Guide to a financial detox – Times Money Mentor

A financial detox can be a way to break bad money habits and help you boost your cash.

Detoxing your finances can help you grow your money, save more and pay off any debt.

In this guide we explain:

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What is a financial detox?

Have you even tried a detox diet, where you watch your food intake and cut out things like sugar in an effort to “cleanse” your body of any toxins?

Financial detoxing is a similar concept: taking some time to cleanse your finances and think about where you spend your money and whether you have any bad habits that you want to tackle.

Financial detox: money saving tips

Like a diet for your physical health, you need to be strict and, at the time, it may not feel pleasant. You also need to think about the areas that you want to focus on and over how long.

For ideas about the best ways to save money, do a financial planner over the next month:

1. Cut discretionary spending – no coffees, takeaways, haircuts etc.
2. Stop using your credit card
3. Download your banking app and check your bank balance daily
4. Draw up a detailed budget or download budgeting apps like Cleo or Emma to help you
5. Get a handle on your debt
6. Focus on your day-to-day spending habits – when do you shop and how, how does it make you feel after?
7. Increase your savings rate by 5-10%
8. Talk to your loved ones about money and your financial goals
9. Plan your mealtimes

Adopting healthier habits like budgeting, saving and investing, can have long-term benefits that go beyond the money you have in your wallet.

So much about our financial habits comes down to our ‘money mindset’, essentially our attitude towards money. It may have been formed during childhood and is not something we may even be even aware of ourselves.

If you are struggling to get a handle on your finances, check out our guide to Budgeting for lots of helpful tips.

How to grow your money

There are a few ways to grow the wealth you have. 

• Ask for a pay rise or look at way sin increase your income
• Explore state benefits – Make sure you are not missing out on any government financial help with an online benefits calculator.
• Diversify where you deposit your money – Premium Bonds are safe and offer the chance to win cash prizes. ISAs are tax-efficient. Ensure you are getting the maximum contribution from your employer into your pension – up your contribution to get it if necessary. Shop around for savings accounts to get the best interest rate.
   
• Invest your money – to help grow your cash. Read our beginner’s guide to investing and look at our independent ratings on ready-made investment accounts.
• Invest in yourself – taking on extra training or courses in your field could help you move ahead and increase your income potential.

Talk about money

Talking about money can be difficult but if you are serious about making changes then finding someone to talk to, like a friend or family member, is a great start.

So before you get started on your detox, outline your main financial goals and any concerns to your trusted adviser. Be open to their insights into aspects of your personality that they see may hinder you achieving that goal.

• Are you stubborn? You may struggle to give things up if you want to save and have to work around that.
• Are you complacent? You may need someone who can offer motivational pep talks.
• Are you a worrier? You may need someone who can look through the paperwork with you.

Find out more about how one Times Money Mentor reader, Hannah, saved a third of her salary after managing her stubborn streak.

Find a friend to motivate you to get your finances fighting fit

If you have a partner, it’s essential that they are on board with your plan too. Understand their money mindset too and work with it, for example, if they are a spender, suggest ideas that include nights out and other activities that they enjoy.

Agree not to judge each other’s spending habits – feeling judged leads to defensiveness, which won’t benefit the conversation at all and may affect the likelihood of regular money talks.

Try out our Relationships and money quiz: which animal are you? and read our financial guide to living with your partner for lots of helpful tips and guidance.

Tackle debt

Debt is the biggest cause of financial stress, so get it sorted. This is where knowing your attitude to spending will really help you, not only to tackle existing debt but to help prevent getting into debt in the future.

The average total debt per household, including mortgages, was £63,582 in January 2022, according to The Money Charity. That’s an extra £1,176.40 per UK adult since January 2021.

Here’s how to tackle debt:

1. Open up – debt-related stress will have an impact on mental health and relationships, and could encourage you to make bad financial decisions
2. Have a plan – Create a plan for clearing the debt, starting with a budget. Your financial detox will help identify bad habits
3. Get ‘appy – There are lots of free apps and websites including Cleo*, a virtual financial assistant, Tully, a digital debt adviser, and Updraft.
4. Free financial advice – There is lots of free support from Citizens Advice and the debt charity StepChange

If you’re dealing with a gambling problem, Gamcare can help.

If you want some inspiration to get into the savings habit, then check out our article: 20 simple ways to save money.

