Cut monthly costs for a regular saving throughout the year

Improve your finances by getting a better deal on the bills that always leave you short, says Simon Read

Where does the money go? It's a perennial cry, especially towards the end of the month as payday approaches. No matter how much we eke out our cash, it still all goes. But rather than enduring the arduous task of being more frugal with your day-to-day spending, you could make a more lasting improvement to your situation by sorting out your regular expenses.

Rather than just paying your bills as they arrive with no more than a cursory glance at the details, examining them more closely could provide you with vital clues about how to cut costs. Your bank statement, for instance, should yield a wealth of information about your spending patterns. You shouldn't worry too much about the occasional lapse into retail therapy – we all need to indulge ourselves at times – but focus on those regular costs and ask if they are too high.

Your biggest outgoing could be your mortgage payment. There are several ways to reduce this; some are sensible and some should only be resorted to as a short-term measure when money is particularly tight. The first thing to do is look at the type of deal that you have. If you have a variable rate loan, would you be better off with a tracker? When weighing your options, don't just look at the monthly repayments, examine the other costs too, such as redemption fees or other charges.

Over the long term you can save thousands on your mortgage by repaying it early. Even if you can make overpayments from time to time, it could end up saving you thousands in lower interest charges. On the other hand if your mortgage payments are currently a bit of a stretch, you can reduce them by extending your loan. It will cost more in the long term, but could make life a little easier right now.

You could even take a payment holiday if things are particularly tight, but these tactics must be for only a short while. If you don't repay your mortgage, you may have to sell your home to pay back the money you owe the lender.

You should also examine your other financial commitments to see if you can save money. What sort of borrowing do you have? If you have a high-rate credit card, it could be an idea to switch to a zero per cent balance transfer deal, but only if you are going to pay the debt off. Otherwise you could end up on a higher charging rate at the end of the interest deal.

Look at your bank account. Do you always go into your overdraft? If you do, look for an account that charges less when you're in the red. If, on the other hand, you keep a fair amount of cash in your current account, then you should probably look for an account that pays a decent interest rate on your balance.

Energy efficiency

How do you pay for your gas and electricity? The cheapest way is to pay online through a dual-fuel deal, getting both gas and electricity from the same provider. The comparison website uSwitch.com says a typical UK household spends around £756 a year on heating and hot water if they're on an offline, standard energy plan. With an online dual-fuel tariff, that drops to £616, saving the average household £140 a year.

Thinking about how you use energy can also introduce you to ways to cut costs, says Ann Robinson, director of consumer policy at uSwitch. "In the face of rising energy bills and our ever-growing love affair with electronic gadgets at home, consumers can no longer afford to waste energy," she says. "This is going to be a very difficult year for family finances, so it's time to plug the holes and fill the gaps where money is trickling away. Ensuring energy doesn't go to waste is a very easy saving."

It can start with simple steps, such as turning things off when they are not in use or using energy monitors or a standby saver. Then there are bigger steps, which may mean spending to save, such as insulating your home or installing a new energy efficient boiler.

"These are more costly, but arguably deliver a greater return. But before taking these, it's worth speaking to your energy supplier to see what advice they can give and to find out whether you would qualify for financial support to help you with the cost," says Robinson. For instance, npower is currently offering a £350 "warm home" grant until the end of March, which can be put towards replacing an old boiler with a new A-rated energy-efficient system.

Prepared for the worst

"Forward planning and investment are key to saving money in your home," says Joan Coe, marketing manager at npower hometeam. "By thinking ahead and investing in items such as loft insulation or an A-rated energy-efficient boiler you could see a substantial difference in your energy bills."

"Meanwhile, when it comes to boilers and central heating systems it's easy to understand why homeowners looking to save money can be reluctant to think about it until something goes wrong. But by getting a regular service and taking out a boiler care and central heating care, you could actually save yourself a lot of time and hassle should your system fail," says Coe.

Soaring fuel prices are forcing two-thirds of drivers to change their driving habits, according to Moneysupermarket.com. Tactics include spending less time in the car or stopping driving altogether because of the rising costs.

"With the effects of the VAT rise taking hold, and the latest inflation data highlighting the pressure on our wallets, fuel is another day-to-day cost that people are really struggling with," says Kevin Mountford, head of banking at Moneysupermarket. "Now really is the time to take action across the board with your finances to make the most of your money so you don't have to resort to changing your lifestyle dramatically. Apathy won't be rewarded, so seek out the best deals for your circumstances to make the most of your hard-earned cash."

Meanwhile, a YouGov poll for Autotrader shows that one in 20 people has bought a smaller car to help manage their fuel bill. The motoring website says there's been a significant rise in year-on-year searches for more fuel-efficient petrol cars. While many drivers are loath to give up their cherished vehicle, especially when downgrading to a less powerful engine, it could be a relatively easy – if not entirely painless – route to reducing your costs in the coming months.

Keep financially fit

Gyms report that January is the boom month for people signing up for new memberships, but how many people actually continue to go to the gym after they've forgotten their good intentions at the start of the year? Online accountants Crunch.co.uk have calculated that a staggering £37m is being wasted on gym memberships, exercise and slimming classes every year in the UK. The average adult loses £303 a year, with a further £158 spent on unused sports equipment. The message is clear – if you have a gym membership and don't use it, cancel it.

If you want to get fit, you can run for free. Getting a friend to run alongside you can be a powerful motivator, as well as a useful way to catch up on gossip. Or if you're determined to get fit but can't find time to get to the gym regularly or schedule training days with a friend, you could instead try one of the home fitness programs used through a games console. For instance, the new EA Sports Active 2, available on Xbox (Kinect), PS3 and Wii, includes more than 70 different exercises, as well as a heart-rate monitor that allows workouts to be personalised to each user's needs. At £49 it could be a budget way to get fit and, as you can use it at home, it could be an easy way to find time for training, too.

Calling up savings

It's always a good idea to look at your mobile phone package and check to see if there's a better deal you could take advantage of. Most people are in tune with the concept, but have you thought about switching your home phone package? For instance, you could cut the cost of line rental to £7.99 by switching to the Primus Home Phone Saver, available through Homephonechoices.co.uk. Michael Phillips, product director at the website, says there are other tactics that people can adopt to cut the cost of their home phones. "Pay by direct debit. Nearly all providers discourage payment by any means other than direct debit and impose punitive charges of anything up to £5 per month for dealing with cheques," he advises.

Next he suggests moving to paperless billing will reap more rewards. "Some providers offer useful savings if you receive your statements online, not by post. You'll also do your bit for the environment," adds Phillips.

Finally he reminds phone users to check the small print. "If you're tied to a 12- or 18-month contract, you may be faced with exit fees if you want to switch before the contract term ends. Weigh up the savings and charges before making your decision, as you may find the savings don't merit the switch."