From time to time everyone uses credit in one way or another. With so many varieties of loans and credit products, it’s almost hard not to borrow money on occasion. Sometimes we do it without realising, like dipping into an arranged overdraft, and other times we spend hours researching a suitable option, like when applying for a mortgage. It’s not uncommon to use credit as adults in the UK. For most people, it can help them to manage their cashflow and meet unexpected payments throughout the month. But if you find yourself consistently borrowing money and depending on different credit facilities to see you through the month, then you may want to start thinking of ways to reduce your credit dependency.

Being financially independent doesn’t just mean not relying on someone else to pay your bills and meet your essential expenditure, but it also means not relying on external financial resources too.

Becoming financially independent might only take a few changes to your usual routine, or it might take some big steps. But either way, we’ve got a quick list of tips to help you get started. There are also several free debt advice services online to provide more personal advice to your circumstances, and help you make better financial decisions – even if you aren’t necessarily struggling with over-indebtedness.

Tip 1: Increase your Financial Literacy

Increasing your financial literacy is a fancy way of saying: learn about the financial products and services you use on a daily basis. Everyone understands the importance of education – whether it’s learning to read and write, or how to deliver a baby – but we often neglect to teach ourselves some basic life skills. Improving your understanding of your money management and the credit cards, overdrafts, or payday loans you use from time to time can actually save you money.

Start by having conversations with the people you trust or get in touch with your bank or credit service to ask questions about the products they offer and how to use them wisely. A lot of banks are happy to provide free financial advice, so make use of it where you can. If you prefer a less formal way of learning, simply sign up to money advice emails or some financial blogs. Just 10 minutes a week could bring your financial literacy level from zero to hero.

Tip 2: Cut down on your invisible spending

It’s only natural that reducing the amount you spend will increase the amount you have available for unexpected payments, and therefore decrease the chances you will need to borrow money. However, it can be much easier said than done, especially if you are already living on a budget. Whatever your income, there have probably been occasions when you’ve checked your bank account and been unpleasantly surprised by a lower balance than you expected. It might just be a one-off payment like an MOT, but more commonly, it’s an accumulation of small payments you haven’t factored into your budget. This is your invisible expenditure. It’s the coffees, t-shirts on sale, and extra drinks with lunch “just because”.

The money you tap away on your card can add up to scary amounts which is why it’s important to reduce your invisible expenditure if you want to reduce your credit dependency. Being more aware of what you spend your money on will automatically help you save, because you will consciously make a decision to purchase rather than subconsciously adding to your basket. Once you notice the small and seemingly insignificant payments, you’ll find it easier to avoid them. In some cases, you might not have to cut down your invisible spending at all; just factoring it into your monthly expenditure so your budget is more accurate can help.

Tip 3: Sustainable Budgeting

Even if it’s not written down, you probably have a general budget you try to stick to throughout the month. You’ll know roughly what you spend on food, how much it costs to get to work and what you have to pay in rent or mortgage payments. But having a sustainable budget goes further than just estimating your income and outgoings. Sustainable budgeting is about creating a budget that allows for unexpected expenses and savings so that you can improve your financial resilience.

Once you’ve tracked a few bank statements to calculate exactly how much you spend each month on essential expenditure, take a look at how you can make your money go further on your day to day expenses and services. Often, it’s the little changes that can make the biggest differences, and those small changes can help you reduce your credit dependency effectively, and almost habitually.

Tip 4: Learn to Save

The importance of saving is preached regularly by family, friends, and even adverts on the television, and that’s because it really is important to save money. Having healthy savings is possibly the biggest change you can make to get out of a cycle of credit.

Instead of borrowing money when you need to make an emergency payment, you can use the money you’ve saved over previous months or years. It can be difficult because saving is a long process – unfortunately, it’s not something that will appear in your bank account overnight. But the more you save, the easier it is to save. You’ll start to see the amount grow which will motivate you on your savings journey, and you’ll be paying less out in interest as you won’t need to borrow money so often.

Sometimes, it might make sense to use credit over savings, for example if you have a 0% overdraft or credit card and you know you can repay the balance in full by the end of your statement period. In addition, using a credit card to pay for things like holidays provides extra consumer protections that debit cards don’t offer. However, in most cases – for flat tyres, broken washing machine, a new car even – it’s better to use your savings.

Start small, maybe £5 or £10 a week when you can spare it. And if some months are more lucrative, put the extra cash into savings straight away so you’re not tempted to spend it with your usual monthly expenditure. Then, as you feel more confident and you cut down on invisible spending and make your money go further, you can start to put more into savings each month. At £10 a week, you’ll have over £500 in your account by the end of a year. Whether it’s strictly for emergencies, or just to help with the Christmas shopping, an accessible £500 could make a huge difference to how you manage your money.

Reducing your dependency on credit starts with how you manage your money and making better financial decisions. It might just take a little extra thought, or it might involve an intervention. The sooner you start to take control of your money, the sooner you will reap the benefits of being financially independent. Talk to friends or family, speak to debt advice charities or start doing regular reading online to improve your financial literacy. Credit dependency is just one cog in the money management machine, but it’s one that once conquered, will make a big difference to your cashflow and your financial resilience.