Cost-of-living crisis survival tips: How to slash £900 off your monthly bills

If you are unaware that the UK is grappling with a cost-of-living crisis, you have either been living in a cave with no Wi-Fi or you are one of the lucky few with a bank balance healthy enough to absorb today’s spiralling price rises.

For everyone else, the cost-of-living crunch is a nightmare being played out in households up and down the country as the sheer scale of the price rises on food, energy and fuel deliver nasty up wake-up calls for family budgets.

With inflation hitting 9.1% in May and expectations that the figure will rise to 11% in the fourth quarter - when energy regulator Ofgem expects the price cap for gas and electricity bills to soar to £2,800, an increase of £829 on the current level – and mortgage rates on the rise, the pressure on household finances will only intensify.

For Britons already struggling with surging prices, the reality is that with inflation as high as it is, even those lucky enough to secure a pay rise from their employer will not find it enough to cover the bill increases coming their way. Instead, the best strategy to survive the cost-of-living crunch is to trim your expenditure.

While making slight cutbacks here and there might shave off a few pounds, slashing expenditure across the board might deliver a better result if you commit to a full review of your finances.

Here Alice Haine, Personal Finance Analyst at Bestinvest, the DIY investment platform and coaching service, outlines 11 substantial savings you could make that would carve as much as £900 a month (or £902.45 a month and £10,829.40 a year to be exact) from your monthly budget now to help build up some funds before the energy price cap goes up again.

If you want to reduce your grocery budget and stick within it, one of the best tips is downsizing what you buy from branded items to the supermarket’s own-label products, which by one estimate can cut grocery bills by 30%. [1]

The average trolley price for 59 groceries at a mid-market supermarket, such as Morrisons for example, came in at £134.09 in May, according to Which? That means the 30% saving would translate into £40.23 a week, or a very healthy monthly saving of £174.33. And this saving could be accentuated of course by switching to a cheaper supermarket.

Behavioural tricks such as not shopping when you are hungry – as you tend to buy items to satiate your appetite – and avoiding being swayed by the confectionary or magazines positioned near the check-out counter designed to encourage impulse buys can be useful ways to trim expenditure. 

Other tips include scanning all the products on display for deals and not just those at eye-level - as often better savings can be found on the lowest or highest shelves – and not being ashamed to fill your basket with reduced items close to their sell-by-date.

While online shopping using your supermarket’s delivery service might mean you can’t browse the reduced shelves, it does mean you can set your grocery bill ‘in stone’ by just running the same order every week or fortnight.

It’s not just the food you buy that is an issue for your wallet; it is also the food you waste. An average family of four can save about £60 a month by reducing the amount of food they dump in the bin, according to Love Food, Hate Waste, a campaign run by the charity WRAP.

The organisation found that 6.5 million tonnes of waste is produced by households every year, and almost three-quarters of that is food which could have been eaten. So, it might be wise to be more ruthless about the food in your fridge and cupboards and make sure it is consumed. Otherwise, you are literally throwing money in the bin.

Food hacks to avoid waste include meal planning to avoid buying food you won’t use, using leftovers to create new dishes or freezing them for another day, checking your cupboards before you shop to avoid buying unnecessary items or having a “use up now” box in the fridge for items going out of date soon.

Also, learn to be sceptical of best-before dates. They are more of a guide to quality than safety – in other words the food is safe to eat but it might not be at its best. Shops will discount perishables by up to 75% as their use-by date is reached – but make sure you use up what you buy in time.

Energy is very expensive right now and while you might not find any respite from switching to a tariff with a different utility provider, instead you can drastically reduce your energy consumption, in turn shaving money off your bill every month. 

Simple tricks to reduce your electricity usage include turning off the lights in any rooms you are not using, which can deliver a saving of £20 a year on annual energy bills, according to the Energy Saving Trust. Switching off unused devices at the plug rather than leaving them on standby can trim about £55 off the annual bill and ditching the tumble dryer in favour of a washing line will save £60 a year.

While the savings are small, the more measures you put in place, the more the savings compound. The Energy Saving Trust has compiled a list of 10 tips to save energy, including the above, with the total saving coming to £375 a year. Stick to the guidance and you could save £31.25 a month.

Unlike most things, the cost of car insurance is on the decline, with the average price paid by motorists in the first quarter of 2022 falling to £416, according to the Association of British Insurers, a decline of 5% on the same period in 2021 and taking the current average premium to its lowest level in seven years.

While this may rise in the coming months, as like other sectors motor insurers face rising costs amid the global shortage of semiconductors and increasing costs of raw materials, new regulations from the Financial Conduct Authority prevent insurers from charging different rates to new customers over existing.

Despite this, don’t auto-renew without doing your research as you could still be paying more than you need to, particularly if your driving habits have changed as they have for many people who now work at least part of the time from home.

One price comparison site [2] claims customers using its portal to find a car insurance policy can save up to £310 – that equates to a monthly saving of £25.83.

The same applies to home insurance, with the same comparison site claiming that customers can achieve a saving of up to £153 on their annual building and contents insurance though its site. That equates to £12.75 a month, making a total monthly saving of £38.58 on your insurance costs when clubbed together with car insurance.

Filling up your car is now eye-wateringly expensive, so you need to get savvy about using your car. On the weekend, petrol prices set a new average record of £188.70 per litre in yet another blow to people’s rapidly dwindling disposable income.

