The Consumer Prices Index (CPI) rose by 5.1% in November 2021, and it’s still on the rise. This combined with the expected energy cap increase and tax rises will put pressure on your finances this year. So, how can you make sure you spend less of your money in 2022? Here are five tips to get you started.
1. Have a budget
Experts have always advised that people budget when it comes to their finances, but what does that really mean?
If you’re trying to reduce your expenses, you need to determine where your money is actually going. This includes household bills, fuel, debts, mortgage or rent, takeaways and subscriptions. It basically covers everything you pay for monthly.
How does this help you spend less? Well, you get to see payments that you can cut back on, even temporarily. However, note that the particular expenses you cut back on will depend on your circumstances, meaning the best places to cut will be specific to you and your family.
Of course, payments like your monthly rent or mortgage and debt may not apply, but there could be some payments, such as subscriptions, that you can forego. You can also reduce the number of times you buy takeaways and substitute them with homemade meals, which are cheaper and often healthier.
It might also be helpful to use a budgeting app to help you keep tabs and stick to your spending habit changes.
2. Try out the ‘three-day rule’
Do you feel like you buy unnecessary things, especially on impulse? It might help to try out the ‘three-day rule’. What you do is simply wait for three days before buying something you want to buy. These three days give you a cooling-off period to not only help you determine whether you really need that item but also to look around at alternatives that might offer better value.
3. Introduce no-spend days in your week
A no-spend day is a day you set aside to avoid expenses unrelated to an essential need. Start small, maybe a day a week, and perhaps you can make it two or three days a week later if you set strict enough boundaries for yourself.
Examples of simple things you can do to get started are taking a packed lunch to the office instead of eating out and avoiding that costly coffee you might buy on each leg of your commute to and from work. You can build from there until you have days each week that you spend on nothing that is not absolutely essential. You can then put the money into savings or investments.
4. Find out if you can switch to cheaper providers
Compare deals from different providers annually, especially as your contract approaches its end. Providers to compare include your home and car insurance, energy, and phone and broadband providers.
You might come across cheaper deals that could reduce your expenses significantly. However, when you find a more affordable deal, it’s wise to talk to your current provider before you shift to find out whether they can match that deal. This could save you a lot of time and effort!
5. Understand your home heating needs and cut back on energy use
The energy price cap is expected to rise at the beginning of April 2022, which is likely to see you spend more on energy. Make changes now to avoid getting caught out.
You could start by understanding your home heating needs with the help of a specialist. Additionally, something as simple as switching your lightbulbs to energy-saving bulbs and making a habit of turning off appliances or devices that aren’t in use could save you more than you might think.
The post 5 tips to help you spend less of your money in 2022 appeared first on The Motley Fool UK.
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