FAMILIES face forking out an extra £2,000 a year on bills as prices soar.
Figures released yesterday show inflation hit 4.2%, its highest in a decade piling pressure on hard-up Brits.
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The higher the rate of inflation the more prices are rising – your money doesn’t go as far and you have to spend more.
Households will also see taxes rise when an increase to National Insurance kicks in next year.
And anyone in debt could see costs increase as the Bank of England is expected to hike interest rates.
The Institute of Fiscal Studies (IFS) calculates that overall households face extra costs of up to £2,000 a year.
Someone earning £30,000 year will be worse off by around £1,420 a year, while in interest rate rise could add £600 a year to average mortgage costs.
Paul Johnson of the IFS said yesterday on talkRADIO: “Earnings aren’t rising this fast.
“Of course we’ve got some big tax rises coming along in April, and all this is going to mean, I’m afraid, is that unless we’re getting pay rises of something like 7%, the buying power of our earnings is going to be less this year than it was last.”
Inflation was pushed up by rising energy and fuel costs, according to the Office for National Statistics.
As the cost of living rises, here’s the steps you can take to keep costs down.
How to save on energy bills
Gas and electricity prices are going up.
The standard advice in such a situation is to shop around for the best fixed deal.
But energy suppliers have been pulling their cheapest tariffs off the market as their own costs soar.
Contrary to usual advice, the best thing for people to do at the moment is wait.
If you’re on the standard tariff then you’ll likely be getting a better price right now than you would from a fixed deal.
If you’re already on a fixed deal then you should be protected from the coming price rises – but you could face far higher prices when it ends.
Instead, households can look at energy saving measures in the home that could cut the cost of bills.
For instance, if you don’t defrost your freezer regularly it could add as much as £150 a year to your bill.
Here’s all the tricks and tips for keeping costs down in every part of your home.
How to save on TV, phone and broadband bills
Energy bills may be almost unfathomable at the moment, but shopping around for your other household bills should be a little easier.
Don’t forget to check your subscriptions, especially with all the streaming services you may have signed up to in lockdown.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, previously told The Sun: “If you’ve consolidated media and broadband into one, this is one of the areas where people have the most success negotiating with their provider.
“If you haven’t switched in a while give them a call, tell them you’re thinking of switching, and see what they can do for you.”
Virgin Media customers shared how they saved up to £276 a year on bills – just by asking.
How to save on council tax bills
Council tax is one of the biggest bills for households, taking up a large chunk of budget.
It’s a priority bill which means there can be severe consequences for not paying. If you’re struggling with it it’s best to seek help sooner rather than later.
To reduce your bill it’s worth checking if you’re entitled to any discounts or reductions.
Apprentices, students, and carers can get a discount for example.
Reductions are available for those on low-incomes, people claiming certain benefits, those caring for others as well as other circumstances.
The amount your bill is reduced by can range from 25% off to 100% which would mean you pay nothing at all for this bill.
As each council offers different support, you’ll need to contact your local authority for more information and apply through them directly.
You can check the help you could get with council tax bills and other support using a benefits calculator.
How to cut the cost of your food bill
Shopping own brand products or switching to a budget supermarket is one easy way to cut your grocery bill.
It’s also worth considering whether you can make use of loyalty schemes like the Tesco Clubcard or Sainsbury’s Nectar card.
Reducing your food waste is another good way to cut costs.
Brits throw away almost 20 per cent of the food we buy, which adds up to £600 a year for the average household.
Plan your meals for the week to reduce waste, and don’t just throw food away if it’s past its best before date – the expiration date is the one you need to look out for.
If you’re worried about the cost of your shopping, you can also get help from your local food bank. Websites such as the Trussell Trust can help you locate a food bank near you.
Parents may also be able to get free school meals for their children.
How to save money on your mortgage
Make sure you shop around and don’t just assume your current provider can offer you the best deal when remortaging.
Unfortunately rates have already started rising in anticipation of the Bank of England’s rate rise – but you should look for the best deal on the market.
When your deal ends you’ll be put on the standard variable tariff, which is typically far more expensive than the best fixed-rate or tracker mortgage deals.
You could get a better deal than before if you have improved your loan-to-value-ratio, your credit score has improved, or if you now earn more.
Put a note in your diary three months before your mortgage deal is up so you can start shopping around.
You can use online tools such as MoneySavingExpert’s mortgage comparison checkers and mortgage calculators to compare deals.
Martin Lewis has recently urged homeowners to consider remortgaged to save thousands of pounds.
But shockingly half of homeowners have never remortgaged because they think it will be too much hassle.
You could also consider overpaying your mortgage if you can afford it, to get debt-free ahead of time.
With interest rates expected to rise here’s what it could mean for your savings and other borrowing too.
Meanwhile, Martin Lewis has revealed how you can save £500 on your car insurance with one VERY simple trick.
Savvy mum shares the easy money hacks which means she ALWAYS has enough cash for her bills
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