First came looksmaxxing, then sleepmaxxing, and now the “maxxing” trend has made its way into the world of personal finance with moneymaxxing.
The maxxing movement has taken social media by storm, with people attempting to optimise, improve or even exaggerate every aspect of their daily habits and lifestyles. But can this approach really help us get on top of our finances?
We spoke to Brian Byrnes, director of personal finance at Moneybox, to find out what moneymaxxing actually is, how you can apply it to your own finances, and the potential pros and cons of this new buzzword.
How would you define moneymaxxing?
“I would define moneymaxxing as trying to make sure that every pound of your income or savings is working as hard as it possibly can be for you,” says Byrnes.
“It has emerged off the back of other maxxing trends from social media which centre around optimisation, so it was just a matter of time before the maxxing trend extended over to personal finance.”
Although the moneymaxxing label itself seems fresh and attention-grabbing, Byrnes says the principles behind it are far from new.
“I don’t think it’s a completely new trend, as there’s a longstanding tradition in the UK of people trying to make their money, particularly their savings, work hard as they possibly can,” says Byrnes.
He reflects that a big benefit of viral finance trends like moneymaxxing is their ability to engage Gen Z in personal money management.
“When it comes to personal finances, Gen Z often feel a little bit left behind or stuck in lots of ways, especially when it comes to things like student loans or getting onto the property ladder, for example. So, I think that financial trends like moneymaxxing can help people take back an element of control and achieve their financial goals a little bit quicker,” says Byrnes.
Can you give some examples of what moneymaxxing might look like in practice?
“For us at Moneybox, moneymaxxing is all about small, everyday changes with your money, covering everything from budgeting to making sure all your recurring expenses are accounted for,” says Byrnes.
Paying yourself first on payday
One the simplest but most effective ways to optimise your finances is to make sure you are putting money away in different pots every month.
“As soon as you get paid, pay yourself first into your cash ISA, into your stocks and shares ISA, into your pension and into your lifetime ISA,” recommends Byrnes.
You can automate this process so you don’t even have to think about it.
“Setting up automatic deposits makes sure that a proportion of your income is going towards your financial goals every single month,” says Byrnes.
Check your spending
“Another thing you could do is go through all your expenditure on a monthly or even weekly basis,” recommends Byrnes. “Make sure that you recognise every line of expenditure in your bank statement.
“For example, check to see if you’ve been double charged for anything. This helps make sure that every pound of expenditure is accounted for.”
Put money into a high-yield savings account or an ISA
Make your money work harder for you.
“Leaving money in a low-interest bank account or savings account is not maxxing and there’s better things you could be doing with that money,” says Byrnes. “Instead you could put some money into a higher-paying savings account, so you’re getting a better interest rate on those pounds.
“Alternatively, you could consider putting some money into a lifetime ISA to get the government bonus.”
The UK government will add a 25% bonus to your savings, up to a maximum of £1,000 per year, according to GOV.UK.
“Moneymaxxing is all about finding the optimum place for your money and getting the maximalised benefit possible for every pound that you’re able to save,” says Byrnes.
What are the main benefits of moneymaxxing?
“I think the main benefits of the moneymaxxing trend is the engagement, the sense of control over your finances, and the confidence that it can give you,” says Byrnes.
“Research at Moneybox over the years has found that when people are financially confident, they hit their financial goals quicker, and end up with more net wealth at the end of the day. One of the main ways to become financially confident is to take positive and proactive steps with your finances, which is what the moneymaxxing trend encourages.
“So, as well as the financial benefits of getting a better return on your savings or investment, the lifelong engagement and confidence that moneymaxxing can build is a huge advantage.”
Are there any potential drawbacks or limitations this trend?
“I think, as with any finance trend, you can probably go too far with it,” says Byrnes. “You don’t want to get hyper-fixated on every penny and lose sight of the bigger picture. From a Moneybox perspective, we always say that it’s not about the account or the money itself; it’s about what it frees you up to do in life.
“For example, taking on further higher level education that might make you more employable and get you a pay rise could have a bigger benefit on your finances in the long run, compared to trying to make sure every penny is optimised. So, sometimes thinking about bigger picture things like that might actually be better use of your time.”
Is it suitable for everyone?
“I think it’s definitely something that everybody could be doing probably a little bit more of,” says Byrnes.
“Our research suggests that Gen Z are more open to a diversified range of products and services for their moneymaxxing, but I think that older generations do implement this moneymaxxing concept when it comes to their savings. For example, shopping around for better interest rates is very common practice across all generations.
“But, I do think older generations could benefit from thinking about moneymaxxing in terms of investing and pensions in particular.”
