There has never been a more important time to save money in the UK. According to research, unemployment is still on the rise with rates hitting new national highs. However it seems that even employment cannot safeguard us against the rocketing cost of living. Last year many found themselves in the situation where inflation outweighed their pay rise meaning financially they were going to be worse off.
Different people have attacked these financial problems in different ways. Arguably, the most effective method is to assess your budget and make relevant cutbacks. Throughout this article we are going to discuss the various ways in which you can save money or maximise your income in order to combat the rising the cost of living:
Clear your debts
With disposable income dwindling, paying off existing debt is becoming increasingly harder. However, regardless of your financial situation clearing debt should be right at the top of your priority list. Having outstanding balances on credit and store cards will be hurting your finances; this is because the interest rates you are charged on a monthly basis are generally quite high. By chipping large chunks off the balance each month you’ll reduce the interest you are being charged and be debt free quicker than you ever thought you could be.
One way of clearing credit or store card debt is to transfer the outstanding balances over to a 0% balance transfer credit card. The main incentive of these cards is that you pay no interest on the transferred balance for an introductory time period.
When looking to clear debt, one of the most effective methods is known as snowballing. This is where you prioritise debt in order of interest rate; therefore you start by paying off the highest interest first and work your way down to the lowest. The theory being; high interest debt is most costly to your finances meaning you need to clear it as quickly as possible.
Taking advantage of an ISA
ISAs arguably offer the best value for money for savers with some currently offering rates of 2.5% interest; an extremely inviting figure for savers. The rates are not the only attractive point of ISAs;the interest you earn is exempt from tax meaning the rates you see are the rates you get.
ISAs are generally designed for those with moderate levels of savings as they come with than allowance. Currently the limit is £11,520 of which up to £5,760 can be in the form of cash.
Reducing your monthly outgoings
When assessing your budget you’ll probably notice a few areas where you are spending more than you could be. By highlighting these areas and taking relevant action you could find yourself considerably better off as the months go on:
Transport – With the cost of petrol seemingly rising week on week many are seeing their transport costs go through the roof. There are endless ways to cut your fuel usage including; walking and cycling whenever possible, driving more economically, carrying out basic car maintenance and removing any unnecessary weight from your vehicle.
Shopping–The weekly shop is likely to be one of the largest expenses on your budget, which makes it a great area to find impressive savings. One method many are now implementing is the supermarket downshift, this works on the basis that you drop down a level of branding and see if you are able to tell the difference; if you can’t – continue to buy the downshifted brand or even try dropping another level of branding.
Utilities – If you’ve been with your current energy provider for a number of years, then it may be time for you to compare quotes and see if you can save money. Many fail to switch providers on a regular basis as they see the switchover process as one that is full of hassle. While this may have been the case 10 years ago, it’s no longer this way. By using comparison sites to compare costs you can gain tens over quotes in a matter of minutes; your future provider then sorts the details out with your current provider so as an individual you have very little work to do.
Broadband, TV and Talk – If you are someone who pays for your satellite TV, broadband and landline bills separately then you could be paying more than you need to. By bundling the cost of all three with one singular provider you’ll find yourself making significant savings.
One way of maximising your spare income is by investing. There are many different forms of investments; stocks, shares, commodities and foreign currencies to name just a few. Investing your income is seen as a high risk strategy that could profit large return, generally speaking the more you invest the larger the returns available. Investing income without carrying out any research isn’t recommended, which is why it could be worth your time to seek professional advice prior to proceeding any further.
As a last gasp option it is certainly worth your time to de-clutter your house and search for things which you could sell. The saying ‘one man’s trash is another man’s treasure’ really is true; even things you’d never dream of wearing/ using again could make you nice sum of money on eBay, in your local ad trader or even at the car boot sale.