There are many companies that provide insurance and most of us will use one of them to buy insurance as most people have some sort of insurance cover. Insurance can be expensive though and so we may wish that we could pay less. It could also be quite a significant chunk of our outgoings. We may therefore consider whether it might be a good idea to move to a cheaper insurer to try to save some money. However, many people do worry about this because they wonder whether they should trust a different insurer to the one that they normally use. They may worry that this is a risk though and so may wonder whether if it is worth doing, so it is worth giving it some thought.
What are the risks?
There are a few risks that you could take when you switch insurers. The first is that you will not be getting such good value for money. If you pay less money then the service you get may not be so good. It could be the case that you will not have so much cover as you did with your previous insurer. This means that if you do make a claim, then you may not be covered. You may also find that the customer service is not as good and so if you need to get in touch with them, you may not get such a speedy, polite or efficient response. Therefore, this could worry you and make you feel like you want to stick with the company that you are with.
Is it worth the risk?
You will need to decide whether you think that it is worth saving the money and taking this risk. You can reduce the risk by doing some research about the different insurers first. You will find that there are some websites which have information about how good the customer service is of various insurers (moneysavingexpert.com is a good place to start). This will allow you to decide whether you think that you are confident enough to swap to a different provider. It is also worth bearing in mind that you will normally sign up for a year, if you are not happy in that year you can switch to another. Of course, the main risk is that if you need to make a claim in that year and you have difficulty getting the money, then you could struggle with this. However, most people, fortunately, do not have to make claims and only take out insurance for peace of mind and therefore do not make claims anyway.
Are they Alternative Ways to Save?
It is worth thinking about whether there are any other ways that you can save money as well as switching insurer. Firstly, when your renewal comes, make sure that you get in touch with your insurer and see whether they will reduce the amount that they are charging. Often, they will just reduce it and sometimes by quite a significant amount of money. Also try to keep your claims down to a minimum as the more claims you make, the higher a risk you are to insure and the higher your premiums will be. It is also good to check your policy to make sure that you are not paying for more cover than you need. Sometimes there are optional parts that you can leave out and if you do this then the premium will be cheaper. Of course, you will need to think hard about whether this is something that you feel is important or not, to keep in the policy.
There are many people that will search around each year when their utility contract comes to an end and will see whether they should switch to a cheaper company. However, there are also people that always stick with the same one and do not change at all. You may wonder which it is best to be like. It is therefore worth considering why people may or may not switch.
Utility providers will differ in how much they cost. This means that there will be some that are cheaper than others. It tends to be the case that it is the larger and more well-established companies that can charge more. They can get away with charging more because people have heard of them and are more likely to use them because they trust them. However, they can be significantly more expensive and switching to another provider can allow you to save a significant amount of money. The savings may seem small per month, but over the years they can add up to a significant amount.
There are some people that like to stick with the same provider all of the time out of brand loyalty. This is because they trust that provider, they know what to expect from them and have probably never had any problems with them. Therefore, they make sure that they always stick with them. This can be understandable but it is worth thinking about the fact that if you do not try any different providers then you never know what you are missing. You could not only be missing out on lower prices but also on a better service.
Reputation of Provider
Some people worry about the reputation of the provider that they are choosing. They wonder whether they will swap to one that might not treat them very well. It is worth thinking about how much contact you actually have with a utility provider though. Most people will just use the service and pay their bills, perhaps by direct debit and very rarely ever get in touch with the provider at all. This means that whether they have a good reputation or not might be completely irrelevant.
Hassle of Switching
There could be a worry about the hassle of switching over to a new provider. Actually, they do make it very simple because they want you to be able to switch over easily. You will need to give them your details, which can often be done over the phone or online and they will need you to read your meter on the day it switches over. That is pretty much all you will normally need to do and so this is very straightforward. Even if you do this every year it will not take that long and it could be well worth it if you save money.
Money you Owe
One set back could be a problem if you are in debt to your utility provider. If you owe them money then you will need to pay this before you can switch to another company. You might be able to afford to do this, but this will depend on your situation. Some people pay a standard amount each month for their electricity and gas and they will therefore end up building up some debt over the winter which they pay off over the summer. This helps to spread the cost but does mean that if you are looking to switch in the spring then you may owe quite a big chunk of money that you will need to pay off first, which might be tricky.
There are soe people that like to give money as a present to both children and adults and some people that like to give gifts. It is something which many people are split on but it is worth having a think about the two options and considering which is likely to be the best for you to do.
Advantages of Money
Giving money can mean their children have the opportunity to learn to save. They will be able to put the money into their bank account and watch it grow or put it together with other money they have or receive to buy something more expensive. Both of these will teach them important lessons. One about saving for when they need money and the advantages in having some savings to fall back on as well as being able to see their interest grow. The other to learn that sometimes we have to wait to buy things that we want. If we learn to save up for things we want, then we are less likely to borrow money just to get something quickly.
Even if they do decide to spend them money, they will be able to buy something that they want. They might enjoy being able to choose items that they wish to have rather than having gifts, which perhaps may not be things that they need or want.
Advantages of Gifts
Some people really like shopping for gifts. They get a lot of pleasure out of choosing items to give to people and therefore want to buy gifts for people. They might also think that it looks like they have made more effort if they buy someone a gift rather than if they just give them money. There is sometimes a fear that it will look thoughtless and lazy to give money even if there are good reasons behind it as explained above.