Get rid of bad habits

Know thyself. Before you can start to rid yourself of your bad money habits you need to understand why they are there in the first place. Consider your ‘money mindset’:

• What is your attitude towards money?
• How does it makes you feel when you borrow, spend and save?
• Do you spend when you are happy or sad?
• Are you impulsive and prone to spur-of-the-moment decisions like booking a last-minute trip?

Think about ways that you can work with your money mindset:

• Set up a time-out – when shopping in store or online, walk away for an hour or so to think about whether you really need or can afford that item.
• Substitute – enjoy shop bought coffees, get a good coffee machine at home; if you love buying books head to a charity store instead.
• Download an app – some banking apps allow customers to block certain types of spending or set spending limits. There are also a number of round-up apps that can help you save money whenever you spend.
• Use cash – a temporary all-cash routine can be an effective daily reminder not to overdo it. Take out what you think you will need at the start of the week, and stick to that.
• Use your inertia – open a savings or investing account, set up a direct debit and leave it to grow. Let your laziness in cancelling things like subscriptions that you don’t use work in your favour.

Robo-advisers

If you are new to investing, you might prefer a ready-made investment account. These accounts are a simple way to invest outside of tax wrappers such as pensions and ISAs. Find out which providers scored highly in our independent ratings here.

A so-called “robo-adviser” will ask you some questions about money, such as how much risk you’re comfortable taking, shows you a suitable investment portfolio, and invests your cash for you. With some of them, you can open an account with just £1.

If you want to find out more about investing and how to get started, check out our beginner’s investment guide.

Drastic times…

If you’re constantly chasing your tail with your salary then you may have to commit to something quite drastic such as a “no-spend month”.

Find out more about how Times Money Mentor reader Claire saved £1,300 to recuperate from Christmas spending by having a no-spend January.

How much are my bad habits costing me?

Some bad habits cost us money, others can kill us – and still cost us a lot of money:

• Cigarettes – A 10-a-day habit can easily cost you £1,825 a year
  • Solution: Cut down or ideally quit altogether – visit the NHS Smoke Free website
• Coffees – One cafe-bought coffee every work day at £2.50 each will set you back £650 a year
  • Solution: buy a coffee machine and take a thermos flask to work
• Lunches out – £7 every weekday on lunch will cost £1,820 a year
  • Solution: make your own

There is evidence to suggest it takes 66 days to form a new habit so mentally dedicate that amount of time to making any of these changes.

Cutting back on takeaway coffee can save hundreds a year

Start saving

Some people find saving a doddle, while others need a little more help – and yet it’s essential to build up that emergency savings pot

If you do struggle to save money, why not take on a financial challenge?

What is a financial challenge?

A financial challenge is quick simply setting yourself a small challenge or goal to encourage you to get into the savings habit.

For example, trying a month or week where you don’t spend on anything except essentials.

There’s also the 1p challenge. This is where each day of the year, you save what you saved the day before, plus a penny more. So you start by saving 1p right the way up to £3.65 by the end of December.

For money saving tips, try our 10 money-saving challenges.

Other money saving tips

1. Cut the unnecessary subscriptions and memberships that you don’t use anymore
2. Consider a systematic no-spend day, week or month – no lunches out, coffees or drinks with friends
3. Get a side hustle – mystery shopping can earn you £600 a year. If you can play piano or speak a foreign language, for example, you could tutor for about £30 an hour.
4. Spend less on rent – try to negotiate a lower rate, move somewhere cheaper, or consider a property guardianship
5. Have a holiday-free year – sticking to day trips and cheap weekends away can save a significant chunk
6. Shop around for better utility deals
7. Consider supporting charities with your time, rather than your money
8. Borrow rather than buy. Need a new laptop? Maybe you can borrow an old one
9. Swap nights out with friends to nights in with friends
10. Get free nights out and culture by signing up to the right mailing lists
11. Many local authorities offer leisure cards that provide discounts for local sport facilities, theatre, museums and cinemas
12. Have a no-presents rule for a year in your family and circle of friends
13. Spend less on food. Apps such as Too Good To Go offer unsold food from top eateries at much cheaper prices in its aim to prevent it going to waste
14. Improve your credit score – if necessary – to save money in the long term. If you are looking for a good mortgage deal, a credit card with an interest-free period or a personal loan with favourable terms, you will need a good credit score. 

For other ways to get help with finances, follow our guide to the best budgeting apps.

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