Guest Post: How we cut more than £10k from our annual spending!

How we cut more than £10k from our annual spending, without even noticing!

Guest Post from Ryan Storey – How we cut more than £10k from our annual spending, without even noticing. I have been blogging for a while now at kakeibo about cost-saving strategies and generally living a frugal lifestyle, but it wasn’t until a friend really challenged me on the benefits of these strategies, that I actually took the time to work out the overall impact on our family finances. I was absolutely blown away when I added it all up! There were some strategies that I was really pleased with when I found them, that honestly didn’t amount to much when I added them up over the year, but the cumulative saving came to £10k and I almost couldn’t believe it. I’ve outlined the strategies below so hopefully, others can benefit from these too. I found it very useful putting them all together in one place, like a warm fuzzy metaphorical pat on the back, maybe you should try doing the same and give yourself some well-deserved credit too!

Before I get into the detail, it is probably helpful to have a bit of a background to give these some context. I have briefly outlined our situation below:

• • Age: 32

• • Married with two children – my daughter is 3 and my son is 4 months old

• • Essentially a single income family, my wife stays at home with the kids, but does do a bit of work around pre-school times as a PA from home

• • I work in London and commute about an hour every day

• • I am an accountant, with a passion for financial education, seeing the benefit it has brought me so far

• • I am constantly shopping around and thinking of ways to save money – I treat it like a game
  • We have had significant debt in the past ~ £35k, which we have now predominantly paid off – more on that later…

I think it is important to say that the savings that we make are reinvested in other things, like home improvements and maintaining a comfortable lifestyle. There is a common misconception that living frugally equates to living like a pauper. The key for us is maintaining a lifestyle that we can afford, being more disciplined about each purchase we make, but living the life that we want to live. It is a fine balance, because like dieting, if the life you build is not sustainable long-term, then you are more likely to slip back into bad habits.

The B word…

I feel like I need to start with a brief bit about budgeting and monitoring finances – many people have a budget, but what is often missed is regular monitoring of your spending against your budget, both within the month and following the month, to ensure that you are staying within your means. I see budgeting as past, present, and future.

Past 

I review expenditure following the month compared with the budget and revise my budget going forward if things are changing, i.e. fuel prices going up and spending more, I make an adjustment for that. The budget is only as good as the day you set it, you need to keep tweaking it to make it reasonably accurate. I also use this to categorise expenditure and then start working through each item and seeing if I can either cut down, or get a better deal. That is basically how I found most of the strategies in the first place, i.e. being motivated to go and do some shopping around. 

Present 

Ensuring that you stay within your means and budget, results in avoiding borrowing money to see you through the month. I update our budget vs. actual during the month at least once per week, and reign in spending if it is getting out of control. This could be a time consuming exercise, but last year I transitioned all of our budgeting and monitoring from a basic spreadsheet, to a cloud-based accounting package called Xero. It downloads your bank transactions and using AI categorises most for you to just review and accept, which has automated a huge amount of this process and given me back about 12 full days per year when I add up the time saving. The subscription does cost me money (approx. £60), but based on the savings below, assistance in keeping us in our budget and the time saving, this was an investment I was willing to make.

Future 

I run a rolling 12 month budget and deliberately budget monthly so that costs like holiday, birthdays, Xmas and other big outlays such as car service etc. are captured in the proper months. This helps me work out what I need to save each month to make sure that I am then not short in those months. This also helps me to forecast for other transactions that we are planning and see if it is feasible, like buying a sofa, or washing machine for example. It is better to work out that it is not possible in a spreadsheet, than signing up and realising that you have run out of money!

For more on budgeting, check out our detailed blog post at -> I’ve made a Budget, why do I still have no money?

Our cost cutting strategies – tried and tested!

So, without further ado, here is a summary of our cost cutting strategies in no particular order and the total that they will save us over the coming year:

Caveat: Some of these are specific to our circumstances and won’t be possible for all, but the concept remains the same – if it is a big cost, think about how you could save money, even if that is just changing your routine or behaviour. 

Mobile phones – this is my favourite, as previously there just weren’t really any options to reduce this cost drastically unless you could afford to buy your phone outright (or chose to not have a smartphone of course…). The other reason I have been raving about it to friends and family is because of the way that contracts have been sold in the past does not clearly demonstrate how much you are ending up paying for the phone, which I think is unfair to the consumer. Using Unshackled.com, I will have saved £150 on my phone this year (£300 over the life of the contract), but I will also use Unshackled.com for my wife when her contract is up in September too, which will save another £50 this year.

Razors and shaving – I was fed up with how much I was spending on razors and shaving stuff, so I shopped around and now have a King of Shaves subscription, saving me £44 per year. It also comes in the post, so you don’t even have to think about it!

