2. Spend less
Once you've identified which areas you need to focus on, you could turn your attention to spending less.
Little expenses here and there can quickly add up – a daily £2 coffee, for example, adds up to over £700 a year. Even a £20 monthly beauty treatment costs £240 annually.
But the flip side is that just one small change in behaviour can potentially save you hundreds of pounds a year.
A daily £2 coffee adds up to over £700 a year
Even with essential purchases, there are ways to get a better deal. Just a few minutes' work can save a considerable sum and can get you on the road to starting to save. Good habits to get into include:
- Shop around. Whether you're doing a supermarket shop or making a big electrical purchase, check out what competitors are offering. You could use a comparison site or app to do the hard work for you – PriceRunner Link opens in a new window compares the price of over 4 million electrical items from dishwashers to laptops every day, directing you to the best deal, while mySupermarket Link opens in a new window compares today's prices across 14 supermarkets with the aim of finding you the cheapest price on your shopping.
- Don't impulse buy. Think carefully before making a purchase – especially if it's a big one. If you sleep on it, it may seem less appealing in the morning.
- Beware of special offers. Never buy something you don't need just because it's discounted – you'll be spending extra money, rather than saving it.
When it comes to utility suppliers, regularly checking that you're getting a good deal from your supplier and that your own usage is efficient are great habits to get into. Consider the following suggestions:
Gas and electricity – changing supplier if you're not in-contract is easier than you think and can save the average household £200 a year, according to the regulator Ofgem. Find a list of Ofgem-accredited price comparison sites on the Energy Shopping website Link opens in a new window
Using less energy is another easy way to save money. The Energy Saving Trust's website Link opens in a new window has tips and ideas, from quick ways to save energy daily in your home (such as switching off appliances on standby, only filling a kettle with the water you need and fitting a water-efficient shower head) to how to find out whether bigger projects such as cavity wall insulation could be beneficial to you.
Changing gas and electricity supplier can save the average household £200 a year
Home phone and broadband – uSwitch estimates the average household can save £69 a year by switching supplier when your broadband contract ends. To find out what deals are currently available for your postcode, use a price comparison site such as Broadbandgenie Link opens in a new window
Remember not to just look at price – match the deal to your needs and check whether line rental is included. If you choose to switch, you can do so directly through a price comparison website, or you can chose to get in touch with your new supplier directly.
You can also save money by avoiding calling at peak times – check your tariff for when these are. Paying by direct debit is also cheaper than waiting for a monthly invoice, and means you won't forget to pay.
Mobile phone – when you're coming to the end of your contract, get into a habit of looking into whether you could save money by switching to a contract more in line with your call and data usage pattern.
Ofcom-approved Billmonitor Link opens in a new window helps you match your usage to the deals currently on the market, calculating whether switching would benefit you. Which? estimates that 70% of consumers could save £159 a year by a having a contract better suited to their needs.
Water – if you don't have a water meter, you may be able to save money by switching to a meter. Use a water usage calculator such as the Consumer Council for Water's Link opens in a new window to find out. The Money Advice Service reports that switching could save you around £100 per year.
Switching to a water meter could save you around £100 a year
Regardless of whether you have a meter or not, read tips on how to reduce your water usage (as well as your energy bills, if you use less hot water) n the saving water section Link opens in a new window of the Energy Saving Trust's website. Habits such as turning off the tap while you brush your teeth and only using your washing machine with a full load can all help you reduce your water usage and costs.
Car – with fuel costs on the rise again, it pays to plan ahead when filling up. Find the cheapest fuel prices in your area on the Petrolprices.com Link opens in a new window website. The Money Advice Service estimates that saving just 5p a litre on the price of petrol or diesel could save the average driver £100 a year.
Changing the way you drive can also save you a significant amount of money. One AA test found that the average driver could go 10% further on a tank of fuel by changing a few habits, including accelerating gently, changing up a gear earlier and avoiding unnecessary breaking – see the AA website Link opens in a new window for the full list of habits.
Public transport – if you use public transport, planning ahead can help get you the best deals. Advance tickets are usually available up to three months before you need to travel, and are often cheaper.
For longer journeys, it's sometimes cheaper to 'split' your ticket – buying several tickets for different segments of the journey (but remember, you must stop at each of the stations on your tickets). In London, get an Oyster card – it can be used on the Tube, on buses and on most local overground trains, and is cheaper than buying paper tickets. A short Tube journey in Central London will cost you £4.30 in cash but just £2.70 on an Oyster Card.
If you need an incentive to get into the cycling habit, a tax-free bike – which you may be eligible for under the Cycle to Work scheme Link opens in a new window – could sway you.
Holidays – identify how much you have available to spend on your holiday by using the budget tool Link opens in a new window described in section 1 above. Then shop around, in high street travel agents as well as comparison sites. Being flexible on your travel dates (such as by avoiding school holidays and bank holidays, and travelling mid-week) can also help you get a better deal. Momondo Link opens in a new window estimates future flight prices to help you find which may be the cheapest.
For suggestions on how to get the best value on your holiday spending money, see our article "Travel money tips for better trips" Link opens in a new window