MSE’s Academy of Money
MSE’s Academy of Money

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

MSE’s Academy of Money

11 Trimming your spending

Whether you’ve done a budget or not, it’s a common situation for many households to have more going out in spending than they have coming in on the income side.

There are, though, many steps you can take to trim spending and get you back in balance with your income. Many of these are ‘pain-free’ ways of saving money through simply paying less for the same goods or services.

The image is a photo of two women in a café. One woman has her mobile phone in her hand and both women are looking at the screen.
Figure 9 Time for a catch-up over lunch – and maybe exchange some money saving tips?

Here are some simple ways to cut your spending without radically changing your lifestyle.

  • Paying some bills by direct debit may save you money, for example utility bills. But check this carefully as some bills – such as household and car insurance – may cost more if paid monthly by direct debit.
  • Think about remortgaging if you’re currently on your lender’s standard variable rate, or your current deal is about to end. Saving 1% on a £100,000 mortgage saves around £80 a month (you will look at remortgaging in the session on mortgages later in this course).
  • Check the market when it’s time to renew insurance premiums. They are often increased each year, relying on customers not bothering to switch to another company. Also check that you’re not paying for any ‘extras’ you didn’t ask for or want.
  • If you’re paying high interest on your credit cards, look to see if you can transfer your balance to a new card at 0% – you can usually do this for a small fee.
  • Switch suppliers of gas, electricity, phone and broadband. There are major savings to be had in these areas. OFGEM have created a website to help you find the best deal on your energy suppliers [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] . A link is provided at the end of the session to help you select and switch energy suppliers.
  • Consider getting a water meter, especially if you use low amounts, or there are fewer people living in your house than the number of bedrooms you have.
  • If you’re paying for a gym and don’t go very often, see if you can do pay as you go instead. Alternatively, can you work out at home or go for a run in your local area?
  • Think about whether a branded item is really value for money or if you can live with buying a store’s own brand, or a non-branded item.
  • Cut down on the number of takeaway meals you have – cutting from two to one a week would typically save over £250 a year and probably be healthier for you too.
  • See if you can get a cheaper mobile tariff. Check the market to see what’s out there and be prepared to switch. If you don’t want to move, call your mobile supplier and ask if they’ll match the deal you’ve found.
  • Buying in bulk for items such as contact lenses saves a lot of money.
  • Ditch your morning coffee from the local coffee shop. It’s much cheaper to make it at home.
  • Taking packed lunches to work can save £100s a year on lunch costs.
  • Buy fresh fruit and vegetables in season. Check whether a local market is cheaper than the supermarket.
  • Turn off lights, don’t leave appliances on stand-by and turn down the thermostat to save large amounts on energy bills (and help the environment).
  • Make a shopping list and stick to it rather than being tempted by items on the supermarket shelves. Try to use money-off coupons from papers and magazines where possible.
  • Think carefully about buying extended warranties. They are usually poor value for money so it’s usually better simply to put aside some money in case of a problem.

And if you are struggling to keep a lid on different aspects of your spending you can enforce more discipline through the ‘piggybanking’ technique. This is where you set up a series of savings or bank accounts for each major category of spending – for example holidays, socialising, clothing etc. You then assign your income to each account in accordance with your budget plan. If you keep to the discipline of never spending more on each spending category than is in its assigned account, then your overall budget will stay in balance. It’s just like the well-known method of using jam jars to share your income between spending categories – except your money is safer in accounts and you could earn some interest too!

Next it’s time for the end-of-session quiz – best wishes for this.

After the quiz it’s time to round up what has been learned in this session, and where to go for further information on budgeting and taxation.


Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371