Do you set long-term financial goals and follow a budget? Do you switch accounts to get the best deal for your savings and your investments?
If not, you may be missing out on the simple lifestyle trick that some savvy savers are using to boost their wealth by an average of £67,000.
Managing your money with confidence is the key to doubling your net worth — no matter what you earn — new research shared with Money Mail and This is Money can reveal.
There are specific habits you must follow in your day-to-day life to make sure you are acting with financial confidence.
Rewards: People who feel confident in their finances have an average net worth two times higher than those that didn’t feel confident – regardless of their income
However, there is a huge chasm across cities in the UK, marking a stark divide between those who know what they are doing with their finances and those who feel nervous about taking charge.
Do you live in a financially confident hotspot, or are you more likely to lack the self-belief required to boost your funds?
A national survey of more than 4,000 people living all over the UK has revealed the best and worst cities, ranked based on households’ self-confidence across 20 measures crucial to financial success.
The report, run by investment and savings group Moneybox, has assessed people’s confidence across four categories — saving, investing, retirement and managing personal finances to provide a definitive ranking.
Here, we ask the experts what you can do to boost your own financial confidence and ensure that you are getting the most out of your savings.
Study: A national survey of more than 4,000 people living all over the UK has revealed the best and worst cities for financial confidence
How does YOUR area compare?
Edinburgh is home to the most financially confident people in the UK, according to Moneybox.
Residents of the Scottish city had, on average, the most belief in their ability to manage their finances, with 63 per cent saying they were confident across a number of measures.
Eight in ten people said they had conviction in the way they approached their savings, while 55 per cent were confident about their future retirement.
When it came to investing, more than four in ten said they were comfortable with putting their money into stocks and shares or bonds, compared to a UK average of 35 per cent.
Those who perceived themselves to be confident had a net worth of £142,000 in combined savings, investments and pensions (compared to £24,000 for those who took a more nervous approach to their finances) — and believed that confidence can boost your wealth by up to ten times.
Residents in the university city of Cambridge ranked second, where nine in ten said they manage their personal finances with ease.
People in the historic town were most likely to spend a lot of time researching options before making a decision and had the greatest proportion of people who said they knew how to choose the right financial products for their needs.
Londoners also deemed themselves to be financially savvy; 83 per cent felt confident about selecting the right savings deals. Those in the capital are most likely to say they read financial advice websites to further their knowledge.
At the other end of the scale, those living in Liverpool had the most self-doubt in the UK when it came to making financial decisions. Half the people in the city lack confidence with their money.
Liverpudlians were most likely to only take advice from friends and family or from social media versus more trusted routes such as a financial adviser, their education or financial advice websites.
Confidence appears to have the greatest effect in Liverpool, where those who scored highly had a net worth of £256,000, compared with £71,000 for those who did not know how to comfortably take the reins.
Second to last is the city of Belfast, where just seven in ten people felt confident in their ability to save. Those in Newcastle and Glasgow also scored poorly, in comparison to many cities in the South of England and Midlands.
Top spot: Edinburgh is home to the most financially confident people in the UK, according to Moneybox
What makes you financially confident?
Nearly two-thirds of people believe they’ve missed out on financial opportunities in life because of a lack of knowledge and confidence, according to the report.
And an understanding of personal finance can go a long way to boosting your overall wealth.
People who feel confident in their finances have an average net worth two times higher than those who didn’t feel confident — regardless of their income, according to the report.
Low levels of knowledge and confidence around money and finances put millions of UK adults at a financial disadvantage, to the sum of £67,000 over the course of their lives to date, according to Moneybox.
Those who are more financially confident have a net worth of £145,000 on average, versus £78,000 for those were not financially confident.
Time is money
Brian Byrnes, head of personal finance at saving and investing app Moneybox, says the most significant factor that will contribute to how confident you feel is how much time you dedicate to your finances.
Those who are more confident — and, therefore, boost their savings more — tend to spend more time each week focusing on their goals and improving their finances.
