Reducing your monthly costs

Are you in the situation where you’re spending more than you earn? Are you finding yourself increasingly dependent on credit cards or an overdraft to get by each month? If so, it’s time to work out where you can cut back to get your finances under control.

If you haven’t done so already you should think about creating a budget and you can find out more about the budgeting basics here .

Follow these ten top tips to help you to reduce monthly costs and feel happier about your money:

1. Use cash

Spending money has never been easier with contactless and mobile payments. This often means we don’t think about the money we spend as we don’t see the money exchange hands. Paying with cash feels more real and once it's gone, that's it.

Try leaving your cards at home to reduce spending. You could try this for a week, or make it a regular habit, such as one day a week when you are likely to spend more. Give it a go and see what works for you.

2. Check your bank statement

Check your bank statements regularly to review the standing orders and direct debits coming out of your account. Do you have any subscriptions you no longer need such as magazines, media streaming or gym memberships? Perhaps you took out insurance on a household item you no longer have? Make a note to check these at least twice a year to ensure you’re not paying for things you no longer need.

Checking your bank statement will also show if there are any suspicious transactions. You should always contact your bank if there is something you don't recognise in case you’ve been targeted by fraudsters. It's also another opportunity to see exactly where your money is going on paper in black and white.

3. Review household bills

For many of us, household bills make up a large chunk of our spending. You should therefore shop around at least once a year for energy suppliers, phone and broadband, mobile providers, mortgages, current and saving accounts, credit cards and insurance to ensure you’re getting the best deals.

Price comparison sites are a good way to get an overview of what’s on offer and will provide you with a wide range of options. However, they rarely include every supplier on the market. Some suppliers may have exclusive deals in place with a particular comparison website, or they may have chosen not to appear on comparison sites at all. Sometimes a supplier might be new to the market and won’t have been added to the website’s database yet.

For these reasons, it’s always best to look at a few websites to see what other options are available before you make a decision. This might take you a bit more time, but it’s worth doing as it could save you a lot of money.

Once you’ve checked what’s available you should check with your existing supplier to see if they’ll match the best price you’ve found. If not, you can either switch through the website itself or contact the new supplier directly.

4. Understand your interest

Whether it’s a credit card, loan, overdraft, phone finance or mortgage, take time to understand what interest you are paying, both as a percentage and in cash terms too. The higher the interest rate, the more interest you’ll pay and the longer it will take to pay off the debt.

It's highly likely that any interest you’re paying on your debt will be more than the interest you’re earning on your savings, so using savings to pay off debts is a sensible move.

Any spare money you have at the end of the month should be used to pay off the highest rate interest debt first to ensure you don’t pay more interest than you need to.

5. Make a weekly food plan

According to research, 60% of people spend less on groceries if they make a weekly food plan and stick to it, only buying the ingredients they need.

You can use the Better with Money Food Planner or just a pen and paper will do.

You can reduce costs further by having a leftovers dinner one night a week and by buying fruit and vegetables that are in season, as the prices tend to be lower.

If you go to the shops to buy your food, try to use the shopping discount vouchers available to you and remember you’ll find most bargains in the last two hours before the supermarket shuts.

6. Try a no-spending day

Try a day each week when you don't buy anything you haven't planned for. Doing this can make you more mindful of those small items here and there that can start to add up. You could try a couple of days, one day every week, or even an entire week, depending on how big of a challenge you're looking for.

7. Wait 24hrs before you buy

Online shopping is another very easy way to spend. Even when we're doing something else online, it can be hard to avoid the adverts or recommendations that pop up on social media.
If something takes your fancy, instead of being tempted to buy it immediately, create an online shopping list and add it. Wait for at least 24 hours and see if you still want the item after you’ve had time to reflect and check how the spending fits in with your budget. Sometimes you’ll receive a discount code too if the supplier can see you’re undecided!

8. Sign up for loyalty cards

Many retailers, restaurants and supermarkets reward customers by allowing you to store points on a loyalty card every time you make a purchase. These points can be converted into money-off vouchers to reduce the cost of your shopping in the future.

9. Track pricing history

A great way to save on shopping is to research the best time to make your purchase. Certain appliances, electronics and products go on sale during specific times of the year and waiting for a price drop could provide big savings. If you don’t have time to watch the prices yourself, you can use tools like camelcamelcamel for a quick overview. They monitor millions of products and alert you when prices drop, helping you decide when to buy for the biggest savings.

10. Change the way you travel

Driving can be expensive particularly when you take into account the price of fuel and parking. Walking or cycling, where possible, can save you money and it’s better for your health.