Spend less
Spend less
Before you start to save more for your retirement, the chances are that you’ll need to find more spare money by spending less now. Alternatively, you might want to see if you can reduce costs by spending less when you retire. In either case, here are a few suggestions of how you might be able to spend less.
Reducing the cost of bills
Reducing the cost of bills
You may be able to spend less by changing your household electricity/gas supplier to one with a cheaper deal – something you could consider doing for all your regular bills. Websites such as www.uswitch.com even do the leg-work for you, so there’s no excuse for not looking. You can review how much you are paying for all the main utilities as well as for services such as digital TV and even loans and credit cards. By keeping your bills under review from now until you retire you may find you save a considerable amount.
Other ways you can reduce the cost of your household bills include making sure that lights aren’t left on and taps aren’t left running. These may sound like small changes, but over the course of a few months they will make a difference – they’re also changes that are better for the environment of course.
Going green
Going green
Reducing heat loss through the wall by up to 60% can save on average between £70 and £100 (2007 prices) a year on fuel bills, so insulating cavity walls can reap big dividends. Another suggestion is to fit an insulating jacket to your hot water tank which can save £15 a year. Fitting energy efficient lighting – as opposed to the traditional 60 or 100 watt light bulb – can also have a major impact.
You will need to find out the cost of adding these things to your house to work out if they are of benefit to you. For example, a hot water tank jacket can cost about £12, so you will save £3 in the first year (and £15 each year afterwards). If you are on a low income, your local authority may help with the cost of going green.
Reducing the cost of loans and credit cards
Reducing the cost of loans and credit cards
If you have quite a lot of debt on your credit card (so you don’t pay it off at the end of each month) then it is probably worth thinking about moving it to a card with a lower interest rate. Sometimes you can even get a 0% rate on balance transfers. This means you won’t be charged interest on the old debt you’ve built up with another card if you move the debt across to a new card. If you decide to open a new credit card account then destroy your old card if you think you might be tempted to use it. There’s no point increasing your debt if you’ve just started organising it properly! The advantage of a low-rate card is that more of your monthly payment will be used to pay off your original debt, rather than paying the monthly interest before you pay anything towards what you actually owe. Again, a quick search on the internet will bring up sites such as www.uswitch.com and www.fool.co.uk which are great for comparing the cost of different credit card accounts.
You can often reduce the amount you’ll pay back on a loan by shopping around too – and the internet is as good a place to start as anywhere else. Watch out that you’re reducing the overall cost (usually by reducing the interest rate) rather than just what you pay each month. Dragging out the loan for a longer period may allow the lender to make more money out of you in the long term – hardly a saving!
Reducing what you spend on household goods
Reducing what you spend on household goods
The simplest way to reduce what you spend is not to buy anything – but if you’re faced with a 15-year-old broken washing machine then you might have to buy a new one! When you buy new goods you can do the ‘shopping around’ on your local high street or use an internet price comparison website (do a search for ‘price compare’).
"When you buy new goods you can do the ‘shopping around’ on your local high street or use an internet price comparison website…"
Other ways to save money
Other ways to save money
Take a look at what you are spending the most on. Your mortgage, car and groceries are likely to feature quite highly. You might be able to find a better deal for your mortgage (you could start by asking your mortgage company what they offer) to reduce the price. You could look at whether you are using your car enough to justify the cost. To reduce fuel costs perhaps you could take it in turns to car share with a work colleague or even use public transport? Getting rid of your car altogether will also eliminate insurance and road tax bills, but you will probably be spending more on public transport (unless you start walking). If you take up cycling, remember to set aside some money to cover emergency repairs, such as punctures!
Why not look around to see whether what you normally buy could be cheaper if you bought all or some of it from another shop? This could be a clever way of saving money whilst still buying exactly the same goods. Don't forget to include any extra transport costs if you go to a different shop. Grocery bills might sound hard to reduce, but if you look at what you buy you may find that taking advantage of some of the supermarket offers (such as 3 for 2) will help you to save money – so long as the goods don’t go off before you’ve used them! Other ways to save on your grocery bill include buying own brand goods. If it’s a question of buying an own brand cleaning product and using a bit of extra elbow grease when you’re doing the housework, then it might make sense to save the money (and keep fit at the same time)!
"To reduce fuel costs perhaps you could take it in turns to car share with a work colleague or even use public transport?"
Really cutting back
Really cutting back
If you really wanted to you could probably consider a lot more of your money as spare. After all, day trips, holidays, CDs and digital TV don’t necessarily count as ‘must haves’. However, you may find that by increasing your TV subscription so that you get the movie channels, you reduce family trips to the cinema and so reduce your costs in the long run – not an easy judgement to make. If you regularly go running in the gym you might want to think about running outdoors. Whilst this isn’t always a safe option, it’s certainly worth thinking about. (Why not run with a friend and help them save money and keep fit too?!)
"If you regularly go running in the gym you might want to think about running outdoors."
Making money instead
Making money instead
Do you have a skill that could bring in some extra cash? For example, if you regularly make greetings cards that you use yourself, perhaps you could make some spares to sell at a craft fair. If you’re musical, you might be able to join a band that is paid to play in clubs – or perhaps give lessons to other budding musicians. If you’re not feeling quite so talented, then why not go through your house and see if you have any bric-a-brac that you’re not using any more – you might be able to sell this on. You could do this by contacting a local second hand dealer (look in the phone directory) or try your hand at selling at a car boot sale or on an internet site.
If you felt you had the time available, you could also look at taking on a part-time job in retirement. This doesn’t have to mean having a second career – a few hours of bar work could be all that you need.
"...why not go through your house and see if you have any bric-a-brac that you’re not using any more – you might be able to sell this on."