Rising cost of living: tips for managing your money

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As UK households face increasing financial pressure from cost-of-living challenges, over three-quarters of our customers expect to cut back on spending and saving. Here’s some inspiration to help you manage your money as prices rise.

Monitor your money

Many of the customers surveyed in our recent research say they’re planning to reduce their spending. If you are too, it could be useful to first remind yourself exactly where your money is going. It sounds obvious, but in the daily rush of life it’s easy to lose track of what you’re spending on. So, study those statements, keep a diary, or try a spending tracking app. 

Stop spending on nothing

Look for anything you’re paying for but not using. One in five people in the UK are paying £265 each year for subscriptions they no longer use.

Ask yourself what you really need, what you actually use and enjoy, and what you wouldn’t miss. Not going to the gym can be expensive, for example. In fact, in our recent research, 23% of our customers are considering reducing their subscription services and 12% may cancel memberships.

Shop around

For those things in life you really do need, like food – could you get them for a better price? 20% of our customers surveyed aim to spend less on food shopping. You could look for offers, switch stores or choose own-brand items over branded. According to MoneySavingExpert, dropping down just one brand level on everything you buy would typically cut your grocery bill by 30%.

Cut back on bills

In our research 51% of our customers said they aim to use less energy and only 5% plan to reduce their mobile phone bills. Phones are clearly a priority. Even if you don’t want to cut back what you use, you could still aim to cut back on how much you pay for it or review your plan to make sure it’s still the right one for you.

Try a comparison website like Uswitch to check if you could save money by switching providers, tariffs or contracts. If you haven’t got one already, you could ask your energy supplier to install a smart meter to help you work out what’s soaking up lots of energy in your home.

Check if you’re eligible for help

The UK government is putting together a £15 billion support package to help the millions of households struggling to meet the rising cost of living. All households will be given £400 towards their energy bills. Those on means tested benefits will receive £650. There’s extra help for pensioners and those on disability benefits too. The payments will be made via energy providers and government agencies, direct to those who qualify.

You might be entitled to other benefits too – you can find out by putting your details into the free benefit calculator from entitledto. 

If you’re struggling to pay your bills, contact your providers and explain your situation. Energy companies and other organisations sometimes offer support to those in financial difficulty.

Sort out your debts

If you’re falling behind with debt payments, speak with your lender or lenders as soon as possible. They could be more understanding than you expect and may agree to reduce or even give you a break from payments. Make sure you’ve prepared some evidence to show that you really are in financial difficulty. There are various organisations that can advise about debt problems, such as Citizens Advice or National Debtline. 

Even if you’re on top of your debt situation, you could look at whether you could pay less interest on any loans. You may want to transfer your credit card balance for a better deal, for example. But be careful – if you transfer debts several times, it could affect your credit score and you may find it hard to get a loan or credit in the future.

Get a better deal on your mortgage

The Bank of England has increased base rates several times recently, which has led to an increase in mortgage rates. You may want to consider whether you could save money by changing mortgage product or provider, or perhaps by moving to a fixed rate. Speak to your current provider, a broker, or try a comparison tool to see if there’s a better deal out there for you. Just be careful not to be stung by extra charges or exit fees.

Try some kitchen creativity

You may want to join the stampede to the kitchen, along with 30% of our customers who say they’re planning to eat out less. And while you’re there – why not raise standards and reduce costs at the same time with some delicious budget recipes? 

Be smart with the money you have

Make the most of any money you have. You can pay less tax on your savings by putting money into a pension plan or individual savings account (ISA), or a Lifetime ISA if you’re saving for your first home. Our article about pensions vs ISAs explains how they both work along with the tax benefits.

There are lots of different savings and investment products out there, so make time for research, or you could ask for help from a financial adviser. There’s likely to be a cost for any advice.

If you have a Standard Life pension plan and you’d like to manage your payments, just log in online or through our app.

A pension is a long term investment. You can't normally access pension savings until age 55 (57 in 2028). Remember, the value of investments can go down as well as up and you could end up with less than what was paid in.

Tax rules may change and tax treatment depends on individual circumstances.
 

Make more money

How about giving your incomings a boost to help cover the outgoings? Here are a few ideas to inspire you – ask for a raise, increase your hours, consider looking for a better paid job, find extra work, start a side-business, sell your stuff, rent out a room, rent out your driveway or downsize your home. As many as 19% of UK workers say they have a second job aside from their main source of income.

Keep some small treats

With 51% of our customers aiming to spend less on luxuries, and 23% cutting back on holidays, it sounds like treats could be scaled back a bit this year. Although only 10% are aiming to spend less on alcohol. So perhaps if you’re one of the other 90%, you could have a little glass of something while you think about ways to preserve your financial wellbeing. A few small treats, whatever that means for you, might just give you the motivation to keep going with your plans for cutting back.

The information in this article is based on our understanding in July 2022 and should not be regarded as financial advice. 

Please remember that the value of investments can go down as well as up and may be worth less than what was paid in. 

Standard Life accepts no responsibility for information in external websites. These are provided for general information.