Taking stock of your finances: step three

Cut your expenditure

Once you have a clear idea of what comes into your household, and where it goes, you can begin to exert some control.

Work your way through your expenditure subject by subject, with the largest items first: mortgage, food, loans, utility bills, car maintenance and fuel, insurances, clothes, home maintenance and furniture, and so on.

With each subject, ask yourself ‘Could I get the same for less?’ and ‘Do I really need to buy that?’

Of course, some costs are easier to reduce than others, but here are a few that allow you to make the biggest savings:


Housing costs are probably the largest monthly bill for many people. While saving money on your mortgage is possible, it may come with some trade-offs, such as the possibility you might end up paying more in the future. 

  • TIP If you do think that you can save money on your mortgage, take financial advice first and allow an expert to point out the pitfalls that may not be immediately obvious. This will help you to make a decision that’s appropriate to your own circumstances.

Other household bills

Saving money on gas and electricity is more straightforward. The same stuff comes out the pipes or down the cable no matter who you buy it from, so the purchase decision should be based on price. Perhaps the one exception to this rule is where your proposed new supplier has a truly awful service record. If this is the case, the hassle of shifting provider won’t make the saving worthwhile. However, if you haven’t done this before, there’s a good chance the savings you make will be large.

  • TIP The financial website MoneySavingExpert.com  has an energy switching service. Depending on the supplier you switch to, you might also get introductory cashback to add to any savings you make on your ongoing monthly bills.

Broadband, telephone, television and mobile phone tariffs

The standard approach of suppliers of communication and entertainment services is to hook you in with an introductory offer. They then gradually increase the price, relying on inertia to keep the majority of customers. Make sure you regularly review your suppliers and, even if you don’t want to switch, contacting your current supplier to let them know you’re considering a move can often result in a reduced price.

  • TIP Also make sure you review your mobile phone contract when it comes to an end. The tariff usually includes the price of the handset, so continuing to pay the same price after the contract expires means that you are still paying for something that now belongs to you.

Motor and household insurances

Make sure you shop around when your car and home insurances come up for renewal. Not all providers supply prices to price comparison portals, so the only way to cover the whole market is to get a quote direct from these insurers. 

  • TIP Some price comparison portals may also promote one insurer over another because they are paid for doing so.

To encourage safer driving, Aviva has launched a new driving app for your smartphone. It monitors your driving skills and, after 200 miles, will give you a score out of ten. You can get the Aviva Drive app now. 

Transport and travel

Cars are expensive to buy, maintain and run, so there are lots of ways you could potentially save – such as switching to a more fuel-efficient car. Low emissions are also rewarded with lower road taxes. Another point to remember is that the cost of parts for popular mass-market cars tends to be lower, making them cheaper to maintain. 

  • TIP Changing your car less frequently can also cut your motoring expenses. The cost of maintaining an older car is usually higher, but lower than the depreciation you will suffer if you buy a newer model.


Cash and contactless payment card spending can add up to a surprising amount over the course of a month. Newspapers, daily coffees and lunchtime sandwiches can easily cost you more than £100 over each 4-week period.

  • TIP Keep a daily diary on paper or using the notes page on your phone and jot down everything you have spent money on at the end of each day.  

There are lots of ways to cut your bills and frugality is now becoming something of a national trend. We even have TV programmes dedicated to cutting your food shopping bills!


Now read step 4:

Step1: set your financial goals

Step 2: a new broom

Step 3: cut your expenditure

Step 4: saving

AR01595  01/2016

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