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Budgeting and money management

We all worry about money sometimes, but it’s important that we don’t let money worries control us.

When you find yourself worrying about money, the best thing to do is take action. By being aware of your spending and saving habits, you can start to have more confidence in your financial decisions and create a more positive relationship with your money – however you choose to manage it.

It’s not always easy to keep your finances in check, so a bit of financial planning can be a useful thing to do. Everyone’s different and there’s no one right way to do it, however to help you figure out the best approach for you and your plans, we’ve put together some helpful information.

Show the section Need help with budgeting?

Need help with budgeting?

Without a full understanding of your spending and saving habits, it’s easy to find yourself with too much month left at the end of your money. By taking a bit of time to work out your income and outgoings, and assess your individual situation, you can create a realistic budget to help you feel more in control.

Creating a budget can be a daunting thing, however the key is to be honest with yourself and really think about how you spend your money: even down those snacks you buy yourself whilst out and about.

If you find that a monthly budget just isn’t the answer for you, you could start with a daily, or even weekly budget instead. It’s all about finding what works best for you and your plans.

How do you create a monthly budget?

Step one: Know how much money you have coming in

It might sound obvious, but it’s really important that you know how much money you have coming into your accounts each month. This is usually the combined salary of everyone in your household, plus money from any benefits you might be getting.

Step two: Work out how much money you spend each month

Some of the big things that you spend your money on will be your mortgage or rent, groceries, utilities, childcare and commuting. It’s important to understand the difference between these needs (the things you can’t really control) and your wants (the things you can). Your wants, like a new outfit or a lovely houseplant, can soon add up – but a little treat every now and then can give you something to look forward to, so it’s a good idea to allow for one-off costs in your calculations. By creating your budget, you’ll know how much you can spend on your wants, while ensuring you’ve got enough money left to cover the things you need.

Step three: Create your monthly budget

Once you know what money is coming into your account, and what’s going out of it, it’s simply a case of working out the difference between the two. This will be your monthly budget (or weekly budget if you choose to do it that way).

Now you’ve got your budget in mind, you can have a think about how much you’d like to transfer to your savings, and whether you need to make adjustments to how much you’re spending.

Remember that no two months are the same, so spending a little bit of time checking in on your finances each month will help you understand your spending behaviour over a longer period of time, meaning you can feel more confident about the financial decisions you make.

Need a little extra help with your finances?

We’re here to help you feel more confident about your money. If you would like some help, we’re more than happy to talk to you about your finances and any money worries you may have. Simply give us a call on 03 456 100 188 or send us a message via your App or Online Banking and we’ll organise a call back for you.

Show the section Your savings options explained

Your savings options explained

While it’s not always possible to save money, if you do find yourself with a bit of extra cash at the end of the month, you might want to think about putting some away, so you can save for something special, or just to get a rainy day fund in place.

Starting a savings habit, even if it’s a really small amount, is a good step towards having a positive relationship with your finances and feeling good about the future. Small savings can make a big difference if an unexpected cost crops up, and knowing that you’ve got a plan in place can help to alleviate any anxiety and stress you might be feeling.

There are lots of savings options available– from everyday, easy access savings to longer-term investments (capital is at risk with investments). It’s up to your individual habits, goals and plans as to which one may be right for you.Your savings options explained

Take a look at all our saving options>

The one for tax-free interest

You can make the most of your tax-free interest allowance with our first direct Cash ISA. You can save between £1 and £20,000 each tax year, with easy access to your savings whenever you need them.

Cash ISA

The one for easy access savings

With our flexible Savings Account, you can save as much or as little as you like, as often as you like. With no commitment and easy access to your money when you need it, our first direct Savings Account is a great place to put money aside.

Savings Account

The one for longer-term savings

If you have a lump sum of money that you can save and you’re happy not to access it for a fixed period of time, you might be able to get a higher interest rate with our first direct Fixed Rate Savings accounts.

Fixed Rate Savings

The one for your future plans

If you’re making plans for further in the future, you may want to consider medium to long term savings options. For example, Pension plans and Sharedealing schemes may be worth thinking about.

Get some independent pension advice > Opens an overlay [Will show a security message first]

Find out more about our Sharedealing service >

Show the section Ways to borrow money

Ways to borrow money

From broken washing machines to emergency home repairs, sometimes life throws something at you that you just didn’t expect. There are lots of different ways that you can borrow some extra cash when you need it, but not all of them may be right for you and your situation.

Before you decide if borrowing is the best thing to do, take a look at the information below on some of the options available to you.

Overdraft

Think of an overdraft as short-term financial flexibility in your current account. There are usually better (and cheaper) borrowing options if you’re looking to make a big purchase or want a little longer to pay it back.

Find out how our overdraft works Link to our overdraft information

Think of an overdraft as short-term financial flexibility in your current account. There are usually better (and cheaper) borrowing options if you’re looking to make a big purchase or want a little longer to pay it back.

Find out how our overdraft works Link to our overdraft information
Personal Loan

When you borrow money using a loan, you’ll have to pay the money back, plus interest, over a set period of time. With a first direct Personal Loan, you could borrow between £1,000 and £50,000. It’s better suited for big, one-off purchases like home improvements or buying a new car.

