Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Reduce your outgoings: save over £1,000 a year
Reading Time: 7 minutes“How can I reduce my outgoings?”
It’s a familiar cry, from the millions of people who have had their finances squeezed in recent years. It’s not an easy task: you need to work out what can go, and what is essential to keep in your budget. You also need to establish the luxuries you can live without, and those that make life worth living.
Fortunately, there’s another trick to balancing the household budget that can make it far less painful. We can show you how to reduce your outgoings the right way.
- Assess what you need and what you don’t
- Be ruthless
- Be environmentally friendly
- Save money by switching, not ditching
Assess what you need and what you don’t
When looking to reduce your outgoings, you need to establish what you can live without. Look at the value for money you’re getting from the direct debits and regular payments that leave your account. What are they for? Do you really need these things?
Most of the time the answer will be yes – especially if you’re paying off debts or paying essential insurance premiums. However, if you haven’t reviewed these payments for a while you could get a better deal elsewhere.
Here are a few suggestions for how to cut your direct debits:
- If you are paying for more than one magazine subscription in your household, would you be better off with a Readly subscription? For £7.99 a month you can get an enormous range of monthly magazines downloaded to up to five devices.
- If you are paying for Sky or Virgin Media TV, are you getting full value from all your channels? Could you downgrade to fewer channels? Could you switch to Freeview instead? Have you looked at Amazon Prime or Netflix recently? Are you sure you couldn’t switch to watching programmes and films on demand?
- If you have a gym subscription coming out of your account, are you using it enough to justify the spend? Could you downgrade it to an off-peak membership, or would you be better off at a cheaper gym offering just those things you regularly use? Check out great ways to cut the cost of your gym membership here.
- If you have a mobile phone payment coming out each month, check how long you have to run until the end of your contract. Anyone whose contract has already expired will be paying extra for their phone – even though they have already repaid the cost in full. If you’re willing to keep your current phone for a while, you can switch to a cheaper SIM only deal. Meanwhile, those who want to upgrade their phone and stick with a full contract can still save money by shopping around. Check out our guide on cutting the cost of your mobile.
- If you pay your bills by direct debit, there will also be the monthly cost of the essentials coming out of your account. However, just because they are essential, it doesn’t mean the costs are fixed.
Never let any insurance policy roll over for another year, as insurers will bump up your premiums each time. It’s always worth shopping around for new car insurance and home insurance.
Similarly, never let your energy deal roll over from a special offer to the standard rate when the deal ends: it’s usually far more expensive. Read our guide to switching energy providers, for everything you need to know. We’ll take you through the whole process and you could save hundreds of pounds a year. You can also compare energy prices and find the best for you.
It’s also worth taking a look at how to cut the cost of car insurance.
Be ruthless
Once you have done the easy and painless things, it’s time to think beyond your comfort zone. Consider whether some things that seem part of the furniture could go – at least for now.
- The easiest change of all is to give up brands at the supermarket. Most of us have forgotten why we always by the same brands and in some cases we’re paying twice the price of the supermarket’s own brand. It’s worth buying own-brand items for a week, and trying them out. Those you don’t like, you can trade back up. Those you get on with, you can keep. Even if you keep half of the swaps, you could cut 25% off your bill.
- Once you have parted with grocery brands, it’s definitely worth trying a discount supermarket. They are cheaper than the big four, and given that they are winning a number of prestigious awards at the moment, you may discover you like them more too. For more tips check out our article on saving money on groceries.
- Once the easy change is made, challenge yourself to consider tougher things – like the question of whether you really need two cars. You could save a small fortune by just having one, or downsizing to a smaller and cheaper second vehicle. If you only use the car a couple of times a week, the sharing economy could help you save money. Check out our article on alternatives to owning a car.
- Holidays are another major cost that we cannot imagine giving up. However, if you don’t have the funds for it, it’s not worth going into debt, when you can still get away for less. Give up your resort and your all-inclusive deal, and consider a low cost flight (check out our guide to getting cheaper flights), Airbnb property, and self-catering. If you book early (follow the airlines on Facebook and Twitter for news of when they release the cheapest flights) you could get away for half the price.
