Tips for tackling the rising cost of living

Amid economic uncertainty, are you doing enough to maximise your money?

The ongoing cost of living crisis remains at the forefront of public consciousness, with an overwhelming 87% of adults citing it as the most important issue facing the UK today.

This is according to the latest Opinions and Lifestyle Survey from the Office for National Statistics (ONS), which also found that 66% of participants claim that the cost of living had increased over March 2025.

“Consumers are still struggling with the cost of living, and while some might be optimistic about the future, there are still many people finding it a challenge to cover rising costs,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

However, while it may seem overwhelming, there are still simple but effective approaches to help you take control of your finances.

Stick to a budget

While it can be daunting to confront your finances, creating and sticking to a budget can be one of the most important steps for tackling rising expenses.

This can involve setting yourself a monthly allowance based on your income and outgoings, or budgeting as you go by staying mindful of everyday spending. If you find your outgoings exceed your income, it’s likely your finances will need an overhaul to avoid falling into debt.

It could be productive to work out ways to cut back on unnecessary purchases or to explore cheaper essentials to help stretch your money further. This could include reviewing utility providers or cancelling any unused subscriptions.

Our guide outlines more in depth, the different ways of budgeting your money and can help you find the one that works best for you.

Build a safety net with your savings

As of February 2025, over £300 billion was revealed to be sitting in current or savings accounts earning little to no interest, according to data from the Bank of England.

This marks a 19% increase compared to a year ago where this figure stood at over £250 billion.

While it can be convenient to leave your money in a current account, building a safety net with your savings can give you financial security and can be a great way to cover any unforeseen expenditures.

Prized for their flexibility and high interest rates, easy access accounts can be ideal for savers looking to put away any spare cash each month for a rainy day fund that can be accessed on short notice.

For those with larger savings pots who may be at risk of breaching their Personal Savings Allowance (PSA), ISAs can help shield your earning from tax. But, you’ll need to consider flexible options to be able to dip in and out of your account without impacting your ISA allowance.

Nevertheless, actively searching for competitive returns on your hard-earned cash can help you increase the size of your investment more quickly and can help keep your earnings from being eroded by rising inflation.

Time for a new mortgage deal?

Lenders recently slashed prices on many of their fixed mortgages, with the average rate for a two-year fixed deal standing at 5.20% as of 25 April 2025.

This could make it a “suitable time” to consider refinancing according to Springall, particularly to avoid significantly higher costs from a lender’s Standard Variable Rate (SVR).

For example, if you borrowed £250,000 over 25 years, a two-year deal priced at 5.20% would cost £1,490 each month. This skyrockets to £1,863 when factoring in the average SVR of 7.60%, meaning remortgage customers could save £373 by securing a new fixed deal.

However, make sure to consider any potential early repayment charges or product fees when comparing deals. If you need help deciding which mortgage is right for you, it could be worth speaking to a broker.

Boost your finances

Making the most of any incentive schemes can help you save on your everyday spending or be used to maximise your savings.

For instance, customers can still benefit from a couple of current account switching incentives on the market using the Current Account Switch Service; first direct offer £175 for moving to its 1st Account, while customers can earn £150 for switching to NatWest.

Similarly, loyalty or cashback credit cards can help shoppers earn points or claim back a percentage of their spending to be used on future transactions, though note these rewards can expire if not used in time.

Manage borrowing effectively

Credit cards can be useful for day-to-day spending or for spreading the cost of larger purchases, however debts can quickly spiral out of control if not managed correctly.

UK Finance data suggests around 49% of credit card accounts in January 2025 incurred interest, with outstanding balances up by 5.7% compared to the previous year.

“Debts hanging overhead can be frustrating, so getting into the habit of clearing debts is wise, but not every borrower will be instantly able to clear their credit card,” said Springall.

If you find yourself owing money to a variety of lenders, you could also consider consolidating debts to simplify repayments. An unsecured personal loan could be a good option for this, though keep an eye on interest rates to ensure repayments won’t leave you worse off in the long run.

Balance transfer credit cards can also be used to move debt onto one card and come with little no interest for a limited period. Customers could find themselves around £430* better off provided they switched to a £3,000 debt from a card that charges 24.9% APR and were to make a fixed payment of £250 monthly.

While this option can offer more flexibility compared to a loan, you’ll need to pay off the debt before the period ends to avoid a spike in interest costs.

*Credit card repayment for a £3,000 purchase, based on an interest rate of 24.9% APR, minimum fixed repayment of £250 (thereafter a minimum of 1% plus monthly interest or £5, whichever is higher) would take one year and two months to pay back, costing around £430 in interest over this term.