Create your Personal Loan LInk to our Loans page

When you borrow money using a loan, you’ll have to pay the money back, plus interest, over a set period of time. With a first direct Personal Loan, you could borrow between £1,000 and £50,000. It’s better suited for big, one-off purchases like home improvements or buying a new car.

Create your Personal Loan LInk to our Loans page
Credit Card

A credit card allows you to borrow money up to a pre-approved amount, which you can use to pay for things.

Providers then charge you interest on the amount you spend. Credit cards usually have high interest rates but there is generally around 30 days before interest will be charged if you don't carry your balance over month to month.

first direct offers two different credit cards - one is designed for balance transfers and one is designed for making purchases.

See our Credit Cards

A credit card allows you to borrow money up to a pre-approved amount, which you can use to pay for things.

Providers then charge you interest on the amount you spend. Credit cards usually have high interest rates but there is generally around 30 days before interest will be charged if you don't carry your balance over month to month.

first direct offers two different credit cards - one is designed for balance transfers and one is designed for making purchases.

See our Credit Cards
Mortgages

This is the biggest loan of most people's lives - but do you know the difference between fixed, tracker, variable and offset? first direct mortgages come in all shapes and sizes, and we'll help you find the one for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Please call us on 03 456 100 173 for joint applications or if there are any changes in your circumstances coming up - like an increase in outgoings or reduction in disposable income - that could affect your ability to repay what you have borrowed over the whole term.

Mon to Fri 8am to 8pm, Sat 8am to 6pm and Sun 9am to 6pm.
More about our mortgages

This is the biggest loan of most people's lives - but do you know the difference between fixed, tracker, variable and offset? first direct mortgages come in all shapes and sizes, and we'll help you find the one for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Please call us on 03 456 100 173 for joint applications or if there are any changes in your circumstances coming up - like an increase in outgoings or reduction in disposable income - that could affect your ability to repay what you have borrowed over the whole term.

Mon to Fri 8am to 8pm, Sat 8am to 6pm and Sun 9am to 6pm.
More about our mortgages

Show the section Help with debt management

Help with debt management

If you’re struggling with debt, or you feel there’s a danger that your finances might get out of control, you’re not alone. Many people have money worries or problems with debt – it’s nothing to be ashamed of. The most important thing is that you take positive steps to help improve your situation.

Show the section Your insurance and protection options

Your insurance and protection options

We all worry about the things we have, and the things and people we care about. Having insurance in place can help bring you peace of mind that you’re protecting what’s important to you.

See all our insurance products >

Home Insurance

Your home is so important, a place of safety and comfort and filled with your valuables and treasured possessions. With first direct Home Insurance, you’ll have comprehensive cover that you can rely on to help protect your home and the stuff you love.
Comprehensive 5* Home Insurance Link to our Home Insurance page

Your home is so important, a place of safety and comfort and filled with your valuables and treasured possessions. With first direct Home Insurance, you’ll have comprehensive cover that you can rely on to help protect your home and the stuff you love.
Comprehensive 5* Home Insurance Link to our Home Insurance page
Life Insurance

We are currently unable to offer life insurance online to new customers. We hope this will be a temporary measure so please keep checking back here for updates. We can help provide life insurance for customers applying for a first direct mortgage. Please speak to your Mortgage Advisor for more information.
Find out more about our Life Insurance Link to our Life insurance page

We are currently unable to offer life insurance online to new customers. We hope this will be a temporary measure so please keep checking back here for updates. We can help provide life insurance for customers applying for a first direct mortgage. Please speak to your Mortgage Advisor for more information.
Find out more about our Life Insurance Link to our Life insurance page

Show the section Common questions about using your overdraft

Regular overdraft use

1. What does ‘regular overdraft use’ mean?

If you’re overdrawn for most of the month over a 3-month period or more, we’d see this as regular overdraft use.

2. I’ve been using my overdraft regularly for a while – why is it an issue now?

As a responsible lender we often review overdraft limits to make sure they’re still what you need. Overdrafts are made for short term borrowing and so generally have higher interest rates than longer term borrowing products, such as a Personal Loan.

If you’re using your overdraft regularly this could be costly. We’ll get in touch with you to discuss these costs and how you might be able to avoid or reduce them. We’ll also share alternative options to an overdraft that might be worth considering.

3. What happens if I use my overdraft regularly?

If we notice you’re using your overdraft regularly we’ll write to you and let you know, as well as offering some practical tips on how to reduce your use.

We’ll take another look at your account to see if you’ve been able to reduce your overdraft use, and if not, we’ll be in touch again.

If you’re still unable to reduce your overdraft use it may be that you’re experiencing some financial difficulty. It’s really important that you don’t ignore the letters and call us as soon as possible on:

03455 873 951 Mon to Sun 9am-5.30pm.

These situations often don’t go away on their own and we may consider making changes. This could include changing your overdraft limit. We’ll get in touch to let you know what we need to do to help you reduce your borrowing.

