Why are you wasting money?

The two most important financial steps that UK families want to take in 2012 are cutting back on spending and clearing their debts, according to a report by Aviva.

A study into family finances found that 39% of households said reducing their expenses was their biggest financial priority. Yet it also found that people still want to spend money on non-essentials and aren’t willing to lower their standard of living.

If that sounds familiar, you need to make sure you’re not spending more than you need to on essentials like your mortgage and other household bills.

Price comparison site moneysupermarket.com calculates that many households can save as much as £3,200 simply by switching to more competitive deals.

Even if you’re not able to make those kinds of savings, a few hours work could easily net many people upwards of a thousand pounds – and that’s after tax.

So, gather your bills and your laptop, and set aside three of the most lucrative hours you’ll ever spend.

Your car insurance

More than one driver in 10 has never switched their car insurer, according to figures from comparison website gocompare.com. But it claims that its customers save an average of £393.67 by comparing premiums online.

That’s a substantial amount, so don’t waste money by letting your cover auto-renew.


Your mortgage

Mortgage and rent accounts for 20% of the average family’s household income, according to Aviva. That’s a very good reason to make sure you’re on the best deal possible.

If you have a £150,000 mortgage on the average SVR, which is 4.83%% according to moneysupermarket.com, and you switch it to the market-leading two-year tracker at 2.08%, you’ll save £1,207.84 a year. And that’s after tax.


Your home insurance

Have you noticed that your building and contents cover is getting pricier? According to the AA Shoparound Index, buildings premiums rose by 9.5% last year, while contents protection rose by 11.2%. And it’s predicting further rises this year.

But finding the cheapest home insurance instead of auto-renewing can save you hundreds of pounds a year. For example, 10% of Confused.com customers saved £273 or more, while 10% of gocompare.com customers saved at least £239.

If you haven’t switched in several years and you’ve not claimed recently then you’re more likely to be able to save such a substantial sum. At very least, phone your provider and ask them for a better quote.


Your credit card

More than a third of people have never switched their credit card, while 23% haven’t switched in more than five years, according to uSwitch.com.

That means they’re paying high rates when they could have transferred their balance and had a long interest-free period to clear their debt.

For example, if you have an outstanding debt of £2,000 and you’re paying 18.4%, you could save £263.27 in the first year by transferring the balance to a card charging 0% for at least 12 months – and that’s factoring in a 3.3% fee, which is what the market-leading card currently charges.

You need to have a good credit rating to qualify for a card offering an interest-free balance transfer period. If you don’t, you may still be able to save by switching to a card with a cheaper rate or even using a loan with a lower rate to repay the debt.

Admittedly, you’d lose flexibility over the repayment but it might help you clear it in a shorter time.


Your food

I go on about this a lot because it’s such a simple way to save money every week. One important task for your big financial sort out is to find the cheapest supermarket for your standard shopping basket.

The grocery comparison website mySupermarket lets you enter your usual shopping and then highlights which shop is cheaper, out of Sainsbury’s, ASDA, Tesco and ocado. It claims that customers can save an average of £10 on their weekly shopping trip, meaning potential savings of more than £500 across the year.


Your television

Aviva found that 50% of families pay monthly for a satellite television package, so it’s clearly important to a large number of people.

But you could potentially save pounds every month by bundling your services – ie buying your TV, phone and broadband all through the same company. You should also haggle with your existing provider before switching, to see if it will offer you a better deal to stay.

When you’re looking for a better deal, ask yourself if you really need all the channels you pay for – what do you actually watch? After all, if you only really watch the Freeview channels then you could scrap your subscription package and save the £30-odd every month!

If you can get the price down by even just £5 a month, then that’s £60 saved over a year.