Nine in ten adults say that their cost of living has increased in the last 12 months, according to the Office for National Statistics, with many of us looking at ways to keep costs down.
It’s easy to get into the mindset that certain expenses are essential, but in reality, many of us waste money on everyday things without even noticing. While it can be difficult to change our habits, doing so could help ease some of the financial pressure we’re under.
Here are a few of the things you might be wasting money unwittingly on and some tips for cutting back.
- Paying twice for insurance
- Buying new instead of used
- Not making the most of high interest rates
- Keeping subscriptions that you aren’t using
- Sitting on your mortgage lender’s Standard Variable Rate
- Paying for convenience
- Not shopping around for phone and broadband packages
- Using discounts to justify purchases
- Buying branded items
1. Paying twice for insurance
The average UK household spends nearly £1,000 a year on insurance policies, according to Statista, but many people are paying for cover that either may not provide them with the protection they need, or that they might already have.
For example, if you have a packaged bank account which you pay a monthly fee for, this may come with travel insurance or breakdown cover included. If you then take out cover when you go on holiday, or buy a separate breakdown policy, you’ll effectively be paying for the same cover twice.
Even if you’re confident you don’t have any duplicate policies, make sure you check the small print of any cover you have, so that you can be certain it meets your needs.
If you find there are any policy features that are either too basic or more than you need, you might be able to adjust your cover. Your best bet is to call your insurer and outline the changes you need, they’ll be able to tell you how the changes impact your premiums and whether you’ll have to pay an administration fee too.
If you’re looking for a new home, car or life insurance policy, these comparison tools allow you to compare policies from a wide range of providers:
2. Buying new instead of used
Although splashing out on a brand-new gadget or item can be tempting, you could save yourself money by buying the same thing second-hand.
There’s a market for almost anything you can think of, from kitchen spatulas to games consoles and everything in between. So before you buy something brand-new, do a quick internet search to see if you can find the same thing second-hand at a fraction of the price.
For example, we looked at the prices for a 128GB iPhone 13 and found that a brand new handset from Apple would set you back £599, whilst a refurbished handset would cost £509. However, if you bought one from second-hand electronics and entertainment specialist, CeX, it could cost between £405 and £505, (prices correct at time of writing: 27.11.23).
3. Not making the most of high interest rates
Interest rates have jumped over the last year in a drive to dampen inflation. This is great news for savers, although make sure your savings provider has passed on these rate increases, or you could be missing out on valuable interest. If they haven’t, then it’s time to vote with your feet and move your money to an account paying higher returns.
Currently, the best savings accounts are:
- Easy access account: Metro Bank’s Instant Access Savings (Limited Edition) offers 5.22% AER on minimum savings of £500.
- One-year fixed rate bond: Metro Bank’s Fixed Term Savings Account – One-year offers an interest rate of 5.80% on a minimum balance of £500.
- One-year fixed rate ISA: Metro Bank’s One-Year Fixed Rate Cash ISA offers an interest rate of 5.71% on a minimum balance of £1.
- Regular savings account: Nationwide’s Flex Regular Saver Issue 2 offers 8.00% AER on a minimum balance of £200. This is a regular saver, so you will need to deposit between £0 and £200 a month to earn the interest rate.
Figures were correct at the time of writing: 4.12.23
For more information on different savings rates, have a look at our articles Best cash ISA rates – which cash ISAs pay the most interest?, Best instant access savings accounts and Fixed rate savings bonds explained.
It’s worth noting, however, that no savings accounts currently offer inflation-beating returns. If you’re comfortable accepting a higher level of risk in return for potentially higher rewards, you might want to consider investing. Bear in mind, however, that there’s a chance you could end up with less than you put in. If you’re not sure where to invest, or whether investing is right for you, it’s a good idea to seek professional financial advice. Find out more in our guide Is investing right for you?
If you’re looking to invest in an ISA, fund platforms such as Fidelity, Hargreaves Lansdown and AJ Bell can help narrow down your choices with recommended fund lists, which might highlight 50 funds out of the 3,000 plus available to UK savers. They also offer ready-made funds for a range of different risk profiles if you don’t want to pick investments yourself. Bear in mind that there are charges associated with stocks and shares ISAs and you’ll pay a fee to the platform as well as for the funds held.
