When performing a Financial Health check, you will be reviewing important aspects of your finances. In my previous blogs we explored how to analyse Income, Long-term loans, and Short-term debt. In this blog will look at Fixed Costs.
Fixed costs are the costs you have to pay without fail. Asking the following questions will help you to start making long to medium term plans.
Are you getting value for money?
Costs in this section need to be reviewed carefully as you can easily overlook a bill that you could have made a saving on. In the UK, it is mandatory to have car insurance when you drive. When I got my first car, in the second year of owning it, I went to my insurance provider and requested a quote for the coming year as the contract was coming to an end. They gave me a quote of £1,700 which was £200 higher than what I had paid the first year. I went to a comparative website and they gave me a quote of £800. When I went back to my provider to cancel the contract, they agreed to match the quote I had received of £800 meaning that year I could have been charged £900 more than the market price if I had not checked.
Another saving can be made by comparing electricity and gas providers. According to Ofgem, switching electricity providers can save you around £230 per year and the process is now a lot easier. It takes up to 3 weeks to complete with a 14-day cooling off period.
Is it really needed?
Sometimes we get into contacts for services that are fixed and are luxuries i.e. cable TV, broadband etc. If you spend most of your time at work and weekends at friend’s houses, it may not be necessary to pay for 500+ channels that you hardly watch. It is important to be honest when reviewing the costs. Savings can be made and the money invested.
Taking control and reviewing your fixed costs regularly will enable you to have the current rates, discontinue unused services thus reducing your expenditure.