How to deal with the rising cost of living as inflation soars

With inflation soaring at its fastest rate for almost ten years, it feels like rising household bills are an inevitability.

The Bank Of England governor Andrew Bailey recently confessed that he was ‘very uneasy’ about the increasing cost of living — he expects the rate of price increases to peak at 5% next spring, a rate that could add hundreds of pounds a year to household expenses.

Even for families where earners do receive a modest pay rise this year, in most cases it is likely to be outstripped by the rising cost of bills and necessities, meaning that many of us will feel poorer.

It is, in the words of Clare Framrose, head of savings at Atom bank, ‘pretty scary’.

However, she adds that there are steps we can all take to ensure we make the most of our money.

‘On a personal level, there are also ways to mitigate the rising cost of life, including becoming as financially literate as possible and making the most of available saving schemes,’ Clare says.

Making the most of your money is important in an inflationary environment.

Here is your go-to guide to some of the ways you can make your cash go further, ensuring that your bank balance remains as healthy as possible, despite rising costs…

How to track your spending

It is easy to make resolutions to spend less but, unless you follow this up with action, your costs will keep on rising.

Here are some ways to improve things…

Technology is your friend

Technology can help to keep spending on track, whether it is regularly checking your credit card bills and bank account online or using a special ‘Open Banking’ app to ensure you can view all of your spending at once.

Chip is one app to consider. It analyses your spending and allows you to set savings goals, as well as saving automatically for you. The ChipLite version of this app is free.

Money Dashboard Neon is another useful free app that has a Balance After Bills feature showing how much you have left to spend or save.

Get cashback on spending

Where you do have to spend, ensure you are rewarded for it. Signing up for Quidco or TopCashback and then clicking on them before you spend will ensure you are given back money that is a small percentage of your spend, which you can then withdraw for use later.

Some credit cards also offer rewards on spending. Amex Platinum Cashback Everyday credit card is free and gives 5% cashback on purchases (up to £100) for the first three months of card membership, before dropping to 1%.

The Amazon Platinum credit card offers a £40 voucher and the equivalent of 1.5% cashback on Amazon purchases and 0.25% elsewhere.

With all credit card spending it is important to ensure you pay off your bill every month (unless you have a 0% card) so that the interest you pay does not dwarf any rewards.

Energy: Monitor your home expenditure

With many of us still working from home more often than usual, and energy prices rising, household bills are likely to sting this year.

Nick Drewe, money-saving expert at online discounts platform, WeThrift, says that many people will find that bills for energy, water, and mobile data are likely to increase this year for households where members are spending more time at home than before the pandemic.

Due to energy price rises that have sent many energy firms out of business, most people will not currently save by changing suppliers.

However, there are still ways to save money on these energy bills. Steps to take include giving regular meter readings, whoever you have as an energy supplier. This will ensure you stay on top of your bills and are aware if anything goes wrong.

‘Some energy suppliers have been known to either make changes to tariffs or make mistakes when charging customers, it’s always a good idea to check your regular household bills,’ Nick says.

Broadband: Switch supplier if you are out of contract

With more of us working from home, broadband internet speed and reliability are more important than ever before. While this might make you nervous about switching, there are still savings to be had for many families. Most contracts for broadband are for between 12 months and two years, so check if you are out of contract first to avoid exit fees.

At present, some of the best deals include Plusnet’s Unlimited Fibre Extra and phone line deal which runs for 18 months and costs £23.95 a month, and John Lewis’s Unlimited Fibre deal that costs £27 a month and includes weekend and evening calls. For those not wanting fibre, deals can be cheaper, with Plusnet offering broadband and a phone line for £18.95 a month.

In some cases, switching through a comparison site can bring extra bonuses. Plusnet offers a £75 gift card through USwitch for its fibre deal, for example, while John Lewis offers a free evening and weekend calls deal with broadband (not fibre) for £18.75 a month with a £50 John Lewis gift card through Broadband Choices.

If you are concerned about service quality, checking the complaints data for broadband providers published by Ofcom will ensure you get a provider that deals well with any issues.

Water: Switch to a water meter if you are a low water user

It is easy to forget your water bill as it is not possible to switch suppliers. However, many people could save money by switching to a water meter, with South Staffs Water company calculating that moving to a meter saves the average user £100 a year.

However, some heavy users of water will pay more if they use a meter, so you should always check out the Consumer Council For Water calculator to see whether it is worth you switching.

Unless you are in an area where water metering is compulsory, you will usually have a trial period of 24 months during which time you can switch back to your old fixed charges if you prefer.

Mobile phone: Scrutinise your mobile contract

Everyone’s mobile phone usage is different so ensuring you match your contract with the way you use your phone will help to ensure that you do not overpay.

Website Billmonitor can analyse your online bills to suggest the best tariff for you.

Case study: ‘I save hundreds a year by switching’

Rob saves £10 per month on bills thanks to clever switches (Picture: Bruce Adams/ Daily Mail)

Robert Weatherhead, from Bolton, has saved hundreds of pounds a year with switching tricks on everything from 0% credit cards to insurance and broadband.

‘They don’t reward loyalty so you have to switch,’ he explains. ‘It’s just massively frustrating but you have to play the game.’

He says he is really noticing the rising cost of living.

‘Every letter that comes to the door is typically someone saying costs are going up. They always position it like, “We’re left with no choice but to increase you’re your prices”, but they do have a choice — that is a real bugbear of mine. You do see costs going up all the time,’ he says.

Rob, who runs online business Affordable Wine from home, while living with his wife and three young children, says that remote working since the pandemic means it is even more important to stay on top of bills.

‘You constantly have to find ways of bringing costs down with the energy bills. We’ve just been at home all the time, which means that, with heating and all that, we’ve really noticed our energy bills,’ he says.

‘I believe that with switching and being savvy I am saving £10 a month per bill, and more with switching credit cards to 0% deals.

‘That has been cheap credit when we needed it, while the children were young.’

If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.

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