Rising costs of food, fuel and energy are punching a big hole in household budgets. Inflation hit a 30-year high in March and could rise as high as 9% by the end of the year. Close to nine out of adults in the UK are now reporting an increase in their cost of living, with four in 10 saying they are facing difficulties paying their fuel bills.
Understandably, a lot of people are worried about their long-term financial security. We’ve all seen the headlines suggesting that hard-up families may face desperate ‘heat or eat’ choices by next winter. If you have a mortgage or a high level of unsecured debt, spiralling costs bring with them concerns about keeping up with payments.
It’s easy to feel that what is going on in the wider economy is beyond our control. It’s easy to feel helpless. But there are things you can do to put your finances on a healthier footing to ride out the current cost of living spike. And it all starts with reducing your outgoings as far as possible. Here are some ideas to get you started.
Cancel unused direct debits and standing orders
When was the last time you gave your finances a thorough spring clean? The chances are that you probably have money going out of your account each month on things you have completely forgotten about. Research suggests one in five people are spending money each month on subscriptions they don’t use any more at an average cost of £265 a year.
Dig out your bank statement and take a close look at where your outgoings are. As well as forgotten subscriptions you no longer use, think about those ‘nice to haves’ that you don’t really need. Is it essential that you have Netflix, Amazon and Disney+? Are you getting any value from Amazon Prime if you’ve cut down on your online shopping? How often do you use that gym membership, honestly?
Switch to save money
You might not be able to find a better deal on your energy supply at the moment. But you can certainly go a long way to offsetting high energy bills by looking for cheaper options on other things. Everything from your mobile phone to broadband to insurance, it pays not to just let your current deal ‘roll over’. When you approach the end of your contract, get on the comparison sites and see if you can find something cheaper. Or, use the threat of leaving to leverage a better deal from your current supplier.
Less means more (in your pocket)
To twist a well-worn phrase around, you pay for what you get in life. One of the best ways to reduce your spending is simply to scale back. It doesn’t mean you have to miss out or go without. Just be a little smarter and make things go a little further.
For example, if you are used to having the very latest smartphone on an all-you-can-eat data deal, think about whether locking yourself into another two year contract at £50+ a month is money well spent. Could you make do with last year’s model or a refurbished phone? Could you get by with less data by using Wifi more, or downloading music, podcasts, TV programmes to watch on the go rather than stream?
You can apply the same reasoning to more or less everything. What regular luxuries in your food shop can you make an occasional treats? With forecourt prices so high, can you reduce your reliance on your car by walking, cycling, lift sharing or using public transport?