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Tips To Beat The Rising Cost of Living

Friday 18th November 2022

What's it all about?

This article's designed to help you:

Get on top your day-to-day expenses.
Understand how small changes can make a big difference to your finances.
Make smart decisions about your spending.

Over 9 in 10 of us in the UK are seeing our day-to-day spending rocketing up. Over 3 in 4 are struggling with bumped-up fuel, gas and electric bills each month, too. It’s a painful one-two punch combination that’s lumped a shocking 15 million UK households with the difficult decision of whether to heat our homes or feed our families. This is all happening at an already tough economic time. According to the Office for Budget Responsibility, the UK was already in a recession as of November 2022. This basically means that the economy has slowed down for 2 quarters on the trot. Meanwhile, unemployment’s expected to go up from 3.6% to 4.9% by 2024 and, while we’re likely to be seeing overall growth of 4.2% this year, the size of the economy will actually shrink by 1.4% in 2023 before growing again by 1.3%, 2.6% and 2.7% in the following 3 years. Inflation, which is what’s got most of us concerned, is predicted to sit at 9.1% this year, before falling to 7.4% in 2023. As long as the cost of living stays so high, it’s down to all of us to make better decisions about how we manage the money we’re spending. Here are some key tips on cutting your costs down to size.

Utilities

The exploding cost of energy’s sent a shockwave through basically all of our family finances. On average, UK households are burning through an incredible £2,500 per year on gas and electricity – essential utilities we really can’t go without.

The November 2022 Autumn Statement announced that the Energy Price Guarantee would be kept in place for another year after April 2023, but would be a little less generous going forward. The cap originally aimed to limit average energy bills across the UK to £2,500 per year. However, after April 2023, typical household bills will be capped at £3,000 instead, which is going to be a painful blow to many families.

When you’re managing your energy use, it’s important to realise that a few small changes you can reliably stick to are usually worth more in the long run than a single big one that you can’t. For example, even clicking your main thermostat down by a single degree can save you anything from £55 to £90+ over the course of a year, depending on the size of your home. The odds are, you won’t even feel the difference in temperature day by day, but you’ll be taking some real heat off your wallet.

There are lots of small changes you can make around you home to bring down your energy bills, and most of them are so simple you’ll barely even notice them. However, they’ll all combine into some serious savings over time. Check out our guides below for more on how to keep your energy spending under control.

6 ways to save on gas & electric bills

7 heating bill hacks
Food

Food bills are another everyday cost where small changes can add up to big savings over time. On average in the UK, households are splashing out £3,312 on groceries alone each year. That doesn’t even include the food we buy from takeaways or eat in restaurants, either. Add those in and the figure leaps up to over £5,000!

Bringing down your yearly food costs doesn’t actually have to mean buying less food – although if you find yourself throwing away a lot of out-of-date food waste each week you could probably do yourself a favour by not buying things your family won’t get round to eating. The real trick to trimming the fat off your supermarket bills, though, is to make full use of the range of retailers and discount schemes on offer. Aldi, for instance, prides itself on keeping its prices super-competitive by staying efficient and stocking a lot of own-brand goods. In fact, about 90% of what Aldi sells is “private brand”, cutting down on their costs and passing some of what they’re saving on to their customers.

Another thing to look into is whether your favourite supermarket has a loyalty card scheme running. Tesco’s Clubcard can be great for bagging a few bargains, for instance. Just be sure that those “unmissable” deals aren’t convincing you to buy things you don’t actually need. Even small discounts can be valuable if they’re on things you have to buy regularly.

Now we come to those little extras we all love. We’ve already seen how a typical British family munches through an average of over £1,700 of takeaways and restaurant meals per year. There’s absolutely nothing wrong with treating yourself and your loved ones once in a while, but if the cost’s becoming a problem, you can still get the full experience by cooking “fakeaway” classics using free recipes from the web. It’s easier than you’d think, and can even be more fun if you get the whole family involved.

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Travel

About half of UK households have been deliberately cutting back in their non-essential travel recently, and it’s easy to see why. Travel costs can pump your yearly expenses up by a lot, particularly if you’re driving or using public transport for your work. As fuel and ticket prices continue to rise, every mile matters even more.

If you’re not using your own wheels for your essential journeys, always check out the kinds of discounts your journey qualifies for. It’s true, the choice can be a bit baffling if you’re not used to sorting through your options. There are 9 different types of railcard alone to pick from, depending on the travel you’re doing. Once you’ve got it figured out, though, you could be looking at a discount of at least a third on your overall costs.

If you’re a London traveller and use public transport a lot, make sure you grab yourself an Oyster card. The great thing about these is they set a hard cap on how much you’ll have to spend on any given day. You can use them on the London Underground, the buses and most of the national rail services in London. About the only thing to watch out for is whether you’re actually saving money compared to your other transport options. Even with the various discounts you can get, you might still end up paying more than if you’d used your own transport. Obviously, your best option will depend on where your travel takes you. Petrol alone is costing the average UK driver over £1,400 a year, so make sure you cost out your various options before making a decision. A little legwork up-front could pay off in a big way over time.
Debt and defaults
As the cost of living goes up, it’s no big surprise to find so many of us struggling to stay out of debt. If you haven’t been managing your household budget carefully enough, just one unexpected cost or financial setback can leave you needing an emergency cash boost that could end up making things even worse. Over 1 in 4 people surveyed in the UK say they’re now having to lean more heavily into loans or expensive credit card deals to cover their day-to-day costs than they did a year back.

When you’re stacking up debts, every other money decision you make gets more difficult. Even if you’re able to save a little cash regularly, the interest on your debts will almost always pile up faster and higher than it will on what you’ve put away. This makes you poorer over time in real terms, even if you’re making a real effort to save. That’s why, wherever possible, it’s a smarter move to pay down what you owe before you try to stock up any savings. At the very least, you want to be able to cover the minimum payment amounts on your debts each month so they don’t get out of control. Not only will this help keep your overall finances more healthy, but it’ll also protect your credit score if you need to borrow in the future. Over 2 million people are currently finding themselves falling behind on at least one crucial payment each month. We’re talking about the really important bills here, like rent, mortgage repayments or high-interest credit card balances. These are the kinds of things that can damage your credit score as well as your bank balance, so it’s incredibly important to stay on top of them.

One thing that really does work is learning how to set up, and stick to, a household budget. Basically, all you have to do is work out exactly how much cash you have reliably coming in each month, and then divide it up to cover your costs.

Those costs get sorted out into categories, with a set percentage of your income going into each, like this:
- 50% of your income goes toward essential costs like loan repayments, rent or your mortgage.
- 30% goes toward the “fun stuff” you could probably live without, but shouldn’t have to.
- 20% is left over to save.
For pretty obvious reasons, this is called a “50/30/20” budget, and it’s a system we’ve talked about before in some of our other guides. If you’re new to setting up budgets, it’s a great place to start. We’ve even got a free tool you can use.

Free budget planner

Keep checking back here for more money tips and updates. We’re experts at saving you cash and we’re always here to help. That’s the reason why you’re better off with RIFT.

RIFT Round-upWhat it all means

Energy price cap: The upper limit on what your energy supplier can charge you per unit of energy you use. Set by the government.
The 50/30/20 rule: A simple way to divide up your money so you don’t lose control of it.

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