From buying chocolate chip biscuits instead of chocolate-coated ones, there are lots of little ways to protect and improve your finances in the new year.
Happy Christmas – but is it a VAT-free biscuit? Photograph: Andrew Hasson
You all know about shopping around for the best gas and electricity deals, and you know you should keep an eye on your savings rates to make sure you are not being take advantage of by your bank or building society. So we have delved a bit deeper to find you some new ways to protect and improve your finances in the new year.
■ Go on a VAT-free diet. Most food is free from VAT, but you do pay on some common groceries including most confectionery, drink and snack items which will all be hit when the rate goes up from 17.5% to 20% on 4 January. So what purchases to avoid on the supermarket run? Weird discrepancies in which foods do, and don’t, qualify for VAT mean you’ll be better off buying, for example, chocolate chip cookies or bourbons instead of chocolate-coated biscuits; unshelled salted nuts instead of shelled salted nuts; cakes, Jaffa Cakes and toffee apples instead of sweets, cereal bars and sweetened popcorn; tortilla or corn chips instead of potato crisps; and baked Alaska, mousse and cream gateaux instead of Arctic Roll, ice cream or ice lollies. Or you could just go on a proper diet and not eat any of this junk.
■ If you are buying a mobile phone for your children for Christmas make sure it’s one that warns you if the user is about to exceed the inclusive minutes, download amounts and texts.
Countless readers with teenage children have contacted The Observer about their mobile-happy offspring running up huge bills that the parents are obliged to pay. Ernest Doku, communications expert at uSwitch.com, recommends mobile contracts from Tesco, which flashes up a warning message every time you text or call when the contracted usage is about to be exceeded, and then cuts of the service once the agreed usage is reached.
Alternatively, he says pay-as-you-go deals are getting more competitive with special add-ons and offers: the Orange Monkey tariff, for example, provides 25 free texts and free music if you top up by £5, and 300 free texts and free music service if you top up by £10.
■ Raise some cash by selling the Christmas presents you really don’t want. Classified sales website Gumtree says 600 gifts had been listed on the site by 28 December last year, including iPods, Nintendo DSs, perfume and hair straighteners. It’s a bit cold to be doing car boot sales, but you could try shifting unwanted gifts on eBay or Gumtree (try Freecycle if you really want rid and no one will pay decent money for the item).
■ Hundreds of thousands of people are expected to lose their jobs this year. The government has already cut the help available to homeowners in these circumstances, so make sure you can still pay your mortgage by taking out payment protection insurance. It is notorious for not paying out, so make sure you get a decent policy by consulting a qualified broker (you can find one on the BIBA website), and if the cost is ferociously high, remember you can cancel once the economic uncertainty has passed.
■ If this is the year you decide to ditch your car and join a car club watch out for the standard excesses on the insurance they sell, and the level of cover you if you buy their excess cover. The standard excess for CityCar and Zipcar is £500, while Streetcar has set the level at a swingeing £750. You can buy from the car clubs, but you either get hammered on the cost, or the cover: Streetcar charges £179 and covers the entire excess; CityCar charges £60 and covers £400 of the excess; while Zipcar charges £40 and covers just £250 of the excess. You can get excess cover for less – iCarhireinsurance.com charges £39.99 and covers the entire excess.
■ 2010 was a horrible year for travellers. Airline and airport strikes, erupting volcanos, and sharks made life miserable for millions, but most of all for those with no, or low-cost, travel insurance.
As in most things, you get what you pay for in travel insurance. In 2011 make sure your policy includes cover for delays, air space closure and missed connections. Check it covers specific activities that you are intending to do on holiday – some even cover the cost of pre-booked activities, which might have helped would-be divers in Sharm el-Sheik. If you suffer a “pre-existing” medical condition that would normally lead to a travel insurer declining you cover, try specialist insurers such as P J Hayman, or its insurance partner Age UK.
■ Review your gym membership. Most gyms charge £40 plus and, in central London, you can expect to pay around £70 a month. But there are better deals to be had: recent start-up The Gym Group, for example, charges just £15.99 a month, or £16.99 if you want access to all its 10 branches (with four more opening in the spring), with no contract to tie you in.
■ Employees who have to switch jobs several times during their careers can easily lose track of their various pensions, particularly if they have moved home or a former employer closes down or merges with another company.
The Pension Tracing Service helps individuals find occupational and personal pensions through a database containing details of more than 200,000 pension schemes. Find out if the service can help you by visiting www.direct.gov.uk/pensions or calling 0845 600 2537 (textphone 0845 300 0169).
■ Help your elderly relatives or neighbours check whether they might be entitled to pension credit. As many as 1.6 million who would qualify are not claiming the benefit, according to the Department of Work and Pensions. Check out the options and entitlement on the Directgov website. The average weekly award is £57 – it could make a big difference.
■ Spread your Christmas shopping over several months, if not the whole year, rather than leaving all your shopping until the last few days. Not only will it help you budget better, if you take more time over the process you stand a fighting chance of choosing gifts that your nearest and dearest actually want.
Research by Western Union indicates that 36m unwanted presents will be given this Christmas because 10.9 million people will end up panic buying at the last minute. Western Union, surprise, surprise, suggests that cash makes the most practical gift.
Sourced from the Guardian Newspaper.
A number of smaller anti-cuts demonstrations have taken place in the last few months
David Cameron speaks on welfare reform at Toynbee Hall in east London Photograph: Lewis Whyld/AP
