Inflation is rising sharply, and Christmas costs are looming large – but there are easy ways to keep your outgoings in check, says Katie Binns.
A fifth of people think their finances will worsen in the run-up to Christmas, according to research by retirement specialist LV=. There are concerns about the cost of living, energy bills, upcoming tax rises next April and an increase in interest rates adding hundreds of pounds to some homeowners’ mortgage costs.
The Institute of Fiscal Studies (IFS) calculates that overall, households face extra costs of up to £2,000 a year. Someone earning £30,000 a year, for example, will be worse off by around £1,420 a year.
Christmas can be a costly season too, so now is the time to look at your outgoings and make some changes to your personal finances.
Boring but easy wins
Switching energy providers is not straightforward, but shopping around for TV, phone and broadband deals should be easier. If you haven’t switched in a while, first give your provider a call and tell them you’re thinking of switching and see what they can do for you.
Council tax could rise by as much as £250 next year (and up to £400 in the next five years). You may unknowingly be eligible for a discount, for example if you’re single, a carer or disabled. On top of that, money saving expert Martin Lewis estimates that up to 400,000 properties are in the wrong council tax band – meaning plenty of us are likely paying more than we should be. Each council offers different support, so you'll need to for more information.
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Reducing your food waste is another good way to cut food costs. Yoghurt, crisps, apples and pork sausages are just some of the products that have seen prices rise recently. UK households throw away almost two kilograms of food per day, which adds up to £500 a year, according to comparison site the eco experts.
Plan your meals for the week to reduce waste, and only throw food away if it’s past the expiration date - not its best before date. shows you can eat well for less, while apps such as offer unsold food from supermarkets and restaurants at much cheaper prices to stop it going to waste.
And don’t forget to check your subscriptions! Do you really need multiple television or music streaming packages?
Saving is often equated with deprivation, but it doesn’t have to be so. There are ways to save without feeling like you’re living a frugal life wearing a hair shirt! Get free culture and nights out by signing up to the right mailing lists. The offers free concerts around the UK, including Later…with Jools Holland, Radio 1 gigs, Radio 6 recording sessions and BBC orchestra performances.
If you regularly give money to charities, you could volunteer your time instead. For example, become a phone friend to an elderly person, donate blood, get involved in a conservation project or mentor a young person.
Choosing to borrow rather than buy is an easy way to save money. Whether it’s a new laptop or an outfit for an event, family and friends may be able to help here but also research local community projects. Olio, the London food waste app, has recently added an feature to encourage users to share items such as drills and pasta makers in their neighbourhood.
Fancy a frugal stretch?
A no-presents rule for Christmas this year in your family or circle of friends will save money and may seem do-able: social media has been quick to remind us that this year we’ll (hopefully) have each other’s company, unlike 2020’s lockdown Christmas.
A no-spend week or month involves no spending beyond mortgage (or rent) and regular bills, so no lunches out, coffees or drinks with friends, or purchase of big-ticket items. You need to be disciplined to do a frugal stretch so it isn’t for everyone.
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Pick a good week or month to do it. January is a good time: there’s less temptation to spend, as many of us go out less because it’s such a dreary month. Have a clear financial goal to give your frugal stretch purpose: knowing you’ll use the savings for a holiday or to overpay the mortgage will keep you motivated.
If you do Christmas presents, then think hard about what to put on your Christmas list. What will you miss in January if you're going to limit spending? Personally, I always ask for products from Neal's Yard Remedies and vouchers for Waterstones, to cushion me during a no-spend January.
If a no-spend week or month sounds too much, try a smaller time frame, like a no-spend weekend once a month.
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