It's been the saving of you

Shopping around for your insurance or a mortgage, banking online or switching gas supplier - just a few of the tips we've offered you this summer. If you took heed, well done. You are now £5,050 a year better off
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The Independent Online

This newspaper's guide to improving your financial health began in July with the ambitious aim of making our readers £5,000 a year better off. And we have succeeded - just.

This newspaper's guide to improving your financial health began in July with the ambitious aim of making our readers £5,000 a year better off. And we have succeeded - just.

Readers who followed our advice will typically save between £3,675 to £6,425 each year from their running costs - an average of £5,050 extra cash in the household purse. What is more, the savings should be pain-free.

The most important piece of advice is to shop around. Whether the product is an insurance policy, bank account, mortgage, car or fridge, it is equally true that the result of comparing price and performance carefully can save a lot of money. This applies not only to buying or renewing existing products, but also to reviewing the assets and services already used. When is it best to replace a car or fridge? And is it better to move to another insurer or credit card?

Time is required to get the most of your money. Comparing prices on insurance policies by phoning and e-mailing round perhaps as many as ten insurers - choosing some brokers as well as direct insurers - will take a couple of hours or more. But on average doing so for car insurance will save £150 each year, and often much more. Few people have the opportunity to earn £150, tax free, from two hours work.

Inertia must be overcome if you are to put your money to better use. Financial services companies rely on customer lethargy for much of their profits. For all the talk by companies of rewarding loyalty, customer disloyalty often earns more money. Remortgaging your home may save £30,000 or more over a 25-year term. And if savings are used to reduce the repayment period by five years, another £15,000 in interest may be cut from your costs.

We have also pointed out that there are some products that it may simply be better not to buy. Income protection insurance on loans and mortgages is not always good value and it may be better to buy a stand-alone policy or even - with credit cards and some loans - not to buy any at all. Most extended warranties - such as those for fridges, washing machines and audio equipment - should be unnecessary if the products are of good quality (It is definitely worth reviewing product performance in copies of Which? magazine before buying an expensive item).

One of the early tips in the series was to consider moving bank accounts, opting for an internet-based current account that should pay interest rates more commonly only available with savings accounts. But this is only worth doing if your finances are actively managed. A fortune can be lost, for instance, by failing to pay-off credit cards bills by their due dates or missing a repayment on what should have been an interest-free loan which then kicks in penalties.

And special attention should be paid to some of the big household bills. Utility charges can be cut substantially by switching suppliers, not just on gas and electricity but also on telecoms - particularly if you use the internet and can obtain free internet access through a new telecoms supplier. And it is just as important to compare prices on mobile networks as it is on fixed-line phones. It is worth reviewing water bills, too, to examine whether it would be cheaper with water metering rather than water rates, and if so, how consumption can be cut. There are many sources of advice on reducing energy and water use.

Consumers that have taken our advice and are now several thousands pounds a year better off should immediately consider how to pay-off outstanding debts. "The first thing is to clear non-mortgage debt," suggests Donna Bradshaw, a director at Fiona Price and Partners, an independent financial advisor. "The interest rate on shorter term debt is often very high. Get rid of any credit card debts.

"Then look at a combination of paying off the mortgage and putting money towards your pension and think about other investments. People want to retire earlier, but are also living longer. You might have paid off your house but you still need something to live off. I would say think about ISAs as well as pensions. It might be worth doing a pensions exercise using the assumed date of your retirement and think about how much you need to put in your pension. Remember, money invested in the early years is worth far more than that at the end and can be more speculative in those early years."

Cutting the household budget as substantially as we have suggested is not easy. It involves time and effort. But the old saying is true - it is usually easier to spend less than it is to earn more. And the goal is worth the effort. An extra £5,000 a year is worth having in anyone's language.

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