How to live on less

Woman in supermarketThe latest Lloyds TSB Spending Power Report shows that the amount the average Briton has to spend on non-essential items has fallen by around £100 a year over the last 12 months, while the proportion of people who have nothing left once bills and essentials are covered now stands at 19%.

Here, we investigate how consumers can reduce their day-to-day living costs.

How can I cut the cost of everyday living?
Recent research from comparison website MoneySupermarket reveals that 45% of Britons have cut down on eating out to save money over the last 12 months.

Another four in 10 have stopped buying so many new clothes, while almost a third have reduced their spending on holidays. There are ways to enjoy the odd treat without overspending, though.

You could, for example, use discount vouchers to get money off little luxuries such as a meal out or a new dress.

The Vouchercodes website is currently offering two main courses at Zizzi restaurants for just £12.95, while fashionistas could get 25% off online orders from Warehouse and those looking to cut the cost of the weekly shop can choose from numerous different offers.

Vouchers are not the only way to cut your supermarket bills, however. Reward schemes such as Sainsbury's Nectar or Tesco's Clubcard points can also help.

With the Tesco Clubcard Credit Card, for example, you can boost your savings by earning extra Clubcard points for every £4 spent outside the store.

Other easy ways to free up some extra cash include checking through existing direct debits to ensure they are still valid and cancelling any unwanted payments.

How can I slash my household bills?
The Lloyds figures indicate that higher energy bills helped to push spending on essential items in January up by 4.9% year on year.

But millions of Britons continue to pay over the odds for their utilities, home phone, broadband and mobile phone.

Anyone keen to cut their monthly household expenditure should therefore visit a comparison website to ensure that they are getting the best deals across the board.

According to MoneySupermarket, using its service to switch your major bills can help you to save more than £1,000 a year. That's 10 times the annual dip in disposable income recorded by the Lloyds researchers.