- And don’t forget those little day-to-day costs, which really add up. The average Brit spends £5 every working day on lunch, which works out at over £1,000 a year. You don’t have to give everything up at once: if you have a special treat on Fridays, or a nice coffee on a Monday morning, you can keep those. Just bring your lunch from home for the days when you’re buying a bog-standard boring sandwich.
Be environmentally friendly
Being environmentally savvy will not only help you feel good about yourself, it’ll help your wallet too!
Don’t waste food! According to LoveFoodHateWaste, we throw away a third of all the food we buy. Check out its website for loads of information, ideas on how to use those leftovers and how to save up to £50 a month.
Another good way to reduce your outgoings and be environmentally friendly at the same time is to have a water meter installed (assuming you have more – or the same number – of bedrooms in your house as people). That way you can cut down on the water you use, and save money. Here’s just a few ways to save:
- Start washing your clothes at 30° instead of 40° and only run the cycle if you’ve got a full load – one cycle uses 95 litres of water.
- Take more showers instead of baths. According to Waterwise, a shower uses one third of the amount of water that a bath does (if it’s not a power shower).
- Use the dishwasher! It uses 15-20 litres of water, compared to hand washing which uses between 60 and 70 litres. This only works if you scrape rather than rinse the plates before they go in the dishwasher, and if you only run the cycle when it’s full. You can also consider investing in a smaller dishwasher if you’re a couple or a small family.
- Turn off the tap when you’re brushing your teeth. Leaving it running can waste as much as nine litres of water a minute.
Now for the most important bit: according to SaveWaterSaveMoney, if you cut your water usage by 20 litres a day, you’ll save £25 a year. For more ideas like this, have a look at 50 Ways to Save Money by being green.
You can also reduce your outgoings when cutting your energy bills by following these handy hints:
- Don’t use the tumble dryer; you can dry your clothes for free either outside in the summer or on an airer/radiators indoors in the winter.
- Get timers for your plugs, so that things will always turn on and off when you want them to.
- Get a smart meter, which monitors your use, and shows you the habits that are wasting energy. We all know, for example, that we should only boil the amount of water we need for a cup of tea – and keep the kettle descaled. However, until you’ve watched your kettle eating electricity, it’s easy to forget our best intentions.
- Make sure your home is well insulated. Take a look at our home insulation article. We’ve also come up with loads of quick fixes to those cold draughts in your home in our article on reducing your heating bills. You can find out whether you qualify for an insulation grant here.
Save money by switching, not ditching
Hopefully, we’ve proved you can reduce your outgoings a fair bit without having to ditch too much of what you need and love.
We took a look at how much the average family could save by cutting their costs. This is the average expenditure of a family on insurance:
- Buildings insurance – £124 a year
- Contents insurance – £138 a year
- Car insurance – £484 a year per vehicle
- Total – £746 per year (of course this is higher if you have life insurance, or private medical insurance).
If you follow our advice and cut some of your other costs, you stand to save much more than this. Even if you only follow a few of the tips, your savings could look like this:
- Switch from the top end Sky package to freeview and Netflix – save £850 a year
- Switch some of your groceries to a supermarket own-brand – save £690 a year
- Bring your own lunch to work for four days a week – save £780 a year
- Save water – upwards of £25 a year
- Save energy – up to £300 a year
- Total Saving = £2,645
So, there you have it. Follow a few of the ideas we’ve come up with and you could save well over £1,000 – without having to give up the things you really value.
Relevant book titles
- 100 Ways to Beat the Credit Crunch
- How I Lived a Year on Just a Pound a Day
- The Thrift Book: Live Well and Spend Less
Some good information here.
Some useful ideas for saving money here.
One GREAT site, you have gotten me into a new way to make saw dust Thank You I think LOL