How to help your finances now the kids are going back to school

Mother and pupil and kids holding hands going to school in first class with schoolbag walking to school bus. Photo: Getty Images

The school holidays have come to an end and some parents may well be reeling over the costs of supplies to kit out their children for the new school term.

Indeed, according to research from Mintel, back to school costs has risen from £855m to £1.2bn this year.

Money experts Moneyfacts has drawn up some top tips on how consumers can improve their finances as the kids return to school.

Plug the pension gap

Parents may well put off making significant savings into their pension as they will not be able to access their cash for some time – compared to a savings account – however, they could be setting themselves up for a pension shortfall.

It’s vital Brits seek advice to ensure they have a comfortable pot ready for their retirement, as it will only get harder to plug the gap as they get older.

Saving just £100 extra per month for the next 25 years will amass £30,000 and, while this sounds a lot, it may not last long or could be just a one-year salary for some.

Remortgage and reduce monthly repayments

One way to reduce essential outgoings would be to remortgage.

There have been significant cuts to deals in the five-year fixed market, as well as more deals surfacing for even longer terms, such as 10-year and 15-year fixed deals.

READ MORE: The hottest back to school tech deals for 2019

Shift credit card debts to an interest-free card

Turning to a credit card to help cover expenses is convenient, but it can cost. Consider shifting debt to an interest-free balance transfer card to avoid incurring interest charges.

According to The Money Charity, the average credit card debt per household is £2,625 and if a borrower only paid the minimum repayment per month, it would take them over 26 years to pay it off.

MBNA is currently offering one of the longest offers, which has a 29-month interest-free deal on balance transfers for a fee of 2.75%.

This may not be the best choice for some borrowers though, as they could instead apply for a fee-free deal, such as the 23-month 0% balance transfer offer from NatWest.

Consider a low-cost loan to consolidate debts

Sometimes debts can get out of hand or there are too many credit cards open with various balances, so it would be wise for consumers to consider an unsecured personal loan to tackle their debts.

Loan rates are much lower than a few years ago – today the lowest rate on offer on a £10,000 loan over five years is 2.9% from a few lenders, including John Lewis Financial Services.

This is up from 4.1% for the equivalent amount and term, from Sainsbury’s Bank just five years ago.

Switch current accounts for some free cash

Switch current accounts for a free cash incentive. Royal Bank of Scotland recently announced it would give £150 to consumers who switch to them using the Current Account Switcher Service (CASS).

Other examples of cashback perks include First Direct, which offers £50, while customers who switch to M&S Bank can get up to £180 in gift vouchers when they switch and stay.

Build a savings fund

There is help available with government schemes, such as the Help to Save scheme designed to encourage working people on Tax Credits to save.

HMRC last week revealed more than 132,000 Help to Save account holders are eligible for bonuses totalling £14m – where consumers have deposited more than £31.4m.

The scheme’s 50p per £1 initiative means it will pay a maximum bonus of £1,200 over four years.

READ MORE: Why back-to-school shopping still benefits big retailers