Most households are looking at a squeeze on their wallets this year thanks to inflation going up, the cost of living rising, energy prices soaring, and much, much more. So, it’s safe to assume that you might be looking for ways to make your money go further.
A quick search will help you find plenty of money-making schemes, from taking on a part time job to participating in paid surveys, but for those of us whose time is precious, here are some other things you could try to get more from your money this year:
This is the big one with price caps increasing and every household seeing a marked increase in their energy prices in a relatively short space of time. So, what can you do to keep costs down and make your money go further?
Well, the first thing to note is that the price cap isn’t a maximum you can pay for your energy but rather a cap on how much suppliers can charge. This means that the only guaranteed way to reduce your energy bills is to use less energy – which is easier said than done.
If you’re concerned about this increase in prices, Martin Lewis has pulled together 10 need to know tips for the current energy crisis to help give you a better understanding.
Some things you could try:
If you have a combi boiler, check your flow temperature. For many homes, setting your flow temperature at 45c is as high as it realistically needs to be any higher and you’ll be wasting energy as the thermostat should knock it all off before this temperature comes anywhere near to being hit. However, the downside of this approach is that your house may be a bit slower to warm up.
So, what are your other options? Insulate! Insulate! Insulate!
Basically, unless you live in a new build house where they’ve gone above and beyond on insulation, you probably need to add some insulation to your loft at the very least. While the initial outlay can be expensive, if you have it professionally installed, it will typically pay for itself in savings over just a couple of years.
Another quick win could be to make sure your windows and doors all seal nicely. If they don’t, then you may want to look at repairing or replacing them. While this may sound expensive, it doesn’t have to be thanks to cheap DIY ways to achieve the same results (search ‘window film’ to see what we mean).
With the cost of living increasing, staying on top of your spending could be more important than ever. But where do you start?
Budgeting is often the first thing people look to do, but even with a generous budget, you may find that some areas get a little tight. That’s why it’s important to shop around and ensure you’re getting the best possible deal – especially on regular costs like groceries and fuel.
Fortunately, there are many things you can try to keep your costs down and control any impulsive spending. Here are a few suggestions:
- Don’t shop hungry – the study might be getting a little old now, but nothing has changed and by shopping hungry (for food or otherwise) you’ll tend to impulse buy more items.
- Make a list – knowing what you’re going to buy ahead of time gives you a goal - and having a list you can tick off will give you satisfaction. These are both factors that may help to reduce the amount you spend the next time you do a weekly shop.
- Ask yourself if you can afford it – even taking a second to question whether you can afford the thing you want may stop you from making unnecessary purchases.
- Ask yourself if you need it – if affording it isn’t the problem, then maybe asking if you need it could help you determine whether to buy something or not.
- Understand your priorities – you may not want to (or need to) cut back on all your spending, so why not pick a few things you know you can’t live without and budget for them? For example, you could consider planning for things like meals out, holidays, entertainment, etc.
- Apply the 48-hour rule – this is really easy with online shopping, if you’re thinking about an item, then put it in your basket and leave it there for 48 hours. If you still want to buy it after that time, then go ahead and make the purchase. If you’ve gone off the idea, then you’ve saved money! (Bonus tip: many retailers offer abandoned basket discounts, so you may get a cheeky discount by doing this too.)
Things you could try
A no/low spending day is quite an interesting one, especially if you’re a frequent spender. But picking just one day a week where you try not to spend any money could cut down your weekly bills more than you might think. For example, say on Tuesday, you choose not to spend any money on anything non-essential. It’s as simple as that.
If you can get used to having a single day away from spending, then why not look at stretching it out and having a week of no/low spending each month? Of course, you’ll need to be careful that the spending from these days doesn’t just spill over into the rest of your month, but if you can get this right, you may be surprised by how much you could save each month.
Utilising your savings
If you have money saved up that’s sitting in a cash account, then rising inflation rates may have you a little bit worried that the value of your money is being eroded over time. It’s a sensible worry too, as if the rate of interest isn’t keeping up with inflation, then the number in between is the real figure of how much value you’re losing. As an example, if the rate of inflation is 5% but you’re only getting 1% interest on your savings, then your money is losing 4% of its value for as long as this continues.
That can be a bit confusing, we know. If you had, for example, £10,000 saved in a cash account, then that amount wouldn’t go down. In fact, you’d earn £100 a year with that 1% interest rate. However, what would change is what that £10,000 could buy you in future as rising inflation means you lose purchasing power.
Things to think about:
- Do you have existing debts? – Depending on the interest rates of your debt compared to your savings, it may be better to pay off your current debt with your savings if you are in a position to do so.