Only taking necessary journeys or tips such as driving smoothly, rather than putting your foot on the accelerator, or driving with less clobber in your boot and ensuring your tyres are at the right pressure can certainly reduce your fuel consumption.

But the easiest way to cut the cost of filling up is to reduce the amount you pay for fuel in the first place. To find the best prices, download the Petrol Prices app, which compares petrol and diesel prices near you using GPS technology. This ensures you know where the cheapest price on the forecourt is, with the app claiming it can save drivers more than £220 a year – the equivalent of £18.33 a month.

Supermarkets tend to offer the lowest rates and motorway service stations the highest, so plan your journeys carefully.

While TV and broadband may seem essential to some, and therefore a cost impossible to cut, switching to a different provider could save up to £200, according to Which? for customers that move away from the Big Four providers – BT, Sky, TalkTalk and Virgin Media. So, shop around to find a more cost-effective deal going forward.

If you take regular medications and therefore have a lot of NHS prescriptions to pay for – with each prescription costing £9.35 per item - it can be cheaper to buy a prescription prepayment certificate (PPC).

Effectively a season ticket for prescriptions, it covers all NHS prescriptions including dental, no matter how many items you need.

While a three-month PPC costs £30.25 and will save you money if you need more than three prescribed items during that period, the 12-month option costs £108.10 and saves you money if you need more than 11 prescribed items a year.

To break down the savings further: two items a month will save a 12-month PPC holder £116.30 a month, with three items per month leading to a saving of £228.50 and four items per month £340.70 - that’s the equivalent of £28.39.

Scour your bank statements and you will probably find a myriad of TV, film and music streaming services that you are paying a monthly subscription for. 

There might also be subscriptions for memberships for gyms, slimming clubs, software, gaming, financial services, beauty boxes, food delivery services and more. And don’t forget to check your mobile for subscriptions as well. With an Apple iPhone, for example, simply click on your Apple ID and then Subscriptions and you can see what you are signed up to.

While individually a subscription can be a token amount, add them all together and you might be surprised at how big the total is.

Half of UK households pay for subscriptions they no longer use – wasting £170 a year, according to one price comparison site [3].

The simplest way to eradicate this cost is to cut those zombie subscriptions now, instantly saving an average of £14.16 a month. 

If you have an outstanding credit card balance that you are not clearing at the end of every month, then you could make a big saving by switching to a 0% balance transfer card.

Each UK household had an average credit card debt of about £2,173 in March 2022, according to The Money Charity.

Therefore, a customer paying a minimum monthly payment of 2.5% or £54.33, with an APR of 19.9%, would take until September 2027 to clear that balance at a cost of £1,205 in interest [4].

Pay the same amount each month and switch to a balance transfer card with a promotional interest rate of 0% for 24 months, with a one-off fee of 1.4%, and you could clear the card by January 2026 and a total of £165 in fees and interest. That gives you a saving of £1,040 over 27 months or £38.52 a month.

While few smokers need reminding of the risks posed to health by a smoking habit, the cost-of-living crunch could be the trigger to focus on what can be achieved financially by giving up the habit.

The average smoker spends £1,945 a year on tobacco, according to the anti-smoking group Action on Smoking and Health (ASH) – but remember that figure can be significantly higher (or lower) depending on the amount you smoke and the brand. 

With the average price of a packet of 20 king-size filter cigarettes hitting £12.64 in April 2022, according to the Office for National Statistics, a smoker smoking 10 cigarettes a day will spend £44.24 a week on the habit or £2,306.80 a year. Cut the habit completely and you will save £192.23 a month.

For those that do make the brave decision to give up smoking, the money saved could cover their monthly food bill or even a holiday. The average cost of a holiday to Europe, for example, comes in at £814 per person, according to an April study by travel money specialist FairFX. This includes accommodation for four nights, flights, fuel and visits to local attractions, so the cash set aside by a smoker on 10 cigarettes a day could stretch to a couple jetting away for a short break with money to spare. Alternatively, invest the savings you make from giving up smoking into an ISA and watch it grow.

The Bank of England may have increased base rates to 1.25% in June, a rate not seen for more than 13 years, but switching to another deal can still save hundreds of pounds a month.

Yes, mortgage rates are shooting up and most homeowners are on fixed rate deals so they won’t feel the pain for now, but if a homeowner does not renew that deal when it expires the lender will switch them onto their Standard Variable Rate (SVR) – often much higher than the lender’s introductory rate. 

One online mortgage broker [5] claims its users can still make big savings or up to £290 a month, particularly by switching someone from an SVR rate to a fixed deal because its service is free-to-use, saving £500 on the brokerage fee and because it scours thousands of deals including exclusive deals that a user might not find by going direct to a lender. 

This level of saving depends on the rate you are on now, how much equity you have in the property and a whole host of other factors, such as your income and spending behaviour.

Scouring the comparison sites for the best deals can also pay off – so do your homework and lock in a new offer now, particularly if your fixed period is expiring soon, as you can secure a new product up to six months before your existing deal expires.

[1] According to Money Saving Expert’s Downshift Challenge

[2] Compare the Market

[3] Compare the Market research June 21,22022

[4] According to the Money Supermarket Credit Card Calculator

[5] Online mortgage broker Trussle

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