National Insurance refund – it is a good idea to check your payslip, especially if you have changed employers in the tax year like I have. I realised that I had overpaid National Insurance by £261. National insurance is often overlooked, as it is not dealt with on a cumulative basis by your employer if you are under the PAYE scheme. I had to call and write to HRMC, but it is worth it if you can get some money back! This is also a reason to run a tight budget, as it will show up when you are comparing forecast to actual on a monthly basis. 

Multi-car insurance – I shopped around for insurance when my wife’s car was up for renewal, exploring multi-car policies and taking into account the £50 I had to pay to get out of the pre-existing separate insurance I had on my car, I will have saved £622 this year.

Parking for work – I commute to work and have to drive to my local train station, parking at the train station costs £12 per week, but I get up a bit earlier and manage to park on a nearby side street (they would all be taken if I didn’t go earlier), saving £500 per year. Who says the early bird doesn’t catch the worm?!

Train travel – I realised that on renewing my season ticket that if I made a slight tweak to my destination, I would no longer need to pay for tube fares getting to my office. It means that I need to walk a short distance, but that is more than worth it considering I will now save £1,360 over the next year!

Lunches for work – I either make my lunch everyday, or take leftovers (also reducing food waste), but on average cost no more than £1 per day. Before I was spending £5 per day, therefore this is a saving of £900 per year.

Coffee on my commute – I have a coffee on the way to work each morning (I’m up early to get that parking space remember), but since getting a KeepCup for Xmas and taking a coffee from home instead, I will now save £400 this year as a result.

Nappies for my newborn son – we use ‘subscribe and save’ through Amazon saving £38 per year.

Childcare vouchers – £300 saved on pre-school fees before my daughter got the free hours, by getting the childcare vouchers through my employer and therefore saving the tax on my pay.

TV & broadband – saved £43 over the year, but managed to upgrade Sky to Sky Q and broadband to fibre on BT Infinity – I could have chosen to just get a discount on my Sky HD package instead, which I negotiated down to 50% off, for a saving of £300 per year, but decided to reinvest it instead. Broadband is one of life’s necessities after all…

Home insurance – shopped around for my home insurance and will save £90 this year by going through John Lewis Insurance. 

Groceries – we shop at Aldi where possible, we do still have to get some things elsewhere, but we save approx. £1,000 over the year as a result. Plus, you get a workout trying to pack your own bags as the checkout assistant fires things through at break-neck speed!

Meal wheel – for my wife’s baby shower present, instead of getting baby ‘stuff’ her best friend set up a ‘meal wheel’, which is basically your friends making you dinners and bringing them over in the first few weeks after the baby is born. It saves both time and money, which are equally important at that key time, but amounted to about £100 saved and immeasurable amounts in sanity. 

Hand me down clothes – with our first child being a girl, we would have needed to buy lots of clothes for our son, but friends and family have donated ‘hand me down’ clothes, which has already saved us at least £100, but will save us a lot more over the year as well.

Breastfeeding – my wife breastfeeds our son, which means we don’t buy formula, which will save us about £120 this year.

Leased car termination fee – I used to have a leased car through my employer. When I left last year I was required to pay a termination fee. It seemed high, so I challenged it, going all the way back to the terms and conditions after lots of arguing and doing my own calculation. They finally accepted a £500 reduction due to their “errors” in the calculation. It is important to know what you are paying for and sticking to your guns if it doesn’t seem right!

Nest thermostat and insulation – I had a Nest Thermostat installed last year, which learns your routines and how your house heats up. We used to have a basic timer on the boiler, which meant the heating was always on for 8 hours per day. Since having it installed there have been many days where it has only been on for 3 or 4 hours instead, even over the winter, giving us a comfortable environment. I will really need to run this for a whole year to determine cost savings, but I think this could help a lot. We also live in an older house, which had no insulation in large sections of the loft. I did some research and insulated it myself on a weekend. It cost me £300 for the insulation, but on average savings achieved by insulating your property can be £600+. Therefore, I estimate £200 saving (after taking into account what I spent) to be prudent over the year.

Re-mortgage – Last year we were planning on re-mortgaging our existing property, to reduce our monthly payments, take advantage of the ridiculously low interest rates and pay down credit card debt. We had the house valued as part of the process and actually ended up selling, moving to a bigger house paying off all our debt and getting a lower interest rate. It is important to say here that I used a financial advisor to help me with this process, which I would strongly recommend for any significant financial decisions like that. The result is that overall we are now £300 better off each month, therefore a saving of £3,600 over a year and have more space and a better quality of life. Much less of our hard earned cash goes into making interest payments.

Drum roll for the net total saving over the next year…..£10,318!

Hopefully you too can utilise some of these and make savings yourself. Are there any great cost saving strategies that I have missed? Let us know and get involved with the conversation on social media:

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Twitter: @puzzlingpieces

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Thank you Ryan for your great post. If you have any amazing ways to save money then do leave us a comment with your suggestions or pop over to Ryan’s site for more tips. 

Lisa