- What’s it for? - Are you saving for something in particular, or just putting money aside as and when? If you have a specific target, then it may be worth setting goals so that you know whether you’re on track to achieving them or not.
- Are you saving for the future? - If you’re saving for your retirement, for example, it may be worth opening a personal pension to get more tax benefits from these savings.
- When will you need that money? – If you don’t think you’ll need that money any time soon and you aren’t relying on it for anything immediate, then it could be worth thinking about investing it in the meantime.
You can save money without giving up the things you enjoy, but it’s always worth trying to be clever about things. For example, if you’re subscribed to every streaming channel going, then it may be worth looking at how often you actually use each service you’re paying for.
But that doesn’t stop at streaming services either. Take a look at when the last time you watched TV was and think about whether you really need a TV licence.
You could also save money on entertainment by sharing services with friends and family, looking for ‘2 for 1’ deals at the cinema, using loyalty cards at restaurants or cafes, and so much more. Making your money go further when it comes to entertainment isn’t about giving things up the things you like, but rather making room for them in your budget and finding ways to do them for less money.
Sometimes, stretching your money also marries nicely with living a more ethical lifestyle. For example, by fixing worn or torn clothes rather than buying new not only are you saving an item from the landfill, but you’re also spending far less money.
Similarly, look at things like turning the temperature of your washing machine down – a cold wash will get your clothes just as clean but will use less energy, which brings down both your emissions and your utility bill!
In the UK, the average car journey for a single person is 7.8 miles. So, instead of driving, why not think about riding a bike or walking instead? Obviously, it’s not always that simple – the weather and infrastructure in the UK does make this difficult. But even if you could reduce the number of car trips you make or use alternative transport a couple of times a month, you could save carbon emissions and money on fuel.
Bring your pensions together
Pensions are often ignored when it comes to making your money go further, but they really shouldn’t be! After all, at some point in your life you’ll probably rely on your pension to pay for everything you need.
One of the quick wins you could look at making is to bring all your pensions together in one place – this is called pension consolidation – and it could help you to save you money in the long run.
The average person changes jobs 12 times in their lifetime, and with workplace pensions, that could easily mean they have 12 pensions too. And those 12 pensions will each come with their own fees, which means you could be paying over the odds for your future – and each fee will be eating into your retirement fund.
Things to think about:
- Fees – Some providers charge high fees, while others are very low. Doing a comparison of your different providers will help give you a better idea of how much you could save on fees by transferring them all to one provider.
- What you’re paying for – Fees are important, but the service you get should hold equal importance. Is your pension being managed for you? Have you got a say in your risk level when it comes to how your money is being invested?
- Choose your investments – If you want to invest ethically, for example, or want control over how much investment risk you take on, then this could sway you on providers.
The cost of travel
You can’t help but notice the increased price of fuel, but there are also additional costs that you could be hit with. In fact, the average cost for running your car each year has increased to £1,860, that’s nearly £300 more than in 2021, and a chunk of this amount is attributed to rising insurance costs. These changes to insurance hit younger drivers harder, but many households are likely to feel the effect.
For those who don’t drive, London has seen a 5% increase in the cost of busses and tube tickets, while rail travel in England and Wales increased by 3.8% - the largest single-year leap in nearly a decade. Needless to say, the cost of travel will be impacting most people’s lives as the cost of living increases.
Things you could try
- Compare quotes – with insurance, loyalty rarely pays off. It could be worth using a comparison site to make sure the quote you’ve got is the cheapest for your needs. This could end up saving you hundreds of pounds each year compared to your automatic renewal price.
- Combine insurances – some providers offer discounts for having multiple insurance policies with them. This could be having two different cars listed in one policy, or they could offer a discount on different types of policies, such as life or home insurance.
- Drive less – if you can, the cheapest way to save money on fuel is to simply drive less. If you could walk, ride your bike, or take public transport, it could work out cheaper. Alternatively, why not car-share? The more people you have in the car with you, the cheaper the journey will work out to be per person.
- Plan ahead – while rail travel is increasing, if you plan your journey in advance, you might be able to get significantly cheaper prices. It could also be worth seeing if you could benefit from ‘Ticket Splitting’ on your journey – due to the way some systems are set up, buying several journeys along the same trip could be cheaper than a single ticket between your destinations.
- Do you need to go? – this sounds like a completely mad thing to say, but remember in peak lockdown when we didn’t go places unless it was ‘essential’? Many of us ended up saving a small fortune as a result. It may not be due to the pandemic anymore, but taking a similar (less extreme) approach to your journeys could save you a bundle of cash.
Good luck! We hope this helps. If you have your own money saving tips, why not let us know on Facebook, Twitter, or Instagram?
With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.