This piece first appeared in Reader's Digest in February 2003
 The text here may not be identical to the published text

Every day we waste money. We spend more than we have to, we buy things we don’t need – and often we don’t even like them. The money we have left in the bank sits there doing nothing all day. And then we pay more tax than we need to. Stop it now! With our fifteen top tips from top financial journalists.

1. Reinvest for a return
More than a billion pounds of savings is earning half what it should, just 1.5%, because people have let their National Savings certificates run their course and then not reinvested them. You should redeem them, and reinvest. Interest rates paid by National Savings & Investments are not the highest, but they are backed by a Government guarantee - you will get the return promised and, unlike stock market based investments, you'll always get your money back. Taxpayers should choose the 5 year 65^th issue which earns 2.9% tax free – that’s equivalent to 3.71% if you pay basic rate tax or 4.83% for higher rate taxpayers. Or if you don’t pay tax and you’re over 60 try the Pensioner’s Guaranteed Income Bond for 3.90% a year over five years. Either way, you just about double what your money earns – guaranteed. More from www.nationalsavings.co.uk

2. Think savings - think internet 
Put your cash savings to work too by moving them to an online account. That’s the advice of this year’s Personal Finance Editor of the Year, Jeff Prestridge of the Mail on Sunday. "Check the interest you get on your savings is half decent. If you are not earning 4% gross you should be looking for another home. Go online and check if the interest you get is up there with the best and if it is not it’s painless to shift. It’s your money. It doesn’t cost anything to check or change." You can get 4.25% with Northern Rock Tracker Online. Those are at least 1% higher than the best rate you can get through a bank or building society branch-based account – currently 3.15% on Bradford & Bingley Premier Saver. And while you are at the computer why not move your current account too? Cahoot pays 3.64% on your current account balance – 3.74% more if you do not need a cheque book. That’s 37 times as much as the 0.1% paid by the four big High Street banks! Check out all current rates at www.moneyfacts.co.uk

3. Move on home protection
 If you’ve got a mortgage the chances are your lender sold you the insurance on your home. But the British Insurance Brokers Association reckons you can easily save 15% by moving to another insurer. Research by the AA for its Insurance Premium Index shows higher savings - the average buildings policy is £140 a year and by shopping around you can cut that by £44. Two things to check. First are there penalties for cancelling your policy before it has run the full year – if so wait until it ends. Second, if you are in flood area, your current insurer may offer better deals than a new one. While you are changing why not check out your contents policy too? The savings there be more than a third off on average - a saving of around £38. Make sure you get the same cover and that personal belongings are insured when you are out of the house. To find the best deal either got to a BIBA registered broker or use the internet www.moneyextra.co.uk is a good place to look.

4. Roll back car insurance premiums
The cost of car insurance has doubled in six years but you can save money by looking for the best deals and taking less cover. Online providers such as Tesco often give the keenest rates. AA research shows that you can save £244 on an average comprehensive policy by checking out the cheap deals. Other ways to save are – limit the drivers, especially young ones. Agree to pay a higher excess if you make a claim. If you do not drive more than 10,000 miles a year you can get a discount. Buy online – a 5% or 7.5% discount is often found saving more than £20 even on a low cost policy. Try out www.theaa.com to see what you can save.

5. Ditch excess life cover
Insurance people have a saying ‘Life insurance is sold, not bought’ and boy do the sell it! Chances are your life is insured several times. Ask why. Do your relatives really want a pay-off if you die suddenly? Not usually. If you have dependants – people whom you support financially now – then tailor the life cover to replace what you give them. And ditch the rest. A 35 year old non-smoking man could easily pay £15 a month for £100,000 cover for 25 years – a 40 year-old woman probably slightly more. However, if you have a joint mortgage, it is important to make sure that it is paid off if you die. Otherwise your partner will have to meet your repayments as well as their own.

6. Hold an online sale 
If you collect stuff or you just have a lot of things you want to get rid of, forget the car boot – ebay is the global garage sale. You can sell things to people all over the world and it costs you very little, no more than 5.25% of the sale price and less on more expensive items. If you sold something for £100 ebay would take £3.42. Gail Wall began collecting Royal Doulton in 1983. "I started to find doubles and obviously thought I could sell these. But I never did it seriously until I read about ebay in a magazine three years ago. I got a computer, I didn’t even know how to use the internet when I began, but it is a doddle. Now I sell a lot to the USA or Japan. You just couldn’t do that from a shop in Cleveland. It pays me half my wage. I went from full time to part-time plus I can be at home more for my daughter. I’d say ‘Have a go. If I can do it anyone can.’" www.ebay.co.uk

7. A designer wardrobe at knock-down prices
Dolce & Gabbana, Nicole Farhi, Versace – names to make most women go weak at the knees. Louise Greenwood is a personal finance radio producer on the award winning Money Box programme on Radio 4. She could not indulge her love of designer labels on her BBC salary, but she still manages to buy them. "I am always very careful, I don’t have a credit card or any debt. But I do like good clothes! My label to die for would be Nicole Farhi, a practical trouser suit for work. But my best buy was a dark red, Dolce & Gabbana party dress reduced from £800 to £99. I got this at a warehouse sale near London’s King’s Cross. These are not seconds or second-hand. They are samples, sales stock, end of lines. But always keep a cool head. The allure of something you couldn’t afford at a fraction the cost is likely to make many people stop being sensible. But remember even at those prices they are probably more than you would pay on the High Street for an ordinary equivalent." You can find out about designer sales from Noelle Walsh’s Good Deal Directory
www.gooddealdirectory.co.uk

