Five ways to combat the spending cuts
1. Check whether you can remortgage to get a better deal.
Over your lifetime, your mortgage is likely to be your biggest outgoing, but it could also deliver your biggest saving.
2. Shop around for better deals on your utility bills.
You may be able to save on gas, electricity, broadband, landline and mobile phone bills, or even get a good value package. And don't forget insurance: deals on car, travel and household policies vary hugely.
3. Face up to debt.
If you have money outstanding on a credit card or an out-of-control overdraft, consider a loan to reduce monthly payments. Better still, make small savings elsewhere, if possible, in order to repay what you owe.
4. Curb unnecessary costs.
Make a packed lunch rather than buying sandwiches at work; cancel that gym membership you never use; and be honest about where your money really goes so you can make sure you fork out only for what you need, rather than what you want.
5. See if your employer offers any added benefits.
Ask if it can contribute childcare vouchers, or if you can work from home a day or two a week to cut down on commuting costs.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
A special government scheme operated through employers that allows you to pay for childcare from your PRE-tax salary. The vouchers cover childcare up to 1 September after your child’s 15th birthday (16th if they are disabled) and can be used at any registered and regulated nursery, playgroup and for nannies, childminders or au pairs.