I love to 'manage' my money. For years, I didn't manage it at all, I just got it from my employer, put it in my bank account and used it to pay bills or buy food. Now, at the age of 33, I think I'm pretty good at managing it. Could I be better? Yea, for sure. But I think I'm doing pretty well so far. So let me share how I manage my money and maybe it'll help someone else too.
The Current Account
The current account is the rather boring bit. This isn't so much about managing money, rather this is about finding the best bank. Or, in 2023, the best bank with the best app.
I've had a lot of bank accounts in the past, both current accounts and savings accounts. With these, I've downloaded a lot of banking apps. Through my trial and error, I have seen the best of the best and the worst of the worst bank apps. I don't want to name and shame, but I'll simply say this - high street banks are generally worse than challenger banks. Perhaps this is to be expected? Challenger banks have a lot to prove in order to convince loyal customers to abandon ship and jump into the unknown.
High Street banks, however, have traditionally seen banking apps as an addition to their service. This is changing, obviously, with many banking customers preferring to bank online than going into a branch. But it does mean there is a lot of dead-weight on their current app offerings.
My current account is with Starling. Starling is a challenger bank that is FSCS protected. It's one of the oldest challenger banks, established in 2014. But it still holds it's own by being app-centric and UX focus. I like it a lot due to it's simple design and it's notification system for current and next-day scheduled transactions. Opening an account with Starling was one of the easiest experiences I've had with banking; it's all handled within the app and took minutes. This isn't possible with all banks, even today. Starling was ahead of it's time, and I find it to be one of the best banking apps available that sticks to it's core function. I have closed other accounts where the banking focus has been shifted to be an all-in-one app, such as Revolut, with advertising for their other functions becoming incessant.
The Savings Account
Current accounts are boring. Savings accounts are where managing money starts to get exciting, especially now in 2023. With the current interest rate rises of the Bank of England, interest rates across a lot of banks have been increasing in fits during the last few months. And it's with these market movements that everyone should be taking note and moving any money they have to utilise the highest interest rates available to them.
I use Chip. Until a few days ago, this was the easy access savings account with the highest savings interest. At the time of writing, it no longer has that crown, slipping a little. I haven't moved away from Chip as the difference is so minimal it would be a couple of pennies in interest in a month. I want my money to work as hard as possible for me, but I do draw the line somewhere.
I love Chip as it provides a daily tally of the amount of interest I have earned. This is great to see incrementing and motivates me to do absolutely nothing and leave my money there to continue to grow. Lazy-mode enabled.
Chip interest, whilst calculated daily, is paid out monthly. Some savings accounts pay out yearly. Paying out monthly is better because of the compound interest effect, getting more money on that money from before. Money money money.
For more on switching banks in genral and why I love Chip, please read my previous article. With the current Bank of England interest rate being so high, getting less than 3% interest on savings is nothing short of daylight robbery. Switch, and earn.
Currently, I'm earning more than £100 a month doing absolutely nothing. And be it £1, £100, or £10,000, the point is your money should be in the place where it has the best return. And more than likely, that won't be with your high street bank. Shop around. And switch. You have nothing to lose and everything to gain.
The Credit Card
I feel credit cards are the marmite of the financial world. People either love them or hate them. And some people love them for all the wrong reasons, and others hate them more out of misunderstanding than a reason for genuine fear.
I've been using credit cards for years. It all started when one bank offered me a credit card with cashback. I was shocked that the bank wanted to pay me money to buy stuff. I was all for it. I bought everything on it. I maxed out my credit card every month. And why not? The bank wanted me to. I wanted me to. It was a win-win. Or was it?
Well, it was a win for me. I paid the credit card off every month. The bank most probably wanted me to get into a bit of debt with the credit card, and charge me some crazy interest. I didn't let that happen. I was using the credit card to pay for things I could afford with my income and had to buy anyway, like my groceries and my fuel. And this is the point. Credit cards are great tools if you use them correctly by paying them off before that interest every starts to build up and creates debt.
Over the last few years, I've rather enjoyed my use of credit cards. And I've went a bit further in my use of credit cards.
Simple Credit Card Management
Credit Cards are great if used correctly. And here is how I use it correctly. And what I do with my 'savings'.
- Get a 0% interest credit card. There are loads available. This may be for only a few months, or as long as 2 years.
- With your 0% credit card, buy anything that you would buy anyway, such as groceries, fuel, or use it to pay your monthly Netflix bill. Don't buy anything you wouldn't normally buy.
- Now that you've bought everything you normally would on your credit card. Now you have extra cash in your bank account that you didn't have before. Hmm...what a dilemma...what could you possibly do with it? Oh, put it in a high interest savings account? Great idea!
- At the end of the 0% interest period for the credit card, pay the credit card off. At this point you will have no debt from your credit card, and extra money from what you've earned by doing absolutely nothing at all by having your money in a high interest savings account.
- Do it all again! Apply for a new 0% interest credit card and start again. The circle continues. The free money comes in. Lovely!
This is how I manage my money. I believe it's simple and easy. Perhaps it won't be for others. Tread carefully. Understand what you are signing up for. Just know the bank is making it's money work for you, the least you should get is a fair cut of the payouts.
For those more financially savvy, the above is known as stoozing - I tried to avoid using this term but since Martin Lewis on Money Saving Expert wrote about it's 'return' in the last few days I felt it right to mention it here and direct anyone interested to the page. It's a great read.
Don't forget to subscribe to my newsletter.