Grace Armonio Nieves
You probably landed on this article because you’re getting sick of living paycheck-to-paycheck. Or, you feel like taking control of your spendings and saving money is like rocket science. Believe me, I know the feeling. Some high street banks in the UK even complicate the journey to financial freedom, by being so not budget-planning friendly. Unlike other banks, Monzo has a lot of ways in helping you to take control of your spending by organizing your budget, while letting you save money efficiently too!
Before I’ve read about Monzo through my first financial literacy book, I was a novice in taking viable financial decisions. From earning around £100 a month as a contractual nurse in my home country before, you see, getting paid a few times fold better, is what I consider “revolutionary.” I mean that’s maybe the reason why I overspent in the first few years lol.
But then, no excuses will be good enough, not even the fact of buying that 3rd rose gold lamp shade just because it made my desk looked pretty, not because I needed it. To me, no income in the UK will ever be enough.
But hey, all that changed. That’s why I am so glad I have joined Monzo.
To start with, I chose to write about it for the reason that it has changed the way I managed my everyday spendings. More so, I became a doer of actually putting money aside, than dreaming that one day my bank digits will blossom. I honestly feel that Monzo is custom-made for people who have zero to little control over their hard-earned salary.
Have a look at the table of contents below to know why.
(I will discuss each list in detail in sections below, so keep on reading)
But first, just a quick background about Monzo.
What is Monzo Bank Limited?
Monzo bank (formerly “Mondo”), founded in 2015, is a “digital mobile-only bank” that mainly operates in the United Kingdom and has now launched in the United States of America. The company lives in the philosophy of diverting expenses on running physical establishments to constantly improving ways of banking in a click with your smartphone. By digital I mean, Monzo has no physical branches but instead works entirely via their app.
Winning the Best Banking App at the British Bank Awards for two years in a row tells you how well they fit together all your banking needs inside the app!
No wonder around 4.4 Million people now use that “Hot Coral” coloured Monzo card at the time of writing.
Okay, so let’s do the run-down of taking control of your: a)spending, and b) savings, THE MONZO WAY!
Ways to Budget your Money Using Monzo
#1. Get Paid One day early
I often kid at work how I feel rich every 25th (my pay date) until, say the next seven days, spend a big chunk of the pennies and consequently become as broke as f**k with no savings from 20th up to the 24th every month. We’re not kidding here, but to tell you honestly, I used to look at the calendar and hope I wake up to the next pay date. Lol. Interestingly, our friend Monzo here can help you budget your money early by advancing your salary at 4 PM on the day before it is due. In my case, instead of waiting for the 25th every month, I will have the money on my account on the 24th!
This is one way to ease up the waiting game.
Hold on, just make sure you meet these two requirements:
1. Your salary must be paid (directed) to Monzo.
If you haven’t switched all your cashflows to Monzo yet, add your salary to Monzo by clicking on the “Add Money” option on your Monzo App. You then have the option to Switch to Monzo (moving all your money and payments from your other bank to Monzo). Alternatively, on the same screen, you can send an email to your employer using the pre-made email template with your bank details created by Monzo for you. From that point forward, let Monzo take care of the rest. How cool is that?
2. You should get paid by BACS.
Banker’s Automated Clearing System (BACS) is a trusted and reliable way of receiving (Direct Credit) or remitting (Direct Debit) payments such as wages, salaries, and other state benefits (for example, pensions). This payment network is used by 90% of UK banks and other institutions. Some high street banks using the BACS payment scheme include HSBC, Metrobank, Monzo, Barclays, Santander, Lloyds, Royal Bank of Scotland (RBS), Tesco Bank, and Starling Bank. Check out this list of BACS Approved Bureaux. Also, confirm with your employer on which bank they deposit your salary. If your bank or organization is not on the list, the best is to inquire about them yourself.
For instance, the usual clearing time for payments to reach your account can be around three days. However, Monzo can advance it one day early as it can verify in their system that the payment will go through on the payday anyway.
#2. Create a budget in Monzo for every category of your expenses
This feature from Monzo makes financial control on expenses easier by setting budgets according to categories.
Default 13 categories include:
Bills, Finances, Charity, Eating out, Entertainment, Expenses, Transport, Groceries, Holidays, Shopping, General, Family, and Personal Care.
