Tackling the rising cost of living - but still planning for a good future

Carly Pepperell - 24 May 2022

Cost of living Cost of living

As the cost of living begins to rise, many of us are feeling the same way: a mixture of worry, fear, and stress. While it might feel daunting, there are things we can do to budget our money a little better, and hopefully feel a little less stressed about what’s to come.

Whilst money worries might be at the top of the list right now, it’s vital not to let it impact on your future and your retirement. It might be tempting to look at saving money by not paying so much into your pension pot (or pots!), for example, but try to avoid this. It’s far better to try and make some budget adjustments and tweaks now, and keep saving the same. Your future self will thank you for it.

What can we do?

Jane Hawkes, consumer expert at www.ladyjaney.co.uk, told us how we can be savvy with our accounts in order to ensure the best financial outcome.

We might be stuck between a rock and a hard place when it comes to energy but there are still lots of areas where a bit of savvy switching can be well worth the time and effort. Here are three of them…

Shopping

Use free supermarket comparison apps and websites to compare the best prices in your local supermarkets for your favourite products. Examples include trolley.co.uk which compares grocery prices across the UK’s largest stores, Superizon with its motto ‘Never pay more than you need to’ and mysupermarketcompare which replaced mysupermarket. In addition, latestdeals.co.uk compares prices across the major supermarkets and provides the option to save deals and vouchers for later so that you can budget better.

It’s not just a change of supermarket which could save you money at checkout. Switching to supermarket own brands can save you hundreds of pounds, according to recent research by Which?

In the magazine’s blind taste tests, supermarket labels were judged to be more flavourful than their big brand counterparts in six out of eight essential items. Nearly £100 a year can be saved on orange juice alone, by switching from Innocent, which came out last in the taste test, to Aldi's version.

Banking

It’s never been easier to switch banks thanks to the Current Account Switch Guarantee. First launched in 2013, the guarantee ensures that any charges or interest incurred as a result of a failure in the process will be refunded once organisations are notified. Any payments made to the old account will be redirected for 36 months following the switch and the sender contacted with new bank details. Under the Current Account Switch Guarantee the new bank will switch payments and transfer outstanding balances and the old bank will close the old account in a ‘7 day’ switch.

Six banks are currently offering up to £175 to switch, so there’s never been a better time to do it. Also, you can opt for accounts which give cashback on bills or pay interest on savings depending on what benefits you most. Many banks stipulate a minimum pay-in amount, but you can get round this by moving your money around between accounts. With a packaged account you could also save money on travel, mobile and breakdown insurance.

Insurance

When your insurance policies expire, take the time to weigh up the best policies for you on comparison sites. If you then still want to stay with your current provider, haggle to see if they will price match or at least get closer to other quotations you have received. The cheapest quote may not be the best, but you could get a better deal with a bit of nifty thrifty footwork.

Don’t make policy assumptions. Always check the small print for details of exactly what you are covered for. Write a ‘shopping list’ of needs to ensure that you are fully covered for your requirements. Examine your insurance policy carefully when received to check everything has been included- and nothing else has been added!

Avoid misguided loyalty, and check for any catches, minimum contract terms, early exit penalty clauses, fees or introductory offer expiry dates.

In terms of making little changes in order to adapt to the changing economy, Jeremy Helm from https://mwbsolutions.co.uk/ has some insightful advice.

Work out your disposable income

You should create a list of all your outgoings over the past month (or three months if you want to really dive into detail). This can be done in Excel, making it easy to move them around where appropriate. You then want to list whether they’re essential (rent, utility bills etc) or whether they’re a luxury (gym membership, drinks at the pub etc).

From here, you can work out monthly essential costs and compare that to your income, and see what disposable income you have available for luxury costs. By knowing exactly how much you have available, this will prevent you from overspending on a cost you don’t see as a high priority.

The practice above will also help to highlight some costs you may have forgotten you’re paying for each month, such as subscriptions which you might not be using. It’s also good practice for when you want to start thinking about how much you’re likely to spend in retirement.

Take advantage of your bill provider's deals

Many services, from the internet to phone deals and bills, will offer a worse rate once you’ve passed 12 months. Therefore it could be the right time to shop around and make sure you have the best deal possible. Before you make the switch, you should also reach out to your current providers and highlight what you’ve found elsewhere. If you can provide evidence, they will often be willing to either meet this deal, or sometimes even beat it.