How to save How to save money
Which? Archive
This article, How to save, was last updated on 10 March 2010 and is now out of date and held in our online archive for reference. Explore our latest Money articles.
If you want to save money, you first have to work out how to stop spending.
Pay off your debts before you start saving
We're deluged with expensive advertising geared to make us think spending money is good – that we'd be better off with that cutting-edge wireless printer (but which uses expensive cartridges – check out the Which? printer reviews for buying advice and models with low running costs) or we'd be more sophisticated by buying a certain brand of coffee.
Don't buy into it. The best way to save money is to decide what you actually need to live with, and what just makes you feel better.
Quick tips on how to save money
- Pay off your debts as soon as you can and preferably before you start saving.
- Use Which? reviews and Switch with Which? to search for the best energy suppliers and financial products.
- Become a savvy shopper and don't be taken in by shops’ ploys to make you spend more. Switch to a cheaper own brand if you normally buy premium brands or labels and don't believe that all special offers are special. Change where you shop.
- Invest in tax-free, risk-free savings by setting up a cash Isa and don't be afraid to move it around if the rate falls. See our Best Rate Isas for the best deals.
- Only buy what you need, not what you think you need.
Step-by-step guide to saving money
1. Make a list of your monthly household outgoings: utility bills, groceries, leisure / hobbies, fuel, transport, phone, broadband, mortgage / rent. Don't forget to include things like the coffee you buy before you get on the train – it all adds up: £1.75 x 5 = £8.75 / week or £35 per month, ie the same as one month’s mobile phone contract.
2. Take any annual payments – ground rent, car tax, car insurance, school fees and divide by 12 to add to your estimated monthly outgoings.
3. If you can, make a daily habit of writing down everything you pay for; this way you won't forget anything, and you may be surprised at how much you have spent.
4. Check any costs on your bank account and credit card statements – if you do have to borrow money, are you doing it as cheaply as possible? What are you paying for that £1500 overdraft and would it be cheaper to move it to a 0 % credit card? Check out our , personal loans and current accounts to make sure you're getting the best rates.
5. Check your direct debits and standing orders in case you're paying for something you could do without, such as payment protection insurance (see our PPI campaign and guide to the pitfalls).
6. Go through the list and decide what is necessary and what you could live without. For example if you smoke, apart from the obvious health benefits, giving up would help pay off some of your debts as well as cutting the cost of things like life insurance.
7. If you have several , make sure they don't have any outstanding amounts on them and cancel them. Having several cards can adversely affect your credit score at the moment and so make it more difficult to get loans etc (check out our ).
Now that you have a good idea of what you're spending and how to save money by spending less, check out our tips on getting the best deals on gas and electricity, credit cards, groceries and insurance.
