Reduce living costs and save

With no sign of inflation falling, our finance expert has put together a step-by-step guide to cutting bills and saving more
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Life is getting more expensive with no sign of inflation falling fast. With higher clothing, food and energy costs, this year Britons will have to spend, on average, £650 more just to maintain the same standard of living as last year.

But carry out a quick financial audit and the good news is that you could save that and more.

Follow our step-by-step guide to reducing living costs:

Energy: Summer is the best time to work on ways to cut your gas and electricity bill. Make your house more efficient by installing cavity wall and loft insulation, plus foil behind the radiators. Then check out to see if you could be paying less for your bill.

Shopping online: find the cheapest via a comparison site like, use a voucher ( has many), then visit a cashback site., for example, pays members money back on purchases from thousands of retailers, including, HMV and Asda. These sites are also lucrative if you’re buying new insurance or financial services.

Credit cards: if you pay off your balance every month, opt for a credit card which pays you to use it. American Express’s platinum cashback card pays five per cent for the first three months, or Lloyds TSB’s Airmiles Duo pays out points for flights. But if you go into the red on your credit card, remember you’re better off using one with an interest-free overdraft.

Insurance renewal: don’t ever accept the renewal price. It may be easy, but it’s sure to waste money. Instead, enter your details into an insurance comparison site like That will bring up some top deals, then contact the insurers themselves to barter down the quote. If you can’t be bothered, then at least call your existing insurer. Threatening to leave will almost always result in a saving.

Savings: have you used up your Isa allowance for the 2011-12 tax year? Don’t leave it till the last minute. If you’ve got any spare money lying around and are a UK taxpayer, Isas are the best way to earn money on your savings. For lump sums, the top deal comes from the AA, paying 3.35 per cent.

Mobile: unless you’re a huge phone user, you probably won’t need to pay more than £30 a month for a decent mobile deal. Work out how many minutes and texts you use per month and enter your details into to find the cheapest tariff.

Payment Protection Insurance (PPI): millions of Britons are due compensation of missold payment protection insurance policies. Are you one of them? If so, contact your bank - you could be due an average £1,500 refund.

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