The screws are turning on our disposable income. The UK and global economies are not as watertight they once were and the High Street is full of cheap deals, price-busting offers and value items. Frugal is good, we are constantly being told.
But cheap isn't always cheerful. Picking up shoddy goods and services under the guise of a bargain can often prove a false economy. We can easily find ourselves paying far more to rectify problems or covering extra charges than we would otherwise have forked out for better quality staples and luxuries in the first place. Cutting costs may, broadly, be a good policy right now but there are plenty of reasons why investing a few more pounds on the right things could save far more in the long run.
Protection providers have been entrenched in a price-war for years in a bid to win your custom, but this is certainly one area when cheapest is rarely best. "It's crucial to remember that there's far more to consider than just price when searching for a good life, health or unemployment policy," says Matt Morris of specialist independent financial adviser LifeSearch. "If you have health problems, or specific needs, the cheapest insurer will often end up increasing the premium you have been quoted. It means you will end up paying a lot more than you originally thought."
Many companies now offer additional benefits on their polices, such as free counselling, help returning to work after illness, or access to specialist doctors that can help to treat your health condition. "Make sure you look into these options rather than simply doing a quick internet search and opting for the cheapest policy," says Morris. "Value for money should be the main consideration."
Travel & holidays
"Classic package-holiday deals often look great on paper, especially if you opt out of paying for the added extras," says Bob Atkinson of Travelsupermarket.com. "But while optional services may seem expensive when you book, you should always find out how much you'll pay out if you don't take them. If you have decided not to include hotel transfers to save a few pounds for example, a taxi to your hotel may cost far more."
Flying with budget airlines like easyJet and Ryanair can also add up. "When you are looking for flights, make sure you are comparing like for like," warns Atkinson. "How far away are the airports at either end? They may deliver you to Frankfurt or Düsseldorf airports, but they are 60 and 70 miles respectively from those cities. And that could easily be an expensive ride."
Cheap long-haul flights with one or two extra stops could save you a few hundred pounds, but the value may be lost after a sleepless night in a departure lounge. "A quick change or two could take hundreds of pounds off the cost of a long-haul ticket," says Atkinson, "but you may not feel that way after a seven-hour stopover in the middle of the night. It's not a nice feeling when you are only halfway through a 24-hour flight and you are eating into your holiday time."
Self-catering accommodation may also look like a more affordable option than a hotel, but check the local cost of living. Groceries and eating out locally could be pricey, and the location may mean it's a challenge to get to and from, making car hire a necessity. The costs can easily mount up. And as for car hire, the basic model may look like a bargain, but beware of underestimating the space you'll need for a family and all that associated luggage. Having to upgrade at the airport because there's a grandmother on the roof-rack will usually cost far more than biting the bullet when you initially make the booking.
"The cheapest goods rarely come from the most reliable sources," says Paul Smith at Which? "They may not last as long as other items, and will not have the most up-to-date technology. But they are also less energy-efficient. People don't realise that they could be hit with higher energy bills as a result of going for the cheapest option."
A mid-range item from a reliable brand should last many years. If you are looking to save, go for a three- or four-month-old model at the end of the line rather than something brand new from an unknown manufacturer. The technology will be very recent and more trustworthy, and you can often halve the price by waiting until there is a new must-have item. Smith recommends paying around £20 for a new kettle, even though there are some on the market for as little as £4. "A decent kettle should last you at least 10 years, especially if you take the time to descale it," he says.
And, although it is possible to pick up a new 32in TV for as little as £300, he advises that you should be spending between £600-£800 to pick up a household name like Sony or Panasonic. "As for fridge-freezers, two-metre-tall standing units can start at as little as £250, but I wouldn't buy one for less than £350," says Smith. "You shouldn't need to replace it for at least 10 to 12 years."
Which? offers hundreds of product reviews in its monthly magazine and on its website. A subscription to the magazine costs £75 a year, or you can get a 30-day trial subscription for the website, www.which.co.uk for as little as £1. Alternatively, it's £93 for the year.
Quality is the best life policy’
When her mother died suddenly last August aged just 53, Natasha Cooke, 31, quickly found out how much difference a quality life-insurance policy could make. "My mum had a couple of life policies with different companies," she says. "One was a cheap £1.99-a-month accidental-death policy with Norwich Union. They refused to pay out because she died of a stroke after a blood clot formed when she fell down stairs, so her death was not considered the result of an accident."
"But another was a more expensive policy from Liverpool Victoria, which did pay out, and came with a free counselling and support service called Red Arc. It made a huge difference to have someone at the end of the phone just at the right time. The counsellor, Angie, gave me a lot of support. If you were left with no family or friends after someone died, these calls could give you the motivation to get up in the morning. It could be your lifeline."
"You might think £1.99 a month will cover you, but they will just pay out and leave you to it. But Red Arc will keep in contact and show an interest in how you are getting on, as well as helping you work out what you need to do, " she adds. "I have now cancelled my £8.99-a-month policy for a better one. I want to know exactly what my family should expect when I die. It shouldn't just be down to ticking boxes."
Clothes & food
Thanks to high-profile campaigns and exposés, we are increasingly aware that ultra-cheap high-street fashion is worth avoiding for all sorts of reasons. Taking your custom away from the world of £3 jeans could help curb exploitative production methods such as sweatshops and child labour.
But even if this doesn't prick your conscience, the way your clothes look on you might. A skirt that gives you change for £5 is unlikely to have been designed or cut by a fashion doyen, and won't do its wearer any favours. If your £10 shirt falls apart every three months, a £70 shirt you wear for two years is a cheaper option, and will probably look much better, too.
Meanwhile, the soaring price of food, particularly basics such as rice and wheat, is hitting the headlines. However, putting only cheap goods into your basket could give you more than you bargained for. Long-life food, often cheapest, can contain high levels of preservatives, sugar and salt, which can lead to significant health risks. Nutritionists say that it's healthier to cook from scratch with fresh products, and often more cost-effective.