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Money. Save it. Spend it. Understand it.

  • Ever wonder where your money goes?

    After all, it’s not as if you splashed the cash on expensive cars and luxury holidays, but there’s never anything left over at the end of the month.

    Image of a coffee cup

    Identify your spending habits.

    You probably think that the most you ever spend is a few pounds on a coffee with your friends or the odd app, music download or magazine. These little things may not cost much, but if you buy one every day, the amount of money you spend soon mounts up.

    That’s why budgeting is helpful.

    Write down how much you have coming in every week or month – and what you’re actually spending it on. Make a list of all those drinks and snacks, all those little indulgences – and how much they are actually costing you.

    Then start listing all the things you really need every week or month; things like food, transport and expenses that must be paid. Get started with our budget calculator.

    Add that up and take it away from your income. That’s how much you have left to spend on the things you enjoy.

    If you can, set aside a little for savings. Once you get into that habit, you’ll soon find you don’t miss it, and before you know it you’ll have tidy little sum saved up.

    Key points

    Even small spending habits cost a lot more than you think

    Become a savvy spender

    Buying something you need and being sold something you don’t.

  • Making payments

    Ever thought about how you pay for the stuff you buy?

    Many of us don’t but yet we should, because there are a number of ways to buy the things we want both in-store and online.

    And it’s worth thinking about how you pay, because different methods of payments have different advantages (as well as disadvantages).

    • 1.
      Cash

      It could be said that cash is the easiest way for you to pay for the things you want. It’s in your pocket, you know how much you have and you’ve got immediate access to it.

      If the cash you have is yours there’s no risk of overspending. After all if you don’t have enough to buy something, the sales person won’t let you take it with you.

      And because you’re paying in cash you’ll not have any charges to pay such as interest. In fact in some cases you may be offered a discount because you’re paying in cash.

      But... paying in cash is not as secure as some other methods of payment. Because once you’ve handed over your cash there is no record of your purchase except for your receipt.

      Another thing to consider when it comes to cash is that should it be lost or stolen, then there’s no way of getting it back and someone else can spend it. Whereas with a card, if anything happens to it you can cancel it so nobody else can buy things with it, keeping your money safe, sound and for your spending only.

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    • 2.
      Contactless Payment

      If you have a wave symbol on the front of your Visa debit card then your card has contactless technology built in. Wherever you see the contactless symbol in the UK you can pay for anything up to £45 fuss-free - there's no need to enter your PIN or sign.

      How does it work?

      Contactless payment imageLook for the contactless symbol when paying for items up to the value of £45.

      Contactless process imageTouch the reader with your contactless card.

      Contactless process imageConfirm successful payment when you see the green light and hear the beep. For extra security you may occasionally be asked to enter your PIN.

      Contactless payments are 100% protected against fraud. Although a contactless payment doesn’t usually require a PIN to be entered, contactless usage is monitored on your card and for your protection you may occasionally be asked to enter your PIN when making a contactless payment.

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    • 3.
      Cheque

      If you’ve got a bank account that allows you to write cheques, you can pay for goods and services using a cheque. A cheque is a paper-based method of payment. You fill in the cheque stating who is to be paid and the amount. You then sign it and either hand it to the person you are paying or send it to them in the post.

      When you write a cheque, you are authorising the transfer of the amount stated on the cheque from your account to the account of the person named on the cheque.

      The good thing about a cheque is because it’s gone through a bank it’ll show on your statement as evidence of the payment you have made. If your cheque book is stolen you can cancel the cheque book by contacting us in branch or by phone.

      Before you write a cheque, you should consider how quickly you need the payment to be made. Cheque payments can take up to six working days to be paid to the other person/company once they get to the bank. Therefore, if you need to make a payment immediately this is not the best method of payment for you. In fact, you may be charged by the other party if you miss your payment date because your cheque is still being processed.

      Also, if someone is buying something from you with a cheque, don’t let them take the item until their cheque has cleared and you have the money in your bank account.

      Finally, if you write a cheque but you don’t have enough money in the bank to pay it, your cheque will ‘bounce’, which means the person/company you need to pay wont get their money and they may charge you.

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    • 4.
      Banker's Draft

      A banker’s draft provides you with another way of buying bigger items, such as a car. They are different to personal cheques because they’re taken from the bank's own account, which means they’re paid for in advance. You can rest assured that they won’t be returned unpaid due to lack of funds.

      Using a banker’s draft

      You’ll need to contact your branch to arrange and issue a banker’s draft. You may have to pay a fee and there’s a minimum amount that we’ll issue them for.

      If there’s a problem like the draft being lost or stolen, we might be able to stop the banker’s draft, but only in very limited circumstances and we can’t guarantee that we can always stop it. If this happens to you, please come into the branch where you got the banker’s draft from and ask us for further details.

      Unfortunately, we can’t stop the banker’s draft if you have a disagreement with the person who you have bought the goods from.

      Receiving a banker’s draft

      If you’ve received a banker’s draft, you need to pay it into your account and then the money will be available for you to use 6 working days later.

      If you have doubts that it might not be genuine, it might be safer not to accept it and ask for a Faster Payment or a CHAPS payment instead. These are quicker methods of payment – both are same-day and can’t be stopped once they are submitted.

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    • 5.
      Debit Card

      Plastic - a bank card that’s connected to your bank account.

      When you use your debit card to buy something, the unique number across the middle and your 3-digit security code on the reverse (when spending online and over the phone) lets the bank know you want to make a payment and who to.

      The bank’s automatic payment system then makes this payment for you. It comes straight out of your available balance (it may take a few days for the money to actually leave your account) and if you’ve not got the money to pay for the item, your card will be rejected unless you have an arranged overdraft in place (for accounts offering credit facilities).

