Swipe to view
Bills and budgeting
Habits for a healthier wallet
We asked our customers to tell us their top tips for managing their money. Here's what they had to say.
Wise words from independent financial experts
Founder of the Young Money Blog and author of Spare Change. Iona is also a freelance journalist and public speaker.Meet all the mentors
Don’t worry if you’re feeling a bit bamboozled by the lingo – you’re not alone. Money-related terms can be a bit daunting to get your head around at the best of times. That’s why we’ve compiled the below to help you brush up on the basics.
AER stands for Annual Equivalent Rate. An AER is intended to make savings accounts easier to compare. The standard AER comparison is based on the interest you’d get by putting money into an account and leaving it for one year.
APR stands for Annual Percentage Rate. This is the official rate for borrowing from a lender and includes interest and all other charges. This rate varies from lender to lender.
Budgeting starts with working out what money comes in and goes out each month. Once you’ve done your sums, you can work out a budget to stick to and put yourself on a sound financial footing for the future.
- Budgeting apps
In a nutshell: an app for your phone or computer that helps you manage your money. Some budgeting apps give you an overview of all your income and expenditure, and they can help you manage your money more effectively.
- Credit score
Your credit score is used by lenders to determine the level of risk in lending to you, and it’s based on your history of paying credit back in the past. Every time you make a new application for credit – including bank accounts, credit cards and mortgages – your credit score will be used. A good score makes it more likely you’ll be accepted. Conversely, being turned down for credit has an adverse effect on your score.
Debt is the amount of money you owe to a second party – typically lenders or creditors. It can be owed to one provider, or more commonly spread across multiple sources for credit cards, overdrafts and mortgages.
- Emergency fund
Like it says on the tin: an emergency fund is money you’ve put aside for emergencies. These may include unexpectedly losing your job, or your boiler packing up. It’s recommended that you keep around the equivalent of three – six months’ salary aside in an emergency fund.
- Financial planning
In a nutshell, this means creating a plan for your finances. This can involve long-term goals, like planning for your retirement or putting a will in place, and short-term goals such as getting your finances in order.
- Joint account
Typically, a bank account that couples (or business partners) set up so both parties have access and are allowed to deposit and withdraw funds. Joint accounts are particularly useful for streamlining all of your income and outgoings in one place.
- Prepaid card
A card that allows you to add credit to it in advance of using it.
- Price comparison website
When you want to get the best possible deal, and see a range of prices from multiple providers, you can use a price comparison website. Mortgages, holidays and insurance are common searches on price comparison websites.
- Interest rate
When you borrow money the interest rate indicates how much you’ll pay back on top of the amount borrowed. For example: if you borrow £10,000 with an interest rate of 6% per annum, you’ll pay 6% of £10,000 every 12 months until it’s paid back. That’s £600 per year in interest in case you’re wondering.
- Spending diary
When you keep a note of all the money you spend. A spending diary can help you budget more effectively as you’ll know exactly how much you’re spending on coffee each month (clue: it may be more than you think).
- Standing order
This is when you give your bank an instruction to pay a set amount at the same time each week or month. These are usually set up for rent, utility bills and other regular outgoings.
An overdraft is an agreed extra limit of credit on your bank account which allows you to go below zero. Interest is applied in line with the terms of your provider so it’s always best to check the exact fees in advance.
Everyone needs help from time to time and so you may find these links handy.
Money Advice Service
Advice on budgeting and managing your money.
Money Saving Expert
How to improve your credit score.
Debt and consumer advice service, covering everything from managing debt to negotiating with creditors.
Financial Services Compensation Scheme (FSCS)
Top tools and apps to help teach kids about money.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.