than you earn, your financial future is going to be fairly grim. Once you've drained your savings, you may start building up expensive debts, which would put you firmly on the road to financial ruin. Spending tomorrow's money today is just daft, so learn to budget.

2. Become a better spender

Over the years, I've discovered that impulse buying is usually the most expensive way to splash cash. The problem is that convenience costs: deferred gratification is always the cheaper option.

When it comes to spending your hard-earned dough, forewarned is forearmed. Before you buy anything costing more than, say, £30, do your homework first. For example, you could surf over to a few online price-comparison websites, which offer substantial discounts on most high-street goods. I listed a few of my favourites in Tip Six of this article.

Also, before you go to the supermarket, stock up on money-off coupons and discount vouchers, and visit Fixture Ferrets, which lists all the bargains at seven leading supermarket chains. Another site for serious supermarket savings is TrollyDolly, which displays prices for almost every grocery item imaginable.

3. Pay less interest on your debt

Borrowing is a way of life for many Britons. In fact, we now owe over a trillion pounds (a one followed by twelve noughts!). Furthermore, banks lend money at up to 30%, while paying savers pitiful returns. This goes a long way towards explaining why British banks have enjoyed sky-high profits in recent years.

But it doesn't have to be like that. See that debt on your credit card with an interest bill of 20% a year? Transfer it to one of the seventy or so cards that charge no interest for up to a year on transferred balances. Taking advantage of these 0% deals could mean paying hundreds of pounds less in interest every year. And don't worry that the banks will think of you as a 'rate tart', because it's a good thing to be!

Check out our Credit Card centre for some great 0% offers.

4. Earn more interest on your savings

Everyone who plans to have a pleasant financial future needs to have some savings and investments. However, we Brits aren't terribly good at finding the right place for our money. Millions of us have our nest eggs in taxed savings accounts that pay well below the going rate of interest.

If you have £3,000 in a ropey savings account that pays, say, 2.5% a year, you'll earn a measly £60 a year after 20% tax (£45 if you're a higher-rate taxpayer). By shifting this money into a tax-free cash mini-ISA paying 5%, you'll increase your savings interest to £150, which is 2½ times as much. If you're not saving in a cash mini-ISA, you're missing a major trick!

Turbocharge your interest with a visit to our Savings and ISA centres.

5. Pay less tax

As this article demonstrates, the average British worker hands over around 41% of his/her wage to the government. That's a lot more than the 28% that Americans pay, but way down on the 58% that Danes and Swedes cough up! The ultra-wealthy employ accountants to minimise their tax bill, but there are dozens of ways that you can easily - and legally - avoid tax. This article mentions eight ways to cut your tax bill.

6. Pay less for protection

Fortune is always outrageous and life is always risky, although that doesn't prevent many of us from enjoying it. We manage these risks by buying insurance to protect ourselves, our assets and the people who depend on us. The list is of everyday protection policies is practically endless, and includes life, health, home, motor, travel, payment protection and pet insurance.

Every time you receive an insurance reminder or renewal notice, it's a good idea to 're-broke your business' – in other words, shop around for lower premiums or more cover. This is especially true if you buy your policies on the high street, where insurance is universally over-priced. Shopping around for life cover is particularly worthwhile, as its cost has tumbled in recent years.

Find a better quote in our Insurance centre.

7. Earn more from your investments

Choosing the wrong savings accounts costs British savers around £5 billion a year in lost interest. But we lose many times more than this by choosing the wrong investments. We entrust our money to highly paid fund managers who fail to beat the stock market, but still take a big slice of our money for doing so. Oops!

In general, Britons pay far too much in return for mediocre investment returns. But there are alternatives: this article explains how to find a better fund, cut your initial and ongoing investment charges, and pay less to buy and sell shares.

Discover a low-cost fund in our Index Tracker centre.

8. Sign up for our newsletters

A huge number of people receive our email newsletters, which showcase the very best articles from The Motley Fool. You can choose to receive updates every lunchtime, week or month, whichever you prefer. And, as far as I know, our mythical Joneses haven't signed up, so registering for our Foolish emails is probably the best way to keep one step ahead of them!

You can sign up for the best of the Fool here.