4. How can I reduce my overdraft use?

Here are some practical things you can do to help reduce your overdraft use and monthly outgoings:

budget: know exactly where you are financially by listing your income and outgoings, and regularly checking your balance
set a spending target: even a small reduction in overdraft interest will save you money over time
check your bills: shop around and make sure you’re not paying more than you should
cut back: are there any non-essentials you can reduce or stop?
check your interest: you can view your monthly statement and pre-notification of charges, and use our overdraft cost calculator – you may be surprised how much it adds up over time
use your savings: (if you have some) overdraft interest is generally much higher than the interest you earn on savings – it’s a no-brainer
explore cheaper alternatives: depending on how you use your overdraft there might be cheaper ways to borrow over a longer term.
chip away at your overdraft: pay whatever you can afford – even small amounts add up over time
reduce your limit: reducing your limit bit-by-bit can reduce the likelihood of falling back into your overdraft.

Get more help and support

Debt can be worrying and paying off your overdraft can be tough – but there is help and support available. We’ve got lots more information about managing your finances and you can also get free independent advice from:

StepChange Debt Charity

Money Helper

visit moneyhelper.org.uk Opens an overlay [Will show a security message first]

National Debtline

Citizens Advice

Frequently Asked Questions

Why have I received a letter from you about using my overdraft regularly?

We want to be a responsible lender to you and we regularly review overdraft limits to check they’re still meeting your needs. Overdrafts are meant to be for short term borrowing, and usually have higher interest rates than other borrowing products that are meant for longer term borrowing, such as a personal loan. If you’re using your overdraft regularly this could be costly so, we’ll contact you to make you aware of the potential high costs and how you might be able to avoid or reduce them. We’ll also explain other options you can consider instead of using your overdraft.

Can I expect to receive more letters from you?

We'll usually plan to send up to 3 letters, but we may contact you at other times too.

After the first letter we'll write again in about 6 months to see how you're getting on. Our aim is to help you reduce your overdraft use.

If you're still unable to reduce your overdraft use it may indicate to us that you're experiencing some financial difficulty. It's really important that you don't ignore the letters and that you call our friendly team on 03455 873 951 as soon as possible. Lines are open 9am – 5:30pm Monday to Sunday. Usually these situations don't just go away, and we may consider making changes to your overdraft limit. If so, we'll get in touch again to let you know what we need to do to help you reduce your borrowing.

Why are you writing to some customers about this but not others? My friend/family member has an overdraft facility with you but hasn’t received a letter about this.

Does this mean that customers who don't use their overdraft so regularly aren't entitled to any support?

No, a lot of the information we provide here could be useful to anyone using their overdraft. For example, reviewing your pattern of use and the associated costs could help you avoid them. We're here to support any of our customers and you can find more information on our Financial Management page.

But I've remained within my overdraft limit and have always paid the debit interest - so I haven't done anything wrong?

That's right, if you've remained within your agreed overdraft limit and paid the debit interest, you haven't done anything wrong. We're encouraging you to review and reduce your overdraft usage, as you may be incurring high avoidable charges.

What happens if I don't reduce my overdraft use?

Will I be stopped from using my overdraft?

If you can’t or decide not to reduce your overdraft use within 2 consecutive 6-month periods, we may have to restrict any further spending on your overdraft. Please give us a call on 03455 873 951 so we can look at other options available to you.

Is this affecting my credit score?

Can you make changes to my account when I've already signed my agreement and kept to it?

There’s no change to what you have to pay under your overdraft agreement, but if you can’t or decide not to change the way you use your overdraft, there are certain steps we may look to take. This could include reducing, suspending or removing your overdraft facility. We'll keep an eye on how you're using your overdraft, and if we think you’re struggling financially, we'll get in touch to explain the different ways we can help and how you can get free independent advice.

What are the other products which offer better interest rates?

Depending on how you use your overdraft, there might be cheaper ways to borrow over a longer term. Details of all first direct products can be found on our website, where you will also be able to apply for these products. All applications will be subject to assessment.

What should I do so I’m no longer considered a regular overdraft user?

You should reduce the amount of overdraft you use on a regular basis. We’ll write to you 6 months after we first contacted you to let you

know how you’re getting on. The letter will confirm that you’ve either:

reduced your overdraft usage, or
you haven’t been able to reduce your overdraft usage and explain the next steps we need to take.

What if I think I won't be able to reduce my overdraft use?

I’m already on a repayment plan - is there any impact on this?

Where can I get help if I'm worried about my finances?

There is some more info about managing your finances within this website section and you can also get free independent advice from:

StepChange Debt Charity, visit StepChange.org Opens an overlay [Will show a security message first] or call 0800 138 1111

The Money Advice Service, visit moneyadviceservice.org.uk Opens an overlay [Will show a security message first] or call 0300 500 5000;

National Debtline, visit nationaldebtline.co.uk Opens an overlay [Will show a security message first] or call 0808 808 4000

Citizens Advice, visit citizensadvice.org.uk Opens an overlay [Will show a security message first] or call 0344 411 1444.

These agencies offer support free of charge, but it’s worth bearing in mind there may be other providers who charge for this service.