Recent analysis reported by MoneyAge suggests that, by cleaning up unnecessary Direct Debits, you could boost your pension by up to £37,000.

This figure (from Standard Life data) is based on the estimate that UK adults effectively waste £39 a month on Direct Debits for goods or services they no longer need or use. Instead of holding onto these Direct Debits, redirecting them to your pension pot every month could bump up your retirement fund.

To put this into perspective, Pension UK’s Retirement Living Standards state that a one-person household needs £43,900 a year to live comfortably in retirement. If you cancelled your unused streaming services and gym memberships, you could add the equivalent of almost an extra year’s worth of retirement income to your pot, to be distributed once you stop working.

So, when was the last time you took a close look at your spending?

Here is your guide to revisiting your household finances and helping to fund your dream retirement.

1. Find your bank statements

Finding your bank statements is a good place to start for self-auditing, as they provide a comprehensive overview of everything you spend.

Your statements are usually posted through your door, so take a look wherever you stockpile your correspondence. Otherwise, you can find your statements online on your personal banking webpage or app.

It’s important that you find recent bank statements, as they will paint the most accurate picture of your current spending.

Also, make sure you find statements for all the cards you actively use to give you a broad and comprehensive financial overview. Otherwise, some costs might slip through the cracks.

2. Analyse your spending

This could be the most time-consuming (but also rewarding) step in the process.

To accurately analyse your spending, you’ll need to look through every transaction.

On your paper statement, you can usually tell whether a payment is a Direct Debit because it will typically be labelled “DD”. Your online statement should also provide transaction descriptions, which will identify the payment type.

For every Direct Debit that you come across, ask yourself: What was this for? Was it necessary? Did I use the service it paid for?

If the cost is unnecessary, flag it, and then carry on until you have a list of Direct Debits ready to cancel.

You can also use this opportunity to revisit your general household budget.

For example, does your spending line up with the 50/30/20 budgeting rule, which suggests:

• 50% of your expenditure should be on essential items, like rent, utilities, and household bills.
• 30% on your wants, like eating out, clothes shopping, and hobbies.
• 20% put towards savings, investments, and paying off debt.

See if your spending generally aligns with these benchmarks. If not, it might be time to recalibrate your finances.

3. Investigate mystery costs

Some costs can be difficult to identify. They might be confusingly labelled, inaccurately described, or fail to name the company charging you.

If you aren’t confident about the purpose of a Direct Debit, searching the merchant’s name can often help you identify it. Otherwise, you can contact your bank directly, and they can give you more details about the nature of the cost.

If you are worried about a scam payment, you can contact your bank, which will cancel it on your behalf.

4. Cancel unnecessary Direct Debits

Once you have cleared up your mystery payments and added relevant costs to your main list, you are now ready to start cancelling.

Be careful, though – it might be harmful if you cancel all of your Direct Debits through your bank, even though it is the easier option.

Some service providers will penalise you if you cancel their Direct Debit while remaining tied to their services, charging you additional fees or allowing payments to continue building. To avoid this, you can reach out to the provider and cancel at the source.

Do this through your online account or by calling directly. Once you’ve contacted them, they’ll usually cancel the Direct Debit on your behalf.

5. Calculate how much you are saving

Now that the more taxing processes have been completed, you can move on to the fifth and final stage: calculating how much money you’ve saved.

Take a look at your list and add up the total monthly costs of every Direct Debit you cancelled.

You might opt to add this amount to your monthly pension contributions; you can boost your own pension contributions or ask your employer to increase your workplace pension as part of a salary sacrifice scheme.

If you have used up your Annual Allowance, you can seek alternative wealth growth opportunities that contribute towards your retirement planning, such as tax-efficient ISAs.

Whatever you do, consider paying your future self first before budgeting with whatever else remains.

Get in touch

If you’d like to learn more about ways to boost your pension, The Pension Planner can help you form a tailored strategy that maximises the potential of your pension contributions and tax-efficiency.

Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.