Taking a more proactive approach with our cash can leave us far better off.
Managing our money is far from straightforward.
That’s particularly true in the current climate, where our finances are under incredible pressure.
As a result, cutting out some unnecessary mistakes can make a big impact to our overall financial health.
Messing up our kids' inheritance
Most parents want to be able to help their kids financially.
You can’t take it with you, but you can leave them a few quid once you pass away which can give their finances a boost.
The big question though is why we wait until we pass away to hand over that inheritance.
If you are going to give your children some cash then surely it makes sense to do it earlier, when it really could make a difference to their lives, than leaving them holding on until you finally pass.
It’s not just a question of timing, either ‒ you can also enjoy seeing those family members putting that money to use.
It’s always going to be rewarding seeing that help in action, seeing your children take that step onto the housing ladder or start their own business thanks to you.
There are tax benefits to consider too.
If you hold on, then the money you plan to leave them could be eaten away by Inheritance Tax, whereas if you get on with dishing out some of the inheritance early then you may be able to sidestep the taxman.
Check out our guide to Inheritance Tax and how to reduce your bill.
There is a balancing act, of course.
There’s no point in leaving yourself financially vulnerable in order to provide that help, but if you’re able to pass the inheritance over before you pass yourself, then that has to be the best option.
Saving and banking in the same place
When it comes to money management, lots of us ‒ and I include myself here ‒ opt for the most convenient approach.
Using the same bank for a host of different products can make it feel a little easier when it comes to keeping on top of your overall situation.
Manage all your savings accounts in one place with Raisin, the simple savings service (affiliate link)
All you have to do is log on to my Halifax banking app to see this approach in action: one joint account, one bank account, one savings account, one cash ISA and a credit card, all from the same brand.
The trouble is that doing what I have done has meant missing out on a better return from my cash.
My ISA ‒ which I use for storing the money for my tax bill ‒ is frankly mediocre.
The savings account is no better, either.
There is a cost to that convenience, and while it’s nothing life-changing, the truth is that at the moment every penny counts.
Just take a look at our run-through of the savings accounts paying the highest rates of interest.
There isn’t too much crossover between those providers and the names delivering the most compelling current accounts.
If you want to get your finances in the best possible shape, that means sometimes opting for the less obviously convenient.
Keeping it convenient
It’s not just banking and saving where convenience comes with a heavy price though; that same attitude can cost us in other areas of our finance.
For example, plenty of us stick to filling up our car in the same garage every time.
I know I do, and it’s not done because that’s the forecourt with the best prices, but because it is a convenient option.
However, we could find real savings that add up over time by being a little more choosy, by taking those few minutes every week or so to quickly check how local prices compare.
It may be that just a small detour could deliver a tangible saving rather than sticking with the regular routine.
It’s a similar story with food shopping.
Sure, it can make sense to stick to the same supermarket ‒ you know where everything is, for a start.
But given the massive price rises seen over the last year, it’s a much better idea to shop around and check out whether a better deal can be secured elsewhere.
Plenty of shoppers are doing that already, given the sharp jumps in market share recorded by the likes of Aldi and Lidl, but many of us have so far opted to stick with what we know.
Believing the minimum is good enough
Doing the bare minimum was not just a common complaint in school reports ‒ it has also cost us at times when it comes to money.
Take the workplace pension scheme.
Employers are required to open pensions for staff and contribute towards them, so long as the workers themselves contribute at least 5% of their salary.
There are plenty of people who think that sticking away the minimum will be good enough to provide a comfortable retirement, but the reality is rather different.
That minimum is only a starting point though; if you can afford to put in a bit more, you won’t regret it once you hit retirement.
It’s not all that dissimilar to credit card repayments. If you stick to only paying the minimum rather than clearing the balance, your debt will snowball to the point it may become unaffordable.
Minimums should be viewed as just that ‒ the very least that you should be paying or contributing. If you want to keep your finances healthy, it won’t be enough.
Trusting energy suppliers
Energy bills are a huge concern for all of us given the way they’ve grown in recent times. So we need to engage with them if we are going to keep them to a minimum.
That means keeping a close eye on the size of our direct debits, and how they correlate with our actual use.
We’ve written before about the huge sums in credit many households have, simply because they have been paying too much ‒ get that money in your own bank account, rather than the energy supplier’s.
Don’t trust your supplier to work out your direct debits fairly, and instead take action yourself to make sure the sum you pay is fair.
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