£1k challenge: Sophie & Rakesh

Can I save this family £1,000?

Something I love as the resident money expert on Channel 5’s Shop Smart Save Money is that they don’t just accept that I can save people cash – they want me to prove it! So every week I’m sent to meet a family who could do with some extra money and challenged to find them at least £1,000 of savings in a few hours.

Now I’m confident I can do this for pretty much any family as even the savviest won’t be doing everything – and they probably don’t need to. But I’m a little bit different as I genuinely enjoy finding new ways to get better value for my money. So when I meet the family I’ve probably got something up my sleeve!

My first challenge was from Sophie and Rakesh who live in Birmingham. They were a great couple who admitted to sometimes spending money they shouldn’t – including £300 on a piano neither can play! But they’ve got hopes to move into a house which will be the family home for a good few years, and need cash to build up the deposit.

So here’s a bit more info on each of the savings I found. If you didn’t catch the episode live, you can watch it on Channel 5’s catch up service.

Their car

I started before I even got into the house. Their car has seen better days. Handed down from Sophie’s dad it’s been good to them but now the cost of keeping it going was becoming prohibitive. Last year they spent £820 making it roadworthy, and they’ve got an MOT around the corner which they don’t think it would pass without even more money thrown at it.

Not only that, but they hardly use it. Sophie estimated they drove it just 10 to 15 miles a week. That’s mainly because Rakesh walks to the train station to get to work, and Sophie uses the bus. The car journeys were pretty much just to take son Leo to nursery, but that was only 10-minute walk away.

So I suggested they should ditch get rid of their car. Yes, I know that sounds a little extreme – but I think a good option for them as the savings were pretty decent, even using a conservative estimate on repairs. They’d also get around £200 for scrapping or selling the car. So the money back in their pocket would break down like this:

• £552 – Car insurance
• £205 – Road tax
• £472 – Repairs (average annual cost in the UK)
• £200 – Scrapping or selling

That’s a huge £1,429 year!!! Of course, that would have been too easy. Challenge over. And realistically Sophie and Rakesh would still want to make the odd trip. So having no car at all probably isn’t feasible.

But for the amount they use the car I think they could be better off using a car club. The one I found five minutes from their house costs £50 a year to join. Then it’s £4 an hour plus mileage. But how much will that cost over the year? Well, a 200-mile journey from their home to the seaside at Weston Super Mare would cost £71.30. If they do a big journey like that once a month (which they probably wouldn’t) and a handful of shorter journeys I still don’t think they’d spend more than £1,000 a year on the car club.

Total saving: £400

Unused gift cards

I like to get my hands on the families’ wallets and purses to learn a little about their spending, so once inside the house I asked Rakesh if I could have a nose inside his.

The first thing I noticed was just how many gift cards he had. There was one for House of Fraser, another for Asda, a handful from returns to Wickes and a few more. What’s the problem with that you might ask?

Well, most gift cards have expiry dates and easily run out, they can get lost or forgotten, and they become valueless when companies go bust – that £50 House of Fraser card is a good example where the money could be at risk. In fact, an estimated £90million of the £6billion spent each year on gift cards is unused. A total waste of cash.

The cards in Rakesh’s wallet had all been in there for a long time. Sophie was proud that she’d got 4% off the Asda card – but they’ve been shopping elsewhere and not used it. They’d even been back to Wickes and forgotten to use the gift cards! So I think they had two options if they didn’t want to lose £200. They could use them as soon as possible (ideally on things they need) or sell them via online marketplaces. They’d obviously not get the full price for the latter, but even a 10% loss is better than letting them become valueless.

Total saving: £180

Bank accounts

Regular readers will know I’m passionate about switching banks and getting some kind of deal. Sophie and Rakesh had a few accounts between them, including a joint Natwest account which earned cashback on bills – great. But both also had one account each which wasn’t doing much in terms of rewards.

So I suggested a simple switch to immediately help the household finances. Moving from their respective banks to Marks & Spencer Bank would earn each £125 in M&S vouchers. Then they get another £5 voucher a month for a year. And both of them could do this! They could use these on food or clothes for Leo and put the money they’d normally have spent here towards their savings.

Now to get the £125 voucher you do need to fully switch your old account including two active Direct Debits. This means closing down the old account. But all your payments in and out are transferred for you, and monitored for at least three years. I’ve done this a lot and it’s been fine every time, but if something did go wrong there’s a guarantee which means you wouldn’t be out of pocket. For the extra £5 a month, account holders need to pay in at least £1,000 a month and keep those two Direct Debits.

Total saving: £370 

Broadband

I had a look at their bills too, and one stood out. Sophie and Rakesh are currently paying £23 for phone and broadband from Sky, but that is due to go up to £30 odd in the next month. So it was definitely time to switch.

The best deal I could find at the time of filming was with Plusnet for just £10 after cashback. It was the same speed and the price was locked for 12 months – but £20 less a month.

Total saving: £240

Packed lunch

Finally I wanted to tackle Rakesh’s pricey lunch habit. Apparently, even when Sophie made him a decent meal to take to work, he still popped out to get a Pret or burrito. This isn’t uncommon. And I get that it’s nice to mix up your meals each day. But the savings you can make are huge.

The average people spend when they buy a lunch near work is £1,800. That’s roughly £7 or £8 a meal. See how quickly it adds up! Of course a packed lunch isn’t free – whether it’s sarnies or leftovers you still need to pay for those ingredients. So the average spend here is just £600.

But Rakesh wasn’t going to do this every day. So instead I suggested doing this just two or three days a week. That should make it easier to stick to, and still gives a massive saving of £600 a year.

Total saving: £600

How did I do?

Well, if Sophie and Rakesh take all of these savings on, they’re going to be better of by £1,790! So I smashed the challenge in my first week. I’ll need to reign it in for future episodes otherwise there’s a chance I might run out of new tips to share.

You can watch me on Shop Smart Save Money on Channel 5 every Wednesday in June at 8pm.