Cost of Living Guide: Practical Tips for Managing Money in the UK

Feeling the squeeze on everyday expenses? You’re not alone. From rising energy bills to higher rent, the cost of living is a hot topic for every household. The good news? Small changes add up, and you don’t need a finance degree to stay on top of your money.

Simple Budget Hacks That Work

Start with a zero‑based budget. List every pound you earn and assign it a purpose—bills, groceries, savings, even fun. When you know exactly where each cent goes, surprise overspends disappear. Use a spreadsheet or a free budgeting app; the tool isn’t as important as the habit of tracking daily.

Next, trim the “optional” costs. Ask yourself if you really need that daily coffee shop habit or if a home‑brew could save £50 a month. Those little savings can cover a boost to your emergency fund or chip away at a loan balance.

Loans, Mortgages, and Interest: What You Need to Know

Borrowing isn’t always a bad thing, but you must understand the real cost. A £5,000 personal loan, for example, can cost you anywhere from 4% to 15% APR depending on your credit score. Use an online calculator to see the monthly payment before you sign anything.

Homeowners, pay close attention to mortgage rates. In 2025, 30‑year rates have hovered around 5%. Even a half‑point change can mean thousands extra over the loan term. If you’ve built equity, consider remortgaging to a lower rate, but watch out for early‑repayment fees.

Student loans are another big piece of the cost‑of‑living puzzle. A £50,000 loan could mean a monthly payment of £400‑£500 depending on the interest and repayment plan. Some lenders now offer income‑based options that lower the payment when you earn less.

Debt consolidation can simplify things, but it won’t magically erase interest. Look for a consolidation loan with a lower rate than the combined rates of your current debts. A better credit score can unlock the best terms, so pay bills on time and consider a short‑term credit‑builder strategy.

Finally, think about savings. Even a modest £1,000 in a high‑interest savings account can earn around £15‑£20 a year at a 1.5% rate. It’s not a fortune, but it builds a habit and adds a safety net for unexpected costs.

Bottom line: Tackle the cost of living by knowing where every pound goes, choosing loans wisely, and keeping an eye on interest rates. Small, consistent actions give you control and protect you from price spikes. Stay informed, stay disciplined, and you’ll feel the pressure ease over time.