If you’re worried about the rising cost of living, these tips can help you to create and stick to a household budget.
In association with Health Service Discounts – this post is for information purposes only and does not constitute financial advice.
Nobody can fail to notice the rising cost of living right now. It makes the news headlines every day at the moment, as well as being easy to see in your weekly grocery bill and your monthly bank statement.
It’s always important to keep a check on your household budget but it’s especially vital to do this when the cost of living is increasing. Right now, the inflation rate is higher than for the last 30 years, food prices are going up and energy bills are set to increase again this autumn. It’s a worrying time for households throughout the country.
So here are some positive steps you can take to get your household finances in the best possible shape. These will help you to reduce the impact of the cost of living crisis as much as possible.
If you’re worried about your household finances, it’s really important to talk to someone about it. Our list of support helplines has details of organisations who are on hand to listen to your worries.
Check your spending habits
The first step is to look back through your monthly outgoings to get an idea of your current spending habits. This should allow you to spot some costs that you can cut out entirely and others that you can reduce.
It’s a good idea to go back over your bank statements for the last three months. This will mean that you can take any unusual expenditures or fluctuating bills into account.
Divide your outgoings into regular fixed bills, regular variable bills (like food or petrol costs) and one-off spending like meals out or general shopping. You may be able to spot some areas straight away where you could make savings. This might be through looking for cheaper providers or switching to a cheaper brand.
Create a monthly budget
If you don’t already have a monthly household budget, now is the time to create one. This is a really important step towards being in control of your finances.
First, work out how much of your monthly income you need to cover your essential spending like mortgage/rent and household bills. The amount left over after these costs is your budget for non-essential spending.
Don’t forget to include a line in your budget for expected costs like birthdays as well as making an allowance for unexpected expenses. It’s also a good idea to plan ahead for big events that you know will eat into your budget. So consider adding a Christmas budget or saving in advance for a friend’s wedding next year.
It will take you a little time to put your household budget together from scratch, and it’s important to review it regularly to make sure that it’s still accurate. But your budget will really help you to manage your money more effectively and feel more in control of your finances.
Make small changes across your budget
Next, it’s time to look through your non-essential outgoings and see if there are any that you can reduce or cut out altogether.
Your initial reaction might be to try and eliminate certain costs completely. But while this may be very effective for your finances, it could also have a big effect on your mental health and wellbeing.
So you’ll probably find that making small adjustments in lots of different places is less painful than making dramatic cuts in a few places. But it can still have a positive impact on your household finances.
Allowing yourself some regular small treats reduces the likelihood that you’ll go out and splurge your entire monthly entertainment budget in one go. But it will still give you some extra money to put towards your rising energy bill.
Look for discounts on shopping
These days, it’s easy to find discounts that can help you to save money on your shopping. It might take a little time and effort to research and compare prices, but there are some good savings available on the internet.
For example if you’re a student, be sure to get a student union card so that you can take advantage of the student discounts and railcards that are available to you. And if you work for the NHS or other emergency services, you’ll find a range of savings from discounts on fast food for frontline workers to EasyJet discount codes for NHS workers.
It’s definitely worth signing up for loyalty cards at shops that you regularly use, such as supermarket reward schemes which send out vouchers or offer in-store discounts. Family deals on streaming services and online discount codes are other ways that you can make cost savings.
Save money around the home
As well as cutting out some of your expenditure outside the home, you may be able to reduce the size of your bills inside your home. For example:
- If you have someone in the house all day, it can work out cheaper to keep the heating on low all day, rather than switching it on and off throughout the day.
- Turning your central heating down by one degree could save around £65 per year. Don’t turn it down too low, but between 18-21 degrees is comfortable for most people.
- If you have an immersion heater, it’s cheaper to maintain the temperature of hot water rather than heating it up from cold, so leave it on.
- Check around your doors and windows to see if there are any gaps where heat is getting out. Blocking these could save you around £30 a year.
- Keeping appliances clean helps them to run more efficiently, so be sure to clear filters, empty bags and defrost your freezer.
- A full freezer is more efficient than a half-empty one, so fill any gaps with plastic milk bottles that have been washed out and refilled with water.
- Turning off lights and appliances instead of leaving them on standby could save you £40-50 per year.
Claim what you’re entitled to
Now more than ever, it’s important to make sure that you and your family are claiming any support that you are entitled to.
You’re probably already aware of Universal Credit, which is available to those who are unemployed or on a low income. But if you need extra help for disability or illness, you may qualify for Personal Independent Payments.
Pension Credit can top up your income in retirement but many older people don’t know if they qualify for it or are reluctant to apply for it. So if you have elderly relatives, it’s worth checking if this applies to them.
The Citizens Advice benefits calculator can help you to work out if you qualify for any of these.
It’s also worth checking with your local council to see if you qualify for any support or council tax reductions. For instance, if you are an adult student, you may qualify for a full or partial discount on your council tax. Your Local Education Authority may also be able to help with free school meals or assistance with travel and uniform costs.
Many people are concerned about their household finances right now. I know that it’s a very worrying time but it’s really important not to ignore the problem and hope it will go away. Taking a good look at your household budget and making these changes will help you to deal with the current financial climate.