      Unlike cash and cheques, you can use a debit card to pay for things online as well as in shops.

      And like cheques because it appears on your bank statement, you’ll have evidence of who you have paid and how much. Plus you’re not charged interest to use your debit card, although there may be charges if you use your card abroad.

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    • 6.
      Credit Card

      Credit cards and debit cards are very similar in the way they work. The difference being when you pay by debit card you use money from your bank account. When you pay by credit card the bank lends you the money to pay for the item you want.

      Every month you’ll get a credit card statement telling you how much you have spent and asking you to pay it back. If you choose not to pay all of it back, you will need to make a minimum payment. If you don’t pay the minimum payment (or miss a payment) you will be charged in line with your credit agreement, which could include missed payment fees and interest rate charges on the outstanding balance.

      The great thing about credit cards is that they are one of the safest ways to pay for something. This is because many come with some sort of purchasing protection.

      Credit cards can also help you to build a good credit score if you pay what you owe every month. And this will come in really handy if you’re looking to buy a car on credit or get a mortgage in the future. It’s important that you only borrow what you can afford to repay, otherwise you’ll pay additional charges and damage your credit score.

      By using your credit card for the more expensive items in life, you’re protected by Section 75 of the Consumer Credit Act 1974. Purchases bought between £100.01 and £30,000 are protected by the Act, meaning if there’s an issue with your suppliers you may be able to claim a refund from your credit card provider.

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    • 7.
      Direct Debit

      Direct debits are payments that are set up to automatically to come out of your bank account every month, three months (quarterly) or yearly. They are usually used for bill payments such as a mobile phone contract.

      Set up by the company you are paying the direct debit to, you agree to allow them to take payment automatically out of your bank account. They can also change the amount they take from your account providing they give you notice.

      Direct debits are good in that you don’t have to remember when your bills are due. So they stop the risk of being charged for late payments.

      If you always have the funds to pay, they’ll also go some way to building a good credit score for you. And once again you’ll not be charged interest on your direct debit payments. Remember, enough funds need to be in your account to cover the payments and to avoid additional bank charges.

      The one thing to watch when paying by direct debit is that the company you are paying is only taking out the amount you’ve agreed to pay, and at the regular intervals you’ve agreed.

      If you do find that there is something wrong with your direct debit payment, contact the company you are paying it to.

      And if you think a direct debit has been paid incorrectly contact your bank immediately, because you’re covered by the Direct Debit Indemnity scheme. This scheme allows you to get a full and immediate refund of the direct debit that has been paid in error.

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    • 8.
      Standing Order

      Standing orders like direct debits are regular and automatic payments from your bank account. The big difference being that you have more control over a standing order than you do over a direct debit.

      With a standing order you set up the amount you pay and when. And it’s only you who can change it, not the company or person you are paying it to.

      Standing orders are ideal if you want to pay a certain amount into a savings account each month. Because it’ll be made automatically without you having to think about it and you’ll soon build up a good savings pot.

      With standing orders though it’s important that you make sure you have the money in your account to pay it or you could be charged.

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    • 9.
      Faster Payments

      A quick way to pay for things via online banking, telephone banking and with standing orders is the faster payments system. Introduced in 2008 it has speeded up the time it takes for payments to go from one account to another by reducing clearing times. Faster payments system is used automatically when making payments.

      In fact a payment made through this system will arrive in the account it’s been sent to the same day, in some cases after just two hours, which is great if you want to make payments quickly.

      If it’s really late in the working day though, the payment you’ve made may not reach the destination account the same day, but you can be sure it will be there first thing the following morning.

      So if it’s a secure, immediate payment you want to make, and the recipient is able to receive it, then a faster payment could just be the way for you to pay.

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    Become a savvy spender

    Buying something you need and being sold something you don’t.

Be a savvy spender

Remember. There’s a difference between buying something and being sold it.

Companies will do almost anything to separate you from your cash. They’ll entice you with special offers, tempt you with savings, and lure you in with unmissable bargains.

Don’t rush into buying something, no matter how hard they try to persuade you that this is your last chance to bag a wonderful bargain.

Instead take the time to think about whether you're really saving money, or just spending it on something you don't really need - and probably won't use!

Savvy spenders know that if you have to borrow to buy it you probably can’t afford it.

If you buy something that’s reduced using a credit card, the interest charged on the card will sometimes cost more than the saving you make – especially if you don’t pay off the balance quickly.

Don’t think monthly – think annually.

A common mistake is to focus on the monthly cost of contract purchases like gym membership and mobile phones. How many times do you hear the words "it’s only £40 a month"?
Before you sign any contracts make sure you work out the annual costs.

It pays to shop around.

Before making a significant purchase, do your research online to get a feel for the best price before looking on the high street. But remember sales people are there to sell you things – it’s their job and they can be very persuasive.

Having done your research (especially if it’s a big purchase), it’s always worth telling them you’re going to shop around and see if you can buy the same thing cheaper – if they know you can, they might even be prepared to negotiate on the price, or throw in something extra as a bonus.

Key points

Always ask yourself: "Do I need it? Can I afford it?" and "Can I get it cheaper?". Focus on the total costs to make a logical rather than emotional spending decision.

Scams, don’t get caught out

It’s your money, don’t let the fraudsters get it.

The information in this guide is not intended to be a recommendation or advice.

Halifax products and services are offered subject to status. Lending decisions and any amount we lend is based on your personal circumstances, you need to be aged 18 or over to apply. Overdrafts are repayable on demand.

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.