LESS FOR THE TAXMAN

8. Use your ISA advantage 
"If you do pay tax then think about opening a cash ISA (Individual Savings Account)." Prize-winning financial journalist Tessa Thorniley of The Daily Telegraph has been in the business just eighteen months. But she is already looking after her own money. "My top tip is to make sure you are taking advantage of your tax-free ISA allowances, especially if you’re a higher rate taxpayer because then you save 40% tax on the money your savings earn. Why give it to Gordon Brown when you can keep it yourself?" You can put from £1 to £3000 into a cash ISA each year and all the interest earned is free of tax. Why not use one to save for Christmas or a holiday? Kent Reliance Building Society offers 4.4% from the first pound with instant access. Although it only has branches in Kent you can pay in or take money out by post from anywhere in the UK.
www.krbs.co.uk/savingsinvest/taxfree/minicash.htm or call 0800 783 4248

9. Study up on child benefits 
If you have children claim your children’s tax credit. This year any parent – single or a couple – where the best paid earns less than £34,515 can get £529 a year off their tax through children’s tax credit. It’s the same amount however many children you have, but if one of them was born on 6 April 2002 or later you get £1049. If the income is above £34,515 you may get some credit as long as it is below £42,450 (or £50,250 if you have a baby). In April it’s renamed Child Tax Credit, the amounts go up and you can also get up to £140 a week for childcare through Working Tax Credit. From April the money will be paid to the main carer, usually the mother, through her bank account. Nine out of ten families will be entitled and you can see what you will get and apply now online at www.inlandrevenue.co.uk 

10. Take the pain out of drugs
Each item on a prescription now costs £6.20 (£6 in Wales). But you can save money if you need six or more items in four months by buying a pre-payment certificate for £32.40. Or if you need 15 or more items in a year buy an annual certificate for £89. Most pharmacists sell them. Remember that anyone over 60 and students under 19 get prescription medicines free as do women who are pregnant or have a baby under 1 year old, as do people with certain diseases such as epilepsy or diabetes and those on a low income.

11. See yourself in contact lenses - for less 
Cut the cost of clear vision by using mail order for your contact lenses. You can get lenses at around half the price of High Street opticians. For example, a year’s supply of Surevue monthly disposables costs around £110 at a high street opticians. But it is £78 at www.iris-online.co.uk or £59 at www.postoptics.co.uk Iris also does designer specs at up to £100 off. You will need to have a sight test and a prescription from a qualified optician but if look around you can get a test free or for as little as £5 or £10 – once you reach 60 tests are always free. Whatever you pay, the optician has to give you the prescription so you can take it or send it anywhere to get your contacts or specs. If you go online you don’t get any aftercare and you are responsible for making sure that the lenses are correct.

12. Get health care you can afford 
As you get older the price of health insurance rockets and chances are that you will decide you cannot afford it just before you need it. Why pay £200 or more a month for insurance that still may not pay the full cost of what you need? Give it up now. Set up your own savings account with part of your pension lumpsum or other savings and then pay the equivalent of the premiums into that. Then, rely on the National Health Service for the really serious things it is good at like heart surgery or cancer treatment. And pay yourself for conditions that are not life threatening but are very hard to live with for the year or two that the National Health Service will keep you waiting. £10,000 will pay for one knee or hip replacement, £2000 for varicose veins, or £2500 for a cataract . 
www.carehealth.co.uk 

13. Switch to smart TV Is it worth paying £37 a month – £444 a year – to watch TV? That’s the full Sky tariff. But you can get lots of channels free with FreeView. It replaced ONDigital (later called ITVdigital) and brings you 30 channels in wide-screen, digital quality through your own TV aerial. All you need is a £99 box and there is no monthly subscription. If you still have an old ITVdigital box you can use that free and some modern televisions – called iDTVs – come with a built in digital decoder. Freeview does not include any specialist Sports or Film channels. But you do get news, history, music, programmes for children, shopping and travel, and high quality digital radio. Check out www.freeview.co.uk And remember that the £112 colour TV licence is now free for any home where a 75-year-old lives.

14. Cut the cost of surfing the Net 
If you pay for your internet phone calls through BT, you can reduce the cost by 20% by putting the number as your Best Friend on your Friends and Family list - that could save you £36 a year or more. However, if you are online more than an hour a day you will save money by paying a monthly fee for unlimited access. It costs around £15 but your internet calls are all free. clara.net was recently voted Best Internet Service Provider by Internet Magazine and it has a £4.99 a month option which pays for up to 12 hours a week on the internet www.uk.clara.net or £14.99 for free access anytime.

15. Ring the changes on mobile tariffs
We spend nearly £16 billion a year on mobile phones, but two out of three of us have never checked if we are on the right tariff. Changing could save a lot. Perdita Patterson, editor of What Mobile magazine says "The biggest expense can be calling people on a different mobile network. Make sure your inclusive calls include phoning all mobiles. If you make calls abroad or send lots of text messages, you can pay a bit more each month and cut the cost per call. The key thing is to check your tariff and that it suits what you do with your mobile. Many people buy a mobile off the page from an advert and end up with an expensive option." If you have friends on the same mobile network, then call them on the mobile not from a BT landline – it usually costs much less. For example Orange includes all mobile calls in your inclusive minutes and after that charges 10p a minute to call an Orange phone. BT charges 20p in the day and nearly 16p in the evening. If you spend 5 minutes a day talking to an Orange phone in the week you will save at least £9 a month and up to £30 a month using it rather than BT. Some networks charge you less off peak, late at night and at the weekend – so pick your time to call. Texting is v pplr bt cn b v xpnsv 2. Each message normally costs at least 10p so don’t just text back ‘OK’! What Mobile has a comprehensive list of every tariff.

February 2003

e-mail Paul Lewis on paul@paullewis.co.uk