To start, you can set your budget at each category, every payday. For example, each time you spend on transactions like buying food groceries at Tesco or Waitrose, it will be automatically tagged into the category “groceries.” Similarly, if you treat yourself a facial, it will be tagged under “personal care,” while your TFL (Transport for London) bus or tube charge will be categorized under “transport.”
Alternatively, you can ‘add tags’ on a particular transaction or change which category it falls into if Monzo doesn’t get it right. In my experience, it’s always right.
Instead of setting a budget under the Bills category, I create a separate pot for bills. So, every payday, I deposit the overall amount of my recurring debits into the bills pot. After that, head on to the “Payments tab,” change the location where your Standing orders, subscriptions, and direct debit payments will be withdrawn from (in this case, in your Bills pot, not in your current account). You can as well change the frequency of this payment to “monthly or quarterly”, for example.
We all know that direct debits are taken from different days of the month depending on your subscription start dates. That’s why not organizing them at times can mess up what you see on your current balance.
#3. Monzo Real-Time Budget Through Push Notifications
Here’s one sad way to get trapped in some high street banks’ loophole. One Black Friday sale, you lavishly spend money on buying those new lines of H&M’s swimsuits or the new Dr Marten’s winter shoes just because you think you still have enough money to get through the next payday. Soon after a few days, surprise – your bank updated your balance, and you went red!
So much for a Black Friday Sale.
THIS SPENDING NIGHTMARE, FORTUNATELY, WON’T HAPPEN IN MONZO. Monzo sends notifications and updates your budget in a split second for every transaction, including the exact location, time, and date.
#4. Easy Bill Splitting with Monzo
Gone are the days when you end up frustrated with splitting costs on pizza and prosecco with your friends. I believe at some point you heard the phrase “pay this time, I’ll give my share later,” and apparently that “later” didn’t come.
Now, spare the hustle and directly split the bill with your friends. Firstly, just tap the transaction, then head on to “split the bill”, and lastly, choose the people you are splitting the cost with.
Also, you can tap “nearby friends”, and Monzo will find nearby account holders via Bluetooth.
Another way you can split the bill using Monzo is to send a personal link to your friends to quickly send or receive payment through a debit card, apple pay, or an existing account. You will need to send them your Monzo. my link with this automatic URL: Monzo.me/yourfullname.
Now I don’t know what can be smarter than that.
#5. Monzo Real-Time Remaining Balance Until Next Pay Day
This is one feature of Monzo which everyone will love!
As I mentioned previously on my protip in the Number 2 Monzo feature, Monzo will tell you how much you will have left until the next payday. This will be the balance after all your direct debits and other recurring payments (past and predicted).
You just have to set-up your budget starting and end date depending on when you receive your monthly wage. This effectively makes you work on the remaining current balance you have while tucking away in safe your essential bills. Again, you would not want to mess up with your council tax payments.
An additional bonus:
Monzo can give you an analysis of how well you have managed your income and expenses, like the simplified graph below.
Ways to Save Money Using Monzo
#6. Create Different POTS for Different Goals
A. Different pots for different needs
As you can see, I have my pots named according to what I am saving for: “Emergency Fund, Bills, British ILR, Groceries, Leisure/Whims.” I have discussed in the previous budget category section why I have created a separate pot for bills.
In the locked pots “Emergency Fund” and “British ILR” as marked by the locked key icon, as for me, these are medium-range goals. Say for the “British ILR” pot, I have locked it for 3 years and set -up an automatic deposit from my current account into this pot every month, of my chosen amount. You can withdraw your savings from this pot for certain exemptional circumstances that you would need the money before the target expiry date. This will move the money to your current account and delete the pot. I would personally discourage doing this before you reach your target date or amount unless deemed necessary. After all, discipline is the name of the game.
The best way to save money on your different custom goals is while having them all under one roof.
THIS FEATURE, FOR ME, IS THE REAL GAME-CHANGER.
Here’s another feature you will love.
B. Nicely customizable
The fact that I can customize my pots worked well for me. Having this feature helps me build a mindset of saving quickly for something I want without making me feel like I am depriving myself of too much. In the photo below, for example, you can choose to lock the pot or not, set monthly payment (direct or not), decide to receive round-ups (I will discuss this in the following sections, so read further) and change wallpapers to encourage you to “eye for the prize visually.“
Perhaps you are saving for a luxury pamper treatment for your dog Shawty. Go ahead and put her cutest photo in there. You’ll see, you might earn up your target money goal a few months early.
