It may be too late to tell you but children are expensive items, in fact VERY expensive items. By the time you have bought the pram, cot, car seat, baby grows and nappies (especially the nappies) you start to get some feeling for the cost. In fact, the Family Policies Studies Centre, has estimated that the cost of lost earnings for a Mum can be as much as £174,000 for a single child and £230,000 for 2 children. So here are some practical cost saving tips for parents.
mortgages and loans
Firstly, look for ways of reducing the cost of your borrowing. This is one of the areas for the biggest savings. If you have a mortgage, check that the rate is still competitive. With interest rates falling and competition for your business increasing compare your mortgage rates with those from other lenders. Changing your mortgage can mean filling in more forms but the savings can be very substantial. Generally, the bigger your mortgage the more worthwhile it is to shop around.
Current offers include a discounted variable rate of 4.25% and rates as low as 1.20% in other cases. On a £50,000, endowment, Pep/ISA or pension mortgage, the monthly savings make it worth while filling in some forms.
% Interest Rate reduction Typical Monthly Saving
1% = £39.17
2% = £78.33
3% = £117.49
Often lenders are offering valuation fee refunds, nil legal costs and occasionally cashbacks. Watch out for compulsory Buildings and contents insurance. This cover can be expensive from the lender. Also make sure that you have accounted for any redemption penalties on your existing mortgage. Consider the new “flexible” style of mortgage. This type of mortgage allows you to make payments above your required payment when your budget allows. The amount of interest you have to pay is then reduced. If times become difficult you can reduce your payments. In some cases you can borrow back any overpayments you have made. This allows you to keep more control of your money.
Despite numerous interest rate falls the cost of borrowing on credit cards is still very high. With APRs as high as 23.10% from some well known banks you should consider moving to a credit card which offers a special deal to transfer your balance. Store cards tend to be even more expensive with APRs of 31% and even the well known brand names charging rates in the high 20s. Transfer your balance to a new card company and you may be able to reduce this rate to an APR of 9.6%. If you are switching your mortgage and have equity in your house, you may be able to clear your credit cards by borrowing more on your new mortgage. But remember, if you do this you may reduce your monthly payments but the loan will be spread over a much longer period.
Shop around for the best deals on all your insurances. The cost of life cover has fallen over the last few years, in some cases by as much as 50%. (See Do you need life cover??) If you have simple term assurance it is possible to replace one policy with another. Remember to get your replacement cover in place before cancelling your existing cover. Banks and Building Societies can be particularly expensive. It is not unknown for a good insurance broker to be able to half the cost of buildings and insurance cover.
Look at shopping at “Factory Shops”. Despite becoming “fashionable” these shops often sell items at really good discounts. There are many shops around the country apart from the factory shop “malls” such as the Clark’s Village in Somerset and the Bicester Centre. Try the “Good Deal Directory” which lists thousands of factory outlets throughout the UK. Besides the usual clothing manufacturers it also tells you where to get electrical items, furniture and gifts. You may well be surprised that there are outlets near you.
If you cannot get to a factory shop remember to look at shopping on line. Besides the convenience there are now many auction and several “bulk buy e-shops”. There is virtually nothing you cannot buy on the internet – but remember to compare prices with traditional retailers. Just because it is on the internet does to always mean it is going to be cheaper. If you are paying by credit card make sure the transaction is carried out on a secure server. See the factsheet ‘safer shopping online‘ for more advice.
utilities (gas, water electricity etc)
Remember that competition is also helping to force down prices in the Utilities. Have you looked at buying your electricity from a gas company or your telephone connection from your cable company? Discounts are available from most suppliers for paying by direct debit helping your budgeting as well as reducing the cost.