What you’re likely paying too much for and how to fix it

Some things cost what they cost and there isn’t much you can do, unless you change your life drastically. However, other expenses quietly eat away at your budget but can easily be lowered. In this article I am talking about a handful of such quiet ‘spare change thieves’ and what to do to stop overpaying.

Mobile phone and data plan

It actually doesn’t matter all that much which provider you are with. What matters, is whether you are chosing to use a plan where you purchase your phone as part of the monthly plan. Mobile phone companies are clever in that sense – probably this is why the newest models come with plans costing in excess of £40 per month, with an additional small fee and a contract length of 18-24 months at a minimum. To save yourself few £ every month, always do your maths first, especially if you are comfy using a model one below the latest release.

To demonstrate the cost, a recent iPhone 12 on the cheapest plan I could find with EE is £57 per month on a 24-month contract, with additional £50 upfront and with 100GB of data. I don’t know who uses this much data, but who am I to judge? The phone, outright, costs £699. A comparable sim only deal costs £20 per month on a rolling contract with the same provider.

If we were to purchase the contract including phone at £57pcm + £50, our overall cost would be around £1418 (£57*24 + £50). For the ease of calculation I am ignoring the annual price increase of the plan.

If we were to purchase the phone outright, the cost would be £1179 (£20*24+£699). That’s £239 difference over 2 years or £119.50 per year.

If you are not in a position to purchase phone outright or prefer the monthly plan including a device, there are options for you too. Simply call your phone provider and ask for a discount. In my experience nine times out of 10, they will find you a small loyalty discount easily – the beauty of mobile phone providers is that usually they do want to retain you as a customer.

Gas and electricity bills

Did you know that British Gas and EDF are expensive? As are most power and fuel providers in the UK. However, there has been a lot done over the last few years in order to bring the consumer costs down. The chief option directly in your own hands is shopping around for a tariff which matches your household’s needs. There is a number of comparison websites available now which make the switch surprisingly easy. But why bother?

An average dual fuel bill on a variable tariff in the UK now exceeds £1000 per year. That’s an eye-watering amount and you do not want to be paying this much. In accordance to a great little comparison run by Ofgem, a standard variable tariff with a ‘legacy’ supplier (the big companies who hold the lion share of the market) costs £1042 per annum, while the cheapest non-variable tariff on the market will cost £914. That’s £128 per year.

Combine your £119.50 saving on your mobile phone with this, and suddenly there is extra £247.5 per year in your pocket.

Food which you don’t eat

I’ve always thought of myself as a relatively frugal, non-wasteful sort of a food shopper. I still think that, even despite all too frequently buying the most expensive sort of food – the food which I will throw away. An average household in the UK according to the Office for National Statistics spends around £61.90 per week on food. That’s £3218.80 per year. Out of that, according to wrap.org.uk/ £810 per year goes, via the fridge and the kitchen counter, into the bin.

How to reduce your food shop cost? The dreaded but very effective response is a meal plan and a shopping list. And I know that some of us are not into either meal planning or shopping with a list, but £810 might just be worth the inconvenience of cooking and eating the food you buy.

If you combined savings across your food, utilities and mobile phone, what could you do with £1,057.50 extra in your pocket?

If you are curious how your own living costs stack up against the average UK living costs and where you might be overspending, this ONS infographic might help. The data for 2020-2021 is not yet out, and I am curious to see what a year at home for a large part of the population has done to how we spend.

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