he cost of living crisis continues to bite. The rate of inflation hit a fresh high of 9.1 per cent in May, it’s highest rate in 40 years, and statistics suggest it’s hitting Lononders hard. Nearly 80 per cent of people in the capital reported a hike in their living costs over the last six months, according to a YouGov poll. Transport for London fares are up almost five per cent and Rightmove reports average rents have risen 14 per cent since last year — from £1,919 last March to £2,193 — which would make it the biggest annual jump of any region in the UK since records began.
It’s all looking a bit grim. Staying out of your overdraft might feel impossible right now, but someone who knows the perils of feeling like your spending is out of control all too well is Clare Seal, the woman behind the hugely popular @myfrugalyear Instagram account. Seal began sharing her journey back into the black online (at first anonymously) in 2019, after she and her husband found themselves in £27,000 worth of debt (now fully paid off).
Her deeply honest attitude towards the complicated matter of money earned her legions of followers — 87,000 and counting. Now a qualified financial coach and author, she recently released her second book Five Steps to Financial Wellbeing, a tool kit for taking back control of your finances.
“It seems a cruel irony that, following two years of intermittent restrictions and limitations on what we were legally allowed to do (for very good reason, of course), there suddenly seems to be another thing holding us back from living a full and enjoyable life: the cost,” Seal says. “But while surging costs and policy changes may be out of our control, there are lots of actions — both small and large — that we can take to give ourselves some breathing space, reduce money worries and retain some disposable income.”
Here she has put together a 10-step guide to cutting costs and sticking to a budget (without completely giving up everything fun).
Do a value audit of your spending
Our spending habits develop over the course of our lives according to various factors, from convenience to emotional triggers. It’s all too easy for your living costs to creep up as your lifestyle changes, even without the impact of inflation, so an honest review of your spending is a quick and easy way to slash costs. Start by downloading one or two months’ worth of bank statements and grabbing some highlighters. Choose one colour for essential bills, one colour for luxuries that you really value and one for luxuries that you could do without, and another for transactions that you don’t even remember. Be ruthlessly honest with this exercise, and it will show you where you can cut costs without affecting your quality of life.
Outsource your financial admin
With so much else on our plates, sometimes we leak money just because of forgetfulness, or lack of organisation. We might roll onto expensive standard tariffs or renewal contracts, pay late fees on credit cards or forget to cancel free trials before being charged, leading to a lot of wasted money. Aside from setting calendar reminders (with a noisy alert), link your current account to an app like Snoop which reads your transactions, analyses your spending and alerts you to better offers.
Adopt a ‘one in, one out’ policy
With the added bonus of helping you to reduce clutter, selling or donating an item every time you buy something new can really help you to shift your mindset around consumerism and practise more mindful spending. On a practical level, selling unwanted possessions can help to offset the cost of new things, while sticking to this rule also adds an extra layer of consideration to your shopping. Alternatively, you might like to have a big clear out at the start of each season, then stash the cash from your sales in a pot to be used for new wants and needs. Look to apps like Vinted, Depop or simply try a car boot sale.
Check for cashback on absolutely everything
We’re used to looking for offers and discounts when we shop, but many people forget about the potential savings from cashback. Get into the habit of checking for cashback across apps like TopCashback and Quidco every time you buy online, especially for things like holidays, insurance and high-ticket items. Even small percentages add up quickly, and you’ll accumulate a balance which can be withdrawn to boost your coffers. Some current accounts also offer cashback on spending, like the Chase current account, or on household utility bills, like the Santander 1|2|3 Lite account.
Focus on habits, not numbers
When money suddenly becomes tighter, it’s easy for positive financial habits to disappear as we enter survival mode. Where possible, though, it’s a really good idea to keep those good habits or even adopt new ones. If you were managing to save or pay-off debt each month but suddenly need that money for day-to-day costs, try to reduce your regular payment — even if it’s right down to a very small amount —rather than getting rid of it all together. In keeping the habit alive, you’ll make it easier to go back to when things get easier again. Try an auto-saving tool like Chip or Plum to save small amounts automatically every few days.
Practise delayed gratification
We live in a culture of very little patience, especially when it comes to material things. Same-day delivery means the gap between wanting something and having it is short and effortless, while easy credit means that we often don’t even have to have the money in our account, or consider whether or not we really want or need it. It can be hard not to scratch that itch once we see something we want but try keeping a “want list” and giving yourself at least 24 hours before you press the “buy” button.
Have a phone curfew
Difficult if you’re used to double-screening, but putting your phone to bed a couple of hours before you turn in yourself will allow you to charge it fully without leaving it sapping electricity all night. It has the added benefit of reducing boredom shopping and it’s great for sleep hygiene, too.
Borrow, don’t buy
Share and repair shops are popping up all over the place and the Olio app has just launched a feature that allows you to borrow and loan things in your community. For those expensive things that get limited use, try borrowing before you buy. If you can’t borrow, try renting. The Library of Things has eight London locations where you can rent all sorts, from a cordless drill to a hand sander and sewing machine (all £8 a day).
Cash in on switching bonuses
You can get up to £150 in cash to switch bank accounts — if you have a partner and you both switch, that’s £300 extra in your pocket.
Create a go-to list of free or cheap activities
We don’t always have the time or energy to think of imaginative, free things to do — especially with children during holidays. So that you don’t end up spending a fortune on cinema tickets or an expensive day trip, compile a list of wet and dry weather activities. You could even get the kids involved in writing the list— it’s a good way to instil a healthy attitude towards spending in them too.
Five takeaway tips
Watch for leaks in your budget with the help of spending analysis from banking apps like Monzo or budgeting apps like Emma or Money Dashboard.
Stay on top of opportunities to save money with an app that will give you nudges like Snoop.
Automate as much as possible, such as savings, bill payments and transfers. This will keep everything in check without adding to your mental load.
Reframe budgeting as something that’s there to empower you, not restrict you. Your budget is just a plan for your money.
Make sure that you support your practical efforts with mindset work if needed — we all fall into patterns of behaviour with money that don’t serve us sometimes, but they can always be changed with a bit of work.
Five Steps to Financial Wellbeing by Clare Seal (Headline Home, £14.99) is available now