4. Keeping subscriptions that you aren’t using
Many of us have multiple streaming subscriptions, like Netflix or Amazon Prime, but it’s worth thinking about whether you really need all of them.
The average subscription service costs about £7 a month, and around 24% of UK households have more than one subscription service, which means you could easily be paying £168 or more a year for them. Dropping just one service for a year could save you over £80. You might also be able to reduce your outgoings by stopping other subscriptions, for example to magazines you don’t read, or gym memberships that you no longer use.
For more information on how to cut spending on subscriptions and streaming services, have a look at our articles 8 ways to save money on your streaming services and Are you losing money on subscriptions you don’t need?
5. Sitting on your mortgage lender’s Standard Variable Rate
When you come to the end of your current mortgage deal, your lender will usually automatically move you onto their Standard Variable Rate (SVR), unless you’ve chosen to remortgage to a different deal. This is normally a much higher rate than you will have been paying.
If you’re able to, remortgaging to a new mortgage deal might help reduce your monthly payments considerably, and over the course of the year you could save hundreds, if not thousands of pounds. You can read more about this in our article Five good reasons to remortgage right now.
If you’re thinking about remortgaging, it’s a good idea to compare remortgage deals from the whole of the market and find out how much you might be able to save. The tool gives you options to filter by lender so you can see how your existing lender compares against the rest of the market.
6. Paying for convenience
Modern life can feel busy and many of us end up paying a little more for convenience. Whether it’s paying a delivery fee for online orders, or buying pre-chopped vegetables, convenience might only cost a few pennies or pounds here and there, but over time these small sums can really add up.
For example, at most supermarkets, a bag of chopped onions is between 80p and £1.90 more expensive than buying the same weight as whole ones. Onions are one of the most popular vegetables in the UK with most households buying them each week, so over the course of a year, this difference alone could add up to nearly £100.
Equally, if you regularly pay for anything to be delivered, whether that’s a takeaway or your online shopping, you could save a lot of money by collecting it yourself.
Most supermarkets don’t charge anything to click and collect so if you’re able to drive to pick up your shopping, this is likely to be a much cheaper option.
7. Not shopping around for phone and broadband packages
Our phones and internet connection can feel like non-negotiables, but if you’ve let your deal roll on for a number of years, the chances are you could be overpaying for your services.
The average person could save hundreds of pounds by switching deals and it’s really important to shop around for the best deal that gives you the level of coverage you need.
If you’re looking for somewhere to start, the following tools can be a great way to compare deals:
Compare broadband deals
This tool allows you to compare deals from a wide range of providers and you could save up to £180.48* on your broadband, phone & TV bills. To use the tool, simply enter your postcode to see deals in your area.
Compare mobile phone contracts
Use this tool to compare mobile phone contracts and SIM only deals from a range of providers, including Three, Vodafone, O2 and more. According to the Competition and Markets Authority (CMA), seven out of 10 people could save £222 a year by switching to a mobile phone contract that better suits their needs.
8. Using discounts to justify purchases
There is something very tempting about the prospect of getting a bargain, but it also means that we can talk ourselves into buying things we don’t really need.
Black Friday shows just how enticing a good discount can be. It has become one of the UK’s biggest shopping days of the year, and it’s promoted as the day to get the best prices. The reality however is that 98% of deals available on Black Friday were cheaper or the same price at other times of the year, according to research by consumer champion Which?.
With this in mind, next time you’re tempted by what looks like a great deal, it’s worth taking a moment to really consider whether you actually need the item, or whether it’s just the price that is making it appealing.
9. Buying branded items
We like brands for a reason. They give you a level of reassurance that you’re getting a well-known quality product, whether that’s ketchup, toilet roll or even sunglasses, but in the majority of cases, the unbranded product is pretty much the same. So if it’s become a habit to buy a brand name over a cheaper alternative it might be time to rethink and save some valuable money.
For example, currently, a bottle of Heinz ketchup will typically set you back around £3.40 for a 460ml bottle, whereas most supermarkets own brand ketchup can cost anywhere between 75p and £1 for the same size bottle. So next time you’re reaching for a brand out of habit, why not give the supermarket’s own brand a try and save yourself a few pennies. You can read more ideas on keeping food costs down in our article 21 ways to save money on your food bills.
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