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Steep living costs mean that many of us are feeling the pinch, which might prompt us to explore ways we can keep bills 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 on unwittingly and some tips for cutting back.
Contents
- 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
- Spending too much on energy bills
- Paying for convenience
- Not shopping around for phone and broadband packages
- Using discounts to justify purchases
- Buying branded items
- Paying more credit card interest than you need to
- Not checking pension and investment charges
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 any changes might impact your premiums and whether you’ll have to pay an administration fee to amend your cover.
Remember too, that when your insurance is up for renewal, you don’t have to stick with the same insurers and you might find better value cover elsewhere. If you’re looking for a new home, car or life insurance policy, make sure you compare policies from a wide range of providers so you can be certain you’ve found the best possible deal.
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 second-hand 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 used at a fraction of the price.
Websites such as Facebook Marketplace, Gumtree and eBay can be good places to start your search for bargain items, but equally second-hand homeware shops and charity shops are a good option too.
3. Not making the most of high interest rates
Interest rates have risen several times over the last year in a drive to dampen inflation. This is good news for savers, although it’s important to check 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.
Below are some of the best easy access accounts currently available.
Top 5 Easy Access Accounts
For more information on different savings rates, have a look at our articles Best cash ISA rates – which cash ISAs pay the most interest? and Fixed rate savings bonds explained.
If you’re comfortable accepting a higher level of risk in return for potentially higher rewards than savings accounts can offer, 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?
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.
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.
The average person in the UK spends around £58 a month on all subscription services, adding up to approximately £696 a year. Even ditching just one of these could save you more than £100 a year, given that many services are around the £8 or £9 mark.
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 could save you 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. Spending too much on energy bills
Energy bills can burn a big hole in our monthly budgets, and if you’re currently sitting on your provider’s standard tariff, you may be able to save by switching to a more competitive tariff. Many people prefer fixed rate energy tariffs, as these lock in your price per unit of gas and electricity and the standing charge for a set period, typically 12 or 18 months. Find out more in our article Should I fix my energy prices?
If you’re considering switching your energy provider, it’s worth doing plenty of research so you can be certain you’ve found the best possible deal to suit your needs. Comparison websites such as MoneySuperMarket, Uswitch and Compare the Market enable you to compare the latest energy tariffs, whether you’re looking for a fixed or variable deal.
If you’re worried about longer-term heating costs, you might want to explore ways you can generate your own energy, or find more energy-efficient ways to heat your property. Find out more in our guide Can I generate my own energy?
7. 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.
8. 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 these services.
The average person could often 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 considering switching your broadband provider, it’s worth doing plenty of research so you can be certain you’ve found the best possible deal to suit your needs. Comparison sites such as MoneySuperMarket, Uswitch and Compare the Market all enable you to compare the latest broadband deals, whether you’re looking to switch just your broadband, or if you want a broadband, phone and TV package.
9. Using discounts to justify purchases
There’s always something very tempting about the prospect of bagging a bargain, but it also means that we often talk ourselves into buying things we don’t really need.
For example, Black Friday in November 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 to splash out on something that 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 discounted price that appeals.
10. Buying branded items
We like brands for a reason. They give us a level of reassurance that we’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, if not better. 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 supermarket own-brand ketchups 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.
11. Paying more credit card interest than you need to
If you’ve got credit card debts and you’re trying to pay off what you owe gradually, make sure you aren’t being clobbered by steep interest charges. If you are, you should consider moving your balance to a 0% balance transfer credit card, so you can pay down your debt free of interest charges.
Bear in mind, however, that although the credit card company won’t charge you interest, you’ll normally pay a balance transfer fee to move your debt across. This can be anything from 0.5% to 3% of the balance transferred.
You’ll also need to make sure you pay off your credit card balance by the time the 0% introductory deal finishes, so always aim to pay more than the minimum each month if you can afford to.
12. Not checking pension and investment charges
If you have a pension or other investments, make sure you aren’t paying over the odds in charges. These can dramatically impact the amount you end up with, so it’s vital to check how much they’re costing you, and to consider whether you might be better off switching to a cheaper provider or product.
If you’re paying more than 0.75% in charges for your pension or investments, this is generally considered expensive and you may want to move your pot to another provider. Some charge a flat fee, rather than a percentage fee, and which is best for you will depend on the size of your pension. Generally, a flat fee is best suited to larger pensions or investments, as your fee will remain the same no matter how large your savings get. Find out more in our article What pension charges am I paying?
If you’re not sure how much you’re paying in charges, or whether you’d be better off moving to a different provider, you may want to seek professional financial advice. Check out our guide How to get advice on your pension.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
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