Just embrace the new austerity, it might even be fun

Don't let the recession get you down. You can save money but still keep your living standards high, say Chiara Cavaglieria and Julian Knight

It's been called the "new austerity", cutting back and saving money in the teeth of the recession. However, finding ways to cut costs but maintain roughly the same lifestyle is tricky, although not impossible. Now that Individual Savings Account (ISA) limits will rise to £10,200 from April 2010, or from 6 October 2009 for the over-50s, this is the ideal time to start downsizing financially. Here are 10 ways to shrink monthly outgoings and build up that savings cushion.

Ditch the car and join a car club

Drivers can join a car club such as Streetcar, Zipcar and City Car Club to rent pay-as-you-go cars by the hour or day and save as much as £1,920 a year. Car-club members pay an annual fee (typically £25 to £60) and then hourly rates of about £5 or daily rates of between £30 and £60 for cars which can be accessed with special smart cards and PINs. Most clubs also offer monthly package deals which could work out cheaper for drivers needing to rent a car on a regular basis. Petrol costs are charged to the club, and with no car maintenance, insurance or tax to pay, the savings could soon stack up. "Research shows that members can save about £160 a month by joining the pay-as-you-go service that Streetcar offers, avoiding all the fixed costs and hassle of keeping a car on the road," says Brett Akker, co-founder of Streetcar.

Swap broadband for a dongle

Broadband providers will often entice consumers with introductory special offers and freebies, but there is no getting away from the fact that internet access is an expensive luxury. One alternative is to opt for mobile broadband or "dongles" which can be plugged directly into a computer to provide instant access to the internet. As with mobile phones, customers can choose a monthly contract for a fixed amount of data allowance or opt for pay-as-you-go. The cheapest monthly tariff from Orange, for example, costs £9.79 for 1Gb of usage. In contrast, the cheapest broadband option with BT costs £7.98 for the first three months, then £15.65 thereafter. Most dongle deals have a usage limit and providers may charge a hefty fee for going over that limit, so always check the terms and conditions.

Trade skills in your community

Local Exchange Trading Schemes (Lets) bring communities together to exchange skills and favours without having to hand over any money. Each scheme sets its own currency, or "mutual credit", which can be earned and then used to "pay" for other skills. Members use their time and skills to build up enough credit to exchange for the skills of other members. "If you need something done, you can see if it's available on the Lets and save your money for things you really have to spend it on," says Mary Fee, from LETSLinkUK. Domestic skills, from gardening, childminding, ironing or even baking a cake are common, but many groups also exchange specialised skills such as language or music tuition.

SIM-only mobile contracts

With mobile-phone contracts getting longer and pay-as-you-go deals still expensive, SIM-only contracts could offer the perfect solution. With these deals consumers are paying for the SIM card only, not the handset, so will typically get more free minutes and texts than they would with a normal contract. The lowest tariff on Virgin's Liberty SIM, for example, costs £10 a month for 200 free minutes and texts, and O2 offers a £10 tariff for 150 minutes and 200 texts. By far the best thing about a SIM-only deal is that consumers can cancel the contract with just one month's notice.

Grab a beauty bargain

Training salons all over the UK offer free haircuts. Being a guinea pig for hairdressing students may sound a bit scary but trained staff are on hand at all times. Trusted names such as Toni & Guy and Vidal Sassoon offer free haircuts in their training academies, but local hairdressing colleges are also likely to need models to practise on. Other pampering luxuries such as beauty treatments and acupuncture may be offered free at training colleges. The British Acupuncture Council has a list of accredited colleges on its website (www.acupuncture.org.uk).

Downsize your TV package

Monthly subscriptions for satellite packages can make a real dent in the pocket. Even the cheapest Sky package costs £16.50 per month. Consumers can save hundreds of pounds a year by ditching their satellite and opting for Freeview. There are still up to 48 digital channels and 24 radio stations to enjoy but without the pricey subscription fee. Digital televisions come with Freeview already built in or a Freeview box costing from about £20.

Free entertainment

Anyone under the age of 26 can see theatre productions free, courtesy of a new Arts Council scheme. Those interested can visit anightlessordinary .org.uk and use the postcode search to find local productions with available tickets. "There are lots of ways to have fun without reaching for your wallet; from working at festivals to listen to bands for free, or getting free tickets to be in the audience of your favourite TV show through sites such as LostinTV.com," says Jasmine Birtles, founder of financial website Moneymagpie.com. ApplauseStore.com and SROAudiences.com also offer free tickets to various television shows, and the BBC releases free tickets for its shows through its website.

Ditch big-brand healthcare

When it comes to health products and medicines many people will always reach for the top brand names, but lots of cheaper manufacturers actually use the same active ingredients. This is particularly true of the more basic medicines such as paracetamol and hay fever treatments. Going online can also cut costs significantly for those who regularly take vitamins; but do make sure you buy from a reputable supplier. Healthspan.co.uk, for example, is a website based in Guernsey which offers tax-free prices and free delivery. Internet shopping for contact lenses on sites such as Getlenses.com and even Tesco Opticians can also reap rewards. At Getlenses, for example, a year's supply of Ciba Vision Focus Dailies costs only £199.65, whilst at Specsavers it costs £234.

Free books and music

Music fans can download a live streaming service such as Spotify on to their computers to access millions of tracks free. It is legal and financed by short adverts every half an hour, or a premium subscription with no advertising can be purchased for £9.99 per month. There are also internet radio stations such as Musicovery.com and Jango.com which allow users to create their own playlist of artists. ReaditSwapit.co.uk offers bookworms the chance to register books they have read and swap them for other people's used books. Members set up their own online library, then contact each other through the site to arrange a swap.

Energy-saving swaps at home

Homeowners who trade in old and inefficient appliances can save both the planet and their purse. "The average home can save £340 a year by being more energy efficient, which makes a real difference to household finances," says Paula Owen from the Energy Saving Trust. Energy-efficient boilers can help homeowners to save a third on their heating bills, and an energy-saving fridge-freezer could cut bills by up to £39 a year.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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