If invested, these barely noticeable savings could add up to thousands of pounds in additional funds, without a significant compromise in lifestyle.
It’s unrealistic to expect yourself to cut all unnecessary spending – you have to live and buy the odd birthday present, but depending how much you currently spend, through shopping around and better budgeting, you might even manage to shave £200 to £300 of your typical monthly outgoings. That sounds like a lot to shave off but below you’ll find some suggestions on how you could do it, ranging from the reasonable sounding to the slightly more extreme.
Over a year, this £2,400 to £3,600 invested could generate up to £180 in extra returns, assuming an average return of 5 per cent annually on your portfolio.
The top things you can do easily to save money all involve switching current deals, which is only an option if you are out of any deal term where there are penalties for early switching. Even if you switch quite regularly, there are always new cheap deals coming out as providers compete hard for your business. If you can, the most lucrative switches you can make are:
If you use your phone a lot - especially data – then switching to a contract with unlimited data can work out much cheaper than paying for data on demand when you run out on your current contract. Do this, and expect to save around £15 a month.
The best deals on the market for loan-to-values of less than 50% are priced at around 1.3 per cent. You can get longer-term fixes for peace of mind (given interest rates are expected to rise) for around 2 per cent. If you are currently on a rate of more than 3 per cent and have about 15 years left on your loan, but think you might be eligible for a cheaper deal, your monthly saving could be around £100 a month if you switch.
It would also be a good idea to set up a direct debit to your investment account for this amount, or add it to an existing direct debit, once you have made your cuts and feel confident that you have freed up the cash. There is less temptation to spend it if that money is moved out of your current account as quickly as possible, and money invested is likely to earn you more than money left in your current account.
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Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.
The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. We do not provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.