Some people like receiving gifts rather than money. If you know people like this then it is better to give them something rather than money or else they may just be offended.
It can also be tricky if you can only afford to spend a very small amount. If you buy a gift you may be able to put it on a credit card and spend more than you could afford if you drew out the cash. Or you could consider applying for a no credit check loan. You may also find that if you find a sale, bargain or other sort of good deal, you will be able to buy a gift that looks like you spent more money than you actually did so you will be able to hide the fact that you do not have much money. Although it should not be anything to be ashamed of.
Therefore, it could be the case that whether money or gifts are most appropriate many depend on the recipient and what they like as well as what your point of view is on the matter. It is worth some careful thought though as using money as gifts, particularly for children could help to teach them some responsibility with money. Often, they will get a lot of gifts and perhaps having some money will make the occasion less over whelming and could mean that they will be able to buy something that they want once the novelty of those gifts has worn off. It can be difficult if the children’s parents want them to have gifts and you feel money will be better and you may have to please them rather than doing what you feel is the best. Sometimes it is better to just to try to avoid falling out with someone and you could always switch to giving money once that child gets older.
There are some parents that decide that they would like to give their children a start in life by giving them some money each month. However, some parents choose not to do this. If you are considering whether to do this, it is worth thinking about what the pros and cons are and then you can decide whether it is the right thing for you to do.
Gives them a Start in life
Many parents want to help their children to get a good start in life. This could be done in lots of different ways but some do it by putting some money aside for them. They want to give them something, perhaps when they turn eighteen, which will help them out. This could be towards paying for university, for a deposit on a home or towards a car and driving lessons. There are a lot of potential expenses that young adults have and so it is very useful for them to have some help at this age, even if it is just a small amount of money.
Stops them Seeing the Need to Save Themselves
Some may argue though, that if you give young people a lump sum of money, they will not see the need to save money for themselves. They might feel that will not need to bother putting the effort into saving up for things if you are going to pay for things, for you. However, this may very much depend on the child as well as the way that you have raised them. If they have already been shown how to save up money through childhood, then this is less likely to be a problem for them.
They may Spend it Recklessly
Sometimes when people come into money they will spend it without really thinking about whether they are being sensible with their purchases. It can be surprisingly easy to spend money quickly on all sorts of small things which really add up. Buying an expensive car, some designer clothes, some tech like phones and contracts to go with them, large television and computer then perhaps some things for the home and a lot of money can disappear very quickly. Some parents prefer to wait to give their children money when they are a lot older so that they can trust them not to spend it like this or perhaps advise them on how to spend it or even buy them things rather than giving them the money.
Might Leave Parents Short of Money
Putting some money away each month could possibly mean that parents are short of money themselves. This can be the case with some parents that will struggle to put money into an account for their children as well as pay for everything that is needed. The more children that they have, the more difficult it is likely to be. It may also be the case that it is more affordable at certain times than others. Of course, it could be possible for them to only pay money in when they can afford it.
So, you can see that it is not a very straightforward decision. It is something that you will need to think about. You will want to do the same for each child that you have and so this will have an impact on whether it is something that you can afford. You might also want to think about whether it is something that you want to do at all or whether you think that it is better for them to learn to save money for themselves, rather than you doing it for them. You may also want to tell them where to spend the money so that there is less risk that they will spend it on things that will not benefit their future.
There are many different places that you can put your money and premium bonds is one that many people like the idea of using. However, it is good to think about whether they will be the right choice for you. They do have a selection of advantages and disadvantages and it is well worth knowing what there are before you decide whether they are a good idea for you.
Backed by HM treasury so your money is safe and secure
Gives you the chances of winning lots of prizes up to a million pounds
You can take your money out instantly
You only need £25 to open an account and can add in £25 or more amounts until you have £50,000 total in there
No tax to be paid on any returns
Better odds of winning a prize than the lottery
Return can be low particularly if you have a small holding as odds are low that you will win
There are limited prizes so you may not get any return at all
Can only pay in £25 or above so if you only have a small amount you will not be able to put it in
You will therefore have to think about whether the advantages outweigh the disadvantages. It may look like there are more advantages but this does not mean that it will really suit you. Consider how much you have to pay in as this is a key factor. It is the case that people with larger holdings are much more likely to win a prize. This is because the odds of winning tend to be 1 in 25,000 so if you have 25,000 bonds (each bond costs £1) then you will be likely to win one prize a month. Therefore, if you have less than this, chances are that you will less often. If you have a very small amount of bonds, then you may never win. Of course, each bond has the same chance of winning which means that you can win, but by buying more bonds you greatly increase the chances that you will win.
As an alternative to buying lottery tickets it can be a great account to have though. Consider, how much you spend on these and think about how much better it could potentially be if you used the money to buy premium bonds instead. You would still be entered in a draw and potentially win a prize, but you will be able to get the money back that you spent on it. As you have to deposit a minimum of £25 you may need to save up a bit of lottery money, perhaps buy bonds once a month or even once every few months, but it can give you better value as you will still get something back.
You should consider though, that there may be other ways to save money that will give you a better return. There are many savings accounts that will give you a guaranteed return each month and that could be a better option. You have to think about how much risk you are willing to take and whether you would rather have the chance of winning a significant amount or whether you would prefer to ensure that you have some interest even if it is less than you would get if you won a prize. You will be taxed on this interest too, so that may have a bearing on it, especially if you have already used up the allowance you have for non-taxed interest per year.