Mr Byrnes says: ‘We all have the opportunity to become more financially confident over time simply by dedicating some time, each week, to learning about personal financial topics.
‘People need to be better supported. The financial decisions they make must be well-informed and confidently executed, so they can lead to better financial outcomes throughout their lives.
‘Financial education in school and later in life has been severely lacking in the UK, which means that most people have been left to figure out how to manage their money and plan for the future through trial and error.
‘We often underestimate just what effect the financial habits we build and embed in our day-to-day lives will have on our financial opportunities in life.
Bottom: Liverpool had the most self-doubt in the UK, when it came to making financial decisions. Half of people in the city lack confidence with their money
‘Good or bad, they can very quickly snowball into long-term benefits or consequences.’
Taking time to understand your own financial situation is vital to taking charge. Those who spent time learning about personal finance topics were also more likely to be better off.
Moneybox also assessed how much time people spent researching options before making a decision on their finances.
Savers must also make specific plans to achieve their goals and save or invest accordingly. In order to do this, they should set both short and long-term financial goals.
For example, if you want to pay off your mortgage early or fund a home extension, you should first pinpoint how much money you will need and then set a monthly and annual savings target to help you achieve your goal.
Those who switch savings accounts to get a better deal and who know how to choose the right type of account depending on their needs are also more likely to hit their targets.
Leaving all your money in cash can cost you in the long run, for example, as you may have been able to generate higher returns by investing your savings if you didn’t need to access the money any time soon.
Study: A national survey of more than 4,000 people living all over the UK has revealed the best and worst cities for financial confidence
Five ways to boost confidence
There are easy habits that you can introduce to your week to boost your financial confidence — and your wealth, by default.
Mr Byrnes, who previously worked as a financial adviser, says: ‘I have always believed the best thing you can do to boost your financial confidence is spend time getting to grips with money matters, and our research shows just how valuable it can be.
‘Setting aside time every week to review your budget, research the best products for your needs or make a plan to help you achieve an important goal, will make a huge difference to your confidence and financial position over time.’
For those starting from scratch, there are basics you need to have in place if you want to see your savings snowball.
1. The place to start is figuring out what your short, medium and longer-term financial goals are.
Get a pen and paper and write out your goals, putting a target figure for how much you will need to save and then set a timeline of when you need to achieve each one.
Next to these goals, decide how much you would need to put into a savings or investment account each month to meet them. This will help you track progress over time and increases the chances of you achieving your target.
Mr Byrnes says: ‘There will always be unforeseen events that can set us off-course, but having that end goal in mind is the best way to ensure that you are always moving in the right direction.’
2. Next, if you don’t have one already, a budget can be a great way to boost your financial confidence.
Log your income after tax, and any pension, savings or investing contributions you make. Then make a list of your expenses including regular bills to figure out your disposable income.
Now you can start to track where your money goes each month and where you might be able to find ways to economise and save more for the future, Mr Byrnes says.
3. Once you have your building blocks in place, you should research what help might be available for you to hit your financial goals.
This might be speaking with debt advice helplines such as Citizens Advice, learning if there are benefits you are entitled to but are not yet claiming, or speaking with lenders and explaining your situation so they can offer realistic timescales for you to repay any debts.
4. Dedicating time to researching the best products could provide another big boost, says Mr Byrnes. For example, if you want to buy your first home or boost your retirement savings, a Lifetime Isa might be what you need to make that dream a reality.
If you are saving or investing for the mid to long term and want to ensure your savings interest and returns are protected from the taxman, an Individual Savings Account (Isa) may be the way to go. If you want to retire early, learning more about pension tax relief could be invaluable.
5. Each week, pick a topic aligned with your financial goals and dedicate 30 minutes to learning about it, Mr Byrnes suggests.
This could range from reading online articles, subscribing to financial podcasts or any other educational forums.
He says: ‘The more you immerse yourself in a topic the more confident you will become in building a plan that will help you achieve your financial goals in life.
‘Thirty minutes might not seem like a lot, but over the course of a year this would result in 26 hours dedicated to improving your financial situation and boosting your financial confidence.’
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