Simple ways to save money today
Even without the events of the past two years and the pressure they created on our finances, saving money has long been a priority for many of us. Though most of us want to save money, it’s sometimes difficult to know the best way to do so. Whether it's sticking to a budget, repaying your short-term loans more quickly or putting cash into a savings account each month, knowing where to begin can be difficult and sometimes overwhelming.
Here, we take a look at some of the oratorical steps you can take to actually reduce your financial burden. These are changes you can make that help you spend less. That means more money in your pocket, and potentially more money in your savings account.
There are different ways to save money, from getting cashback on your credit card to switching to a cheaper phone provider. Have a read of our simple ways to help you save this year.
Is your tax code correct?
- If your tax code is 1257L, then you’re on the standard PAYE code that most people get.
- 1257L was the most common tax code in England and Northern Ireland for the 2021/2022 tax year, which started in April 2021.
- If your tax code was 1257L, it means your allowance was £12,570 and is expected to remain at that level until at least 2026.
- A basic Personal Allowance of £12,570 is applicable to low and middle earners with an annual income of less than £100,000. While this tax code is fine for most, if you’ve got any special circumstances or requirements it’s likely to be wrong.
- If your code is lower or higher than you expected you need to find out why, as it may have been adjusted by HMRC to accommodate unusual circumstances or to rectify underpayments of tax in previous years. If there are any errors and you pay the incorrect amount by the end of the year, you are usually liable to pay any unpaid tax, rather than your employer.
- Understanding how PAYE works and checking that you’re on the right code will help you avoid underpaying or overpaying tax.
How much do you pay per year on credit card interest?
If you pay your credit card bill in full each month, you won’t pay interest on the amount you borrowed. However, interest is typically charged on a daily basis for cash withdrawals and can significantly add up over time, especially as the interest rate for cash withdrawals is usually higher than for one-off purchases.
If you find that you’re spending more than £50 per year on credit card interest, one way you could cut this down is to shift to a 0% balance transfer card. A 0% balance transfer card can help you pay off your existing credit by moving the balance from one card where you may be paying interest, to a new one at a 0% interest rate for a fixed period.
the savings you can make with an interest-free card could help you keep in control of your finances, it’s important to remember that you must meet the monthly repayments, or you’ll lose the interest-free period.
Have you switched energy tariff in the last year?
If you’ve not switched tariffs in the last year, you’re likely to be on your provider’s standard tariff. A standard tariff is a good option if you want flexibility and don’t want to be tied down to a contract, but the variable prices mean that you may be paying far more than you need to.
According to Ofgem, the cheapest tariff in summer 2021 was £1,053 per year, which is £212 cheaper than the typical energy price cap. With a variable tariff, your provider can alter the unit rates for gas and electricity anytime during the duration of your contract. This means that your monthly bill can rise, even if you use the same amount of energy.
Fixed-rate tariffs usually represent the best value for money as they cap the unit price of gas and electricity for the length of your contract, which can be anything from one to three years. If you haven’t already, try using a comparison website to help you shop around to find more affordable tariffs.
Have you auto-renewed your car insurance?
If you’ve auto-renewed your car insurance the last time it came around, it’s likely that you’re paying a higher interest rate than you need to.
Auto-renewal means that you’re automatically signed up to a new insurance policy with your current provider when your existing contract comes to an end. This new contract will generally have a higher premium for loyal customers, as insurers tend to offer the best deals to new customers rather than rewarding existing ones.
Can you save on your car insurance?
Another simple way to save money is by doing the following with your car insurance:
- Change policy. Often if you find a cheaper deal and you’ve not claimed on your current policy in the past, you can cancel and get the rest of the year refunded. This means you won’t earn this year’s no-claims bonus, but it could be worth it to help you save and avoid future price rises.
- Check for a cheaper deal. To ensure you find the cheapest price possible, shop around and get quotes from multiple comparison sites. Once you’ve found the cheapest quote, see if you can get cashback.
If your car insurance automatically renews, you may be able to cancel depending on your insurer’s terms and conditions (when you first purchase a new policy, you should have a two week period to change your mind and cancel – usually without paying a penalty).
Do you get cashback from your credit card?
Paying off your credit card in full each month means you don’t pay interest, but when you use it to make a purchase, the retailer has to pay the card firm a transaction fee.
With a cashback card you’ll earn a percentage of that spend back. The rate of cashback will vary depending on where you shop or how much you spend, and some purchases might not earn you back any cashback at all, but it can be a simple way to save money. These funds are paid monthly or annually as credit on your card balance, but the maximum amount you can receive is usually capped.
Is your mortgage rate too high?
Although it’s very easy to take out a mortgage and not think about interest rates fluctuating, you should see whether you can switch contracts to save some money. This might be possible if you have some to the end of your fixed-rate period.
Providers recommend that homeowners avoid paying more than 30% of their income on a mortgage in order to leave enough money for unexpected expenses. However, millions of homeowners end up stuck paying their lender’s standard variable rate, which averages 4.9% in the UK. Standard variable rate mortgages tend to be higher than the rates of other types of contract. The rate you pay on an SVR mortgage will be determined by your lender, who may increase or decrease it at any time independent of the Bank of England Base Rate.
While not everyone can switch mortgages easily, it’s worth regularly checking for better deals and reviewing your mortgage when interest rates rise. For instance, in the summer of 2021, Halifax launched mortgages at 0.83% amid a flurry of rate cutting on loans worth up to 60% of home value.
Do you have a spare bedroom?
If there are the same number, or more bedrooms in your home as people, it’s likely you could save money by switching to a free water meter. You have a right to be charged for the water you use, rather than what providers think you should. Water bills are calculated based on your property’s ‘rateable value’, which roughly equates to what it’s worth. Instead, water meters measure usage, which should correlate roughly to the number of people in your home. This means if you’ve got a big house with very few occupants, meters are cheaper. Water meters can usually be installed free of charge.
An empty room can also be used to earn a little extra cash. Rather than letting a room stand empty, you could fill it up and earn some extra money on the side. Look for organisations that host overseas students looking for a place to stay.
Could you opt for a cheaper phone contract?
If you’re paying more than £20 per month for your mobile, not including the handset, you could probably reduce the amount you spend. Traditional mobile contracts that bundle in the cost of calls and data with the handset is the default way many people pay for their phone. While this can help to spread the cost over time, you may be better off buying the phone outright and pairing it with a Sim-only or PAYG deal and just paying for the monthly allowance.
Most networks have a base PAYG tariff that sets out a standard cost of making calls, using data or sending texts. You may be subject to additional charges for calling premium numbers, SMS services or using your phone abroad. Bundles typically range from £5 to £20 and the more you spend, the more calls, data and texts you’ll get.
When it comes to choosing the best plan for you, if you spend the majority of your time connected to a Wi-Fi network, 1GB of data should suffice for a month. While it’s important to buy enough data, there’s no point spending money on a huge allowance that you won’t use, especially as most networks won’t allow you to roll any unused data over to the next month.
If you’re a student, companies like Unidays offer money off airtime plans for some phone providers, so it’s also a good idea to do some research before taking out a new contract.
If you’ve adopted some money-saving tips and are still struggling to save the funds to meet a temporary financial shortfall, you may have considered taking out a loan as a short-term solution. Before taking out a short-term loan, it’s essential to understand the financial and emotional implications of not being able to meet the monthly repayments alongside other essential expenses.
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