Donna Werbner tells us about five financial lessons she has learned.
This article has been sent to readers as a lovemoney.com email.
Sometimes it feels like the world has gone money-saving mad. Every piece of bad news about the recession seems to be followed by more and more extreme advice to cut costs. Rent a handbag! Swap your car for a skateboard! Polish your shoes with banana skins!
In my experience,the best money advice is a bit more obvious. You know: budget, save, plan ahead... things we all already know about, but often fail to follow.
Here are five things I've learned about money myself, whether through trial and error, painful experience or just good luck. Hopefully, you'll find it useful.
1. Insurance is worth having
I first learned this lesson when I was a teenager and my mother accidentally set fire to our family home. The smoke damage alone ran to thousands of pounds, never mind the cost of replacing the kitchen. But our home insurance came up trumps and nothing important was lost.
Top tip: Read the small print of your policy carefully so you know exactly what you're covered for - and what you're not.
2. Credit card interest is avoidable
I'll let you in on a secret. I've never paid a penny of interest to a credit card provider. Why not? Because I know the true cost of credit card debt.
I know, for example, that it takes 17 years to pay off a £3,000 balance if you only make the minimum payments, and that it will cost you thousands in interest payments. Of course, it's not always possible to avoid credit card debt - but most of us can avoid the interest, first by taking out a 0% on new purchases card, and then by transferring it to a
0% balance transfer card while you pay off the debt.
3. The internet is my friend
Often in my life I've faced what I like to call 'the Ikea furniture assembly dilemma': do I spend time on this purchase, and save myself some money - or shall I spend more money, but save myself some valuable time?
The answer, of course, depends on how much time and money you have - to waste. That's why I like the internet. It can often save you both money and time. For example, I find shopping at supermarket price comparison site mysupermarket.com twice as fast and ten times more convenient than shopping in-store, and it usually saves me about £10 per £60 shop. Winner.
4. Banks are not my friends
Most banks do not have your best interests at heart. For example, in September, I took out a new savings account with Alliance & Leicester, paying a whopping 6.56% AER.
Now, less than six months later, it's paying a measly 1.31%! Admittedly, interest rates have fallen dramatically since then. But Alliance & Leicester hasn't bothered to inform me how low my rate has dropped or that it is now offering a new esaver savings account paying 3.1%. Time I switched, I reckon...
5. It really does pay to shop around
Pretty logical conclusion to draw from number 4 - but worth stating in its own right. I reckon I've saved hundreds - if not thousands - of pounds this year by ensuring I've got the best deal on financial products and taken out the best tariffs.
It's not as difficult as it sounds. For example, you can save £206* in five minutes by switching energy suppliers through our gas and electricity service. Alternatively, you can use our whole-of-the-market credit card, savings and loans search engines to check whether you've got the best deal to suit your needs.
Compare all sorts of financial products at our brand new site, lovemoney.com