The Biggest Waste Of Your Money

Don't waste your money [PA]

The economy might be recovering, but plenty of us still feel a bit broke and few of us have money to burn.

So why are so many of us wasting our cash? And when I say us, I mean me.

I recently realised that a credit scoring service has been taking money from my account even though I have not actually used it in (whispers) three years. Credit checking services are useful but I have been accessing mine elsewhere and not used this one since the company asked for a copy of my marriage certificate, which I forgot to send.

That’s £10 a month I have been paying for three years. That’s £360 I have wasted because it slowly dripped out of my account without me really noticing. £360!

Now, before you rush to the comments to tell me I’m an idiot, I’d like to point out that I am not alone. A worryingly high number of us waste cash by failing to cancel services and subscriptions we no longer need.

Around 3.6 million Brits are paying unnecessary bills, with the average victim forking out an extra £70 a month in unnecessary and forgotten direct debits, suggest research carried out last year by price comparison website moneysupermarket.

Here are some other examples of when we pay for things we don't use

Gym no-shows

Almost half of gym members don't go, wasting around £350 a year each, according to to research by thinkmoney. And 19% of UK adults pay for a gym subscription, yet more than one in ten of them admits that they hardly ever go.

Most of them say they ‘plan on going soon’, but others simply haven’t got round to cancelling or feel too guilty to cancel.

"Rather than simply cancelling their contract or direct debit it seems that most of us have convinced ourselves that we will go to the gym – starting tomorrow!" said Thinkmoney’s Ian Williams.

"It makes sense to review all the direct debits leaving your current account at least once every few months and check that you really are using the things you are paying for."

Pointless phone contracts

The moneysupermarket research showed that 17% of people pay for a phone contract they don’t need. For some, that’s because they’ve allowed a contract to drift on even after they’ve taken out a new one.

However, plenty of people were wasting cash in a less obvious way by continuing to pay full price for a phone contract after they became eligible for renewal. That means they were paying extra even though they had already covered the cost of their handset. Others simply paid for more texts and minutes than they really needed.

Useless utilities

Could you be paying for services that you no longer use? The moneysupermarket research showed that one in five people admit still paying unnecessary bills for utilities they never use. I suspect that’s what my £10 monthly charge would come under.

Unnecessary insurance

The same research showed that 16% of people are paying for insurance they don’t need. Before you scoff and say that you aren’t, it’s worth checking whether you’re paying for insurance that you already have.

After all, many packaged current accounts include perks such as free breakdown or mobile insurance, so it’s worth double-checking that you aren’t spending money on insurance you don’t need.

So what can you do?

Don’t assume that you’re safe and that everyone who forgets a direct debit has more money than sense. The research proves that this is a relatively common phenomenon – direct debits make paying bills easier, but they also make them easier to forget.

Here are some tips for staying on top of your direct debits, and avoiding unnecessary payments.

•    If you spot a relatively small amount leaving your account each month then don’t delay chasing it up and cancelling it – these payments might be small but they soon add up to an amount that will make you kick yourself.

•    When you sign up for a free trial that rolls into an ongoing contract, make a note in your calendar or set an alarm on your phone to remind you to cancel it before you automatically subscribe.

•    Think seriously about your monthly commitments. Is it worth paying for that gym membership or magazine subscription if you don’t use it? Consider scrapping any expenses you’re not that committed to.

•    Find out your rights. Don’t just cancel a subscription without checking whether or not you’re allowed to escape the contract early; you don’t want to pay penalties on top of the wasted money.

•    Spend some time each week or month looking at your current account. If you don’t recognise the incomings and outgoings then find out more.

What do you think? Are direct debits a help or a hindrance? Do people who forget to cancel subscriptions simply have more money than sense? Have your say using the comments below.