It’s all the motivation, baby.
#7. Grow Your Money with easy access savings, or fixed rate savings
At the time of writing, there are two options for savings: Easy Access Savings and Fixed Rate Savings.
Easy Access Savings
Best For saving for short to medium-term goals.
Interest Rate: 0.30% interest per year (AER, variable) (this is the published rate on the site, although I have the 0.5% interest rate at the moment on my account). Note that various bank saving interest rates decreased slightly due to the economic recession during the Cornovavirus pandemic.
Minimum deposit: £10
Earliest time to withdraw savings: The following working day
Best For saving for medium to long-term goals.
Interest Rate: up to 0.60% gross interest per year (AER, fixed)
Note that various bank saving interest rates decreased slightly due to the economic recession during the Cornovavirus pandemic.
Minimum deposit: £500
Earliest time to withdraw savings: On best interest rate, withdraw after 12 months (12-month lock period). Option for withdrawing on your 3rd or 6th month also available.
Note: Monzo is working on adding more saving options like Easy access ISA, etc.
Is Monzo Safe?
Yes! Like other high-street banks, Monzo covers up to your first £85,000 under the Financial Services Compensation Scheme (FSCS) Protection. Click here to learn about how FSCS protects your money.
Tip: If you’re super-rich and your savings are more than £85,000, you can open multiple accounts to ensure all your money is protected.
#8. Save While You Buy (Round-ups)
I call this feature “the chill saver” for a reason on taking control of my savings. This allows me to save all the pennies when I buy my essentials, without merely putting much math in it.
With this feature, every time you spend shopping or when your monthly dues are collected, the payment is automatically rounded off to the nearest pound!
So, if you spent £2.45 for an iced caramel latte in Starbucks, you will be charged £3. This way, easily put a £0.55 on your pot. You will see how surprising it is to see how few pennies end up double or triple digits in no time.
I have chosen to direct my round-ups to my Easy Access Saving account as shown below. Equally, you can choose which pot you want this feature to be added on. Just turn on the Round-up feature on your pot setting (one pot at a time only).
#9. Travel with Monzo Card Worry-free
Some people switch to Monzo as their official travel partner on saving for their holiday expenses because of these benefits:
- They don’t add additional fees to the exchange rate (at a Mastercard exchange rate). Just use your card anywhere that supports MasterCard.
- No fee on withdrawals in ATMs within the European Economic Area (EEA). Click here to check if your destination country is within the EEA.
- In countries outside EEA, withdrawal up to £200 for free every 30 days. There is a charge of 3% for the amount more than that.
- As soon as you arrive at your destination country, Monzo will notify you of the current exchange rate. There is also no need of informing them in advance that you are traveling.
- All your expenses will be categorized under “holidays” or “expenses” (see in previous sections the discussion in budget category).
- When you go home after your travel, Monzo will analyze all your expenses for the entire holiday.
#10. Change Energy Provider And Earn Credit
Monzo gives you the advantage of finding the right energy tariff for you to save money in the long run.
And hey, a bonus of £75 credit will be given to you too when you complete the switch of energy provider! Yippee!
You might wonder how to get started with the energy switch. Here’s how:
- In your Monzo bank app, tap your photo to access the “Monzo energy switch service.”
- You will be asked about the details of your home meter.
- They will be giving you a quote (tariff) you can choose based on the list of their trusted renewable energy providers.
- The team will be communicating the information you provided with the selected energy supplier.
- More details will be given to complete the energy switch.
Final Words on Monzo?
Lastly, I can go on for hours telling you how in many ways, Monzo helped me in taking control of my spending and savings, 100%.
But, it is better yet if you go and experience it yourself. I am confident that you will love it as much as I do. If you decide to open an account with Monzo, read this article to learn what you need to know.
In this digital age where knowing the weather forecast is as easy as calling Siri, managing your spendings and savings has never been easier using Monzo.
If you have been using this bank, let me know in the comments below how this helped you in your finances. Otherwise, I hope you join us today and grab your “Hot Coral” coloured card.
Thanks for stopping by. Until next time.