What a depressing start to the year – as well as today's increase of VAT to 20%, there's the fuel-duty rise, train fare increases and energy prices are set to soar (again), meaning it's likely people will have to tighten their belts in 2011.
With the VAT increase alone it’s estimated that it’ll cost the average family an extra £521 per year. Other companies such as gyms, mobile phones, restaurants and shops are also expected to hike up their prices between 5 to 8 per cent to account for the increase in petrol, energy, cotton and other key commodity price rises.
But it’s not all doom and gloom because cutting back on small things often can make a major difference, as our handy guide to saving money shows:
When it comes to lunch, do-it-yourself
Buying your lunch five days a week at a moderate £6 per day will cost you £30 per week. It all adds up so prepare your lunch at home and save money.
Hunt for deals
Make the most of voucher websites such as vouchercodes.co.uk, netvouchercodes.co.uk or groupon.co.uk. You can get money off most things such as restaurants, fashion, electronics, travel, books, sport and beauty.
Check the rates you're on for things such as your mobile phone or energy tariffs. Are you on the right one for you? With a little bit of Googling, you might be able to save money or get a better deal.
Make money from your mobile
Sell your old mobile – even the oldest handset can be worth cash. Retailers such as envirofone.com or skyphones.org will buy your old mobile and give you up to £150 in exchange (depending on the age and model).
Do your financial homework
Review your average monthly outgoings and think about how you could cut back on unnecessary spending. Recent NS&I data shows that nearly a third of us spend more than we ideally would every month. What you don't spend you can save and either put towards something you really need or build up a savings safety cushion, should you need some extra money in an emergency.
Become your own bank manager
Make the most of a cold and rainy day to go online and set up a regular direct debit from your current account into a savings account. This means you don't need to worry about saving every month, and it really helps keep you on track with your savings goals. Also make sure you change savings account as soon as your initial )and no doubt attractive) AER rate decreases.
Consider the Latte Factor
It's all too easy to turn a comforting latte treat into a morning routine. By giving up your morning coffee shop buy, you could save around £50 a month.
Turn the heat down. It may be cold outside but turning your thermometer down by just one degree can cut your heating bill by up to ten per cent.
Consider taking out a set amount of money at the start of each week and limiting yourself to this budget. At the end of each week or month you can transfer any remaining money into a specific savings pot to help fund treats, such as new clothes.
Have you felt the effects of rising prices? Share your experiences in the comments section below...