5 tips to move from the financial naughty list to the nice list this Christmas

By Dylan Crismale, utilities expert at Finder

Tis the season for getting your finances in order.

With everything except the cost of the Christmas ham going up, the end of the year is the perfect time to reflect on your wallet’s state of play.

See which habits will find you on Santa’s financial naughty list and how you can bump yourself up to the nice one instead.

Staying loyal to the one provider – NAUGHTY

When it comes to financial products, loyalty is a one-way street.

New customers are offered the best deals. Then, within 12 months or less, they’ll see their bill start to creep up while the same product is now being offered to new people for less.

Yet, you decide to stick to the same provider.

Comparing plans once a year – NICE

Taking stock of everything you’re paying for at least once a year and then comparing your options is a tried and tested method of making savings.

For example, the sweet spot for comparing your internet plan is 6 months as that’s typically how long sign-up deals last before the price goes up.

By comparing and switching your services every 6–12 months, you could avoid paying full price ever again.

Not knowing your credit score – NAUGHTY

If you don’t know your credit score and it’s less than stellar, it can affect your eligibility and the rate you’re offered for personal loans, credit cards and other financial products.

For example, there’s an average 9% difference between the minimum and maximum interest rate for a personal loan. A lower credit score can put you out of the running for the best deal.

Monitoring your credit score – NICE

It’s a myth that checking your own credit score incurs a penalty.

In fact, being able to do so is a great way to see how actions like paying your bills and repayments on time can have a positive effect.

Combining this with your credit report will also help you keep an eye out for fraud. For example, you’ll notice if someone takes out a credit card under your name.

Bundling services – NAUGHTY

In theory, bundling saves time and money with the convenience of dealing with just one provider.

However, when you bundle without comparing each service or product on its own, you’re preventing yourself from getting the best deal.

Avoiding bundles and getting the best deal – NICE

Let’s run through the scenario of one company offering to let you bundle your phone and internet plans for a $10 per month discount.

Company 1

Phone: $35 a month

Internet plan: $60 a month Total after bundling discount: $85 a month

You do some research and find there are actually a number of other companies offering the same products for cheaper.

Company 2

Phone: $20 a month

Company 3

Internet plan: $45 a month

Bottom line. Signing up to phone and internet separately in this scenario ends up saving you money as opposed to bundling the services.

Not having emergency savings – NAUGHTY

If the savings in your bank account aren’t enough to get you out of a tricky situation, you may need to take action as soon as possible.

Without savings to cover urgent repairs, medical bills or any other unexpected costs, you might have to take out a credit product without getting the chance to shop around and find the best deal.

If you set aside just $20 a week into a separate savings account, you could have a little stash of $1,040, plus interest.

Saving 3 months of expenses – NICE

It might sound daunting but with a little planning and some lifestyle changes, it can be easy to start saving money.

Saving 1, 2 or even 3 months of expenses (or stretching that goal to 3 months of wages) puts a buffer between your savings account and life.

With 3 months of expenses saved, you’re not only better able to weather the cost of emergencies but also have some buffer if you’re in the unfortunate situation of losing your job.

Money doesn’t buy happiness, but it does provide flexibility.

Using buy now pay later services – NAUGHTY

Buy now pay later (BNPL) services might sound like a good idea in principle, especially at Christmas time, but you could find yourself in a pickle without even realising it.

While many don’t charge interest, it’s easy to miss a payment and then be hit by late fees, lose track of your spending, or develop bad habits that can affect your credit score.

They’re also less regulated and don’t have the same obligations as other lenders such as banks.

Saving up for things – NICE

You might think the opposite of BNPL is layby, but those aren’t much better as they’re often stacked with hidden fees.

In fact, the best ways to pay for things are old-fashioned methods. If it’s a regular bill or payment, make room for it in your budget.

If it’s something you’d like to splurge on, start saving for it. Whatever you do, pick a goal and stick to it.