How Can I Save When Everything Is So Expensive?

on February 12, 2025 at 1:16 pm

As the cost of living crisis continues to rise, we’re all asking ourselves the same thing – is it even possible to save when everything’s so expensive?

Wages may be on the rise, but it’s not getting any close to meeting the rising prices. High inflation is a living nightmare for families struggling to make ends meet when their income doesn’t accommodate a sudden spike in costs.

A few months ago, I found myself staring helplessly at my credit card bills, realising I had gone over budget—again—and was dangerously close to falling into debt. I knew I had to figure out how to stick to my monthly budget, pay my bills on time, and still save for the future. So, I turned to the ultimate ‘sage library’—the internet—for finance and budgeting tips. That’s when I discovered I was making some major financial mistakes.

From what I’ve learnt, it is possible to find a balance and save money even when everything seems so expensive. And it’s not as overwhelming as it seems.

Here’s why I think so, and tip number 3 might just surprise you.

What’s Really Happening?

First and foremost, lets understand what is driving the price increases. You cannot make long-lasting changes to your budget and spending habits if you are unaware of the state of the economy and the factors causing the sharp price increases.

The primary reason why everything seems expensive now is high energy costs. From January 2025, you can expect a 1.2 % rise in the price caps on energy and heating charges – from £1,717 a year to £1,738. However, the actual bill amount will reflect the total energy you use.

Adding to the bad news, food costs are likely to rise further too. The increase in employer National Insurance contributions will lead to a rise in the minimum wage from April 2025. Supermarkets and manufacturers may increase food prices to offset these costs.

In addition to this, council tax bills and household water bills in England and Wales are slated to increase. Transport will become dearer as rail fares are expected to increase too, particularly for London.

But Wait!

This refers to the magnanimous scale of the cost of living crisis in the UK. It’s easy to feel overwhelmed by the soaring prices of essentials and costlier amenities, signalling difficult times ahead. Amid the pressures of daily life, work, and other responsibilities, finding the time and mental space to sit down and plan a way around these financial hurdles can be difficult.

However, it’s essential to make the effort, as it can lead to opportunities you might not have seen coming. And this is exactly what I did, through careful planning and strategic budgeting.

Wondering how I managed to navigate this financial challenge? How did I find a way to reduce my everyday expenses, even with costs soaring, and still save money?

Here’s how.

Let’s Talk Numbers

After understanding what costs are expected to rise, the first thing I did was update my budget. Even though I genuinely hoped that the UK economy would recover quickly, I knew I needed to develop a solid budget and financial plan regardless. I also had to make staggering changes to the way I handled money if I wanted to tide over the debilitating impacts of the cost of living crisis.

Here’s what I did:

1. Write. It. Down.

I read on a financial blog that writing down your expenses can be a real eye-opener. I tried it, and it was. You can use a book or an app; I chose an app for the ease of tracking my expenses, and I quickly realised the insane amount of money I was spending every other week on coffee and croissants. That realisation itself helped me consciously start making coffee at home and cut back on £100 to £150 in a month.

2. Control Your Cash Flow

At the end of the day, it’s how much you spend that determines how much money you can save. Keeping a tight-fisted approach to my budget helped me kick out the splurges and kick in the core needs.

I improvised on the 50-30-20 rule to create my own 50-30-10-10 rule to rework my budget and cash flow. I allocated 50% of my income to essentials like groceries and bill payments, 30% to savings, 10% for treats and 10% for investments.

This rule is not set in stone, and you can tweak it as you see fit. If you’re looking to get rid of debt, you can also adopt the 70-10-10-10 rule and allocate a set percentage to pay off debt too.

3. Control Essentials Costs

Given the predicted rise in food prices, the last thing I wanted was my grocery shopping spiralling out of control. I analysed my food habits and understood that I’m likely to eat more or less the same thing most times a month.

So I chalked up a master list that included those foods and cross-checked it with what I already had in my pantry. Carrying this grocery list to the store and buying only what I needed (and in bulk) saved me almost £100 pounds last month.

As for saving up on my energy bills, I reached out to my supplier and enquired for a fixed-rate deal as I know it could save me around £100 a year against the current price cap. When using this tip, make sure you pick a deal that doesn’t involve early exit fees if the energy prices drop next year.

Now It’s Your Turn

I may not be the best person to give financial advice, as I’m still a work in progress when it comes to managing finances. But I’m sharing my tips here with the aim that you, like me, will reduce mindless spending, put money where your mouth is, and most importantly, bring in more financial discipline to your life.

As cliche as it sounds, financial discipline doesn’t come overnight; it takes regular practice to achieve. But with budgets, cutting down on splurging, saving and investing, you’re well on your way to achieving it, regardless of the prevailing economic scenario.