As the cost of living crisis continues to squeeze household budgets, the dawn of a new year presents a crucial opportunity to take control of your finances. With many families still grappling with elevated expenses, proactive steps to review and reduce your outgoings can make a significant difference to your financial health in 2026.
Slashing Your Biggest Household Bills
One of the most impactful areas for savings is your energy bill. The Ofgem price cap is currently set at £1,755 a year for a typical household and is scheduled to rise slightly to £1,758 in January 2026. Experts advise households to shop around for a fixed tariff, with data from MoneySavingExpert.com indicating the cheapest fixes are around 13% cheaper than the current cap. Alongside switching, improving home energy efficiency by draught-proofing and turning appliances off standby can yield further reductions. Ensure you're claiming all support, including Winter Fuel Payments and the Warm Home Discount.
Water bills offer another saving avenue. Simple behavioural changes, like reducing shower time by one minute, can add up. Households should investigate if they are eligible for free water-saving devices from Save Water Save Money and consider installing a water meter. Financial journalist Martin Lewis notes a meter could be beneficial if you have the same number or more bedrooms than people living in your home.
Smart Shopping and Challenging Your Council Tax
Groceries represent a major weekly expense, but strategic shopping can lead to substantial cuts. Engaging in the "Downshift" challenge—swapping branded goods for supermarket-own labels—could reduce your food shop by around 30%. Using comparison tools like Trolley.co.uk for essential brands, hunting for yellow sticker reductions, and signing up for supermarket loyalty schemes for exclusive member prices are all effective tactics.
With council tax expected to rise again next April, it's vital to check you're not overpaying. Policy in Practice estimates over two million people in the UK may be missing out on discounts. You could be entitled to a 25% reduction for living alone, or even a 100% discount if you are severely mentally impaired or claim certain benefits. Furthermore, hundreds of thousands of homes are thought to be in the wrong council tax band; successfully challenging a high banding can result in a backdated payout and lower future bills, though you must research carefully as a challenge could also lead to an increase.
Insurance, Mortgages, and Subscriptions
When it comes to insurance, never auto-renew. For the best prices, check car insurance quotes 23 days before renewal and home insurance 21 days before. Use comparison sites to find a better deal and use it as leverage to haggle with your current provider.
Mortgage holders approaching the end of a fixed-rate deal should act early. Most lenders allow you to secure a new rate up to three months in advance. Gather details on your current rate and Loan-to-Value (LTV), check your credit report for errors, and consult a mortgage broker. Failing to secure a new deal will see you roll onto a lender's Standard Variable Rate (SVR), which is typically more expensive.
Finally, conduct a ruthless audit of your subscriptions. Scrutinise bank statements for regular payments for services like gyms or streaming platforms and cancel any you don't use. Monthly payments can usually be stopped immediately, and you may be able to claim a partial refund on annual subscriptions.
By methodically reviewing these key areas—energy, water, food, council tax, insurance, mortgages, and subscriptions—you can start 2026 on a firmer financial footing, keeping more of your hard-earned money in your pocket.
