A Guide to Saving Over £1,000 During the Financial Year Starting 2011

What You Need to Know

1. With interest rates set to rise, now could be a great time to get on a good fixed rate mortgage. You could save in the region of £400. See the 'Mortgages' section for more details.
2. When remortgaging remember to consider more than just the interest rate. Look at arrangement fees, whether or not legal work and valuation is included, how large the required deposit is, and, of course, the length of the mortgage.
3. You can save money on your credit card bills by taking adavantage of introductory 0% balance transfer periods if you switch cards. This can be a great way to shift any nagging debts. Depending on your debts this could be a great way to save £300 or more in interest payments. See the 'Credit Cards' section for more details
4. Energy prices look set to rise by about 15%. This might make a fixed rate energy deal look like a good idea but remember, suppliers may play on consumer fears. Don't get ripped of. Move wisely and you could save up to £458. See the 'Energy' section for more details.
5. Cash Isas offer the chance to create your own personal tax haven. The amount you can put into an Isa has risen to £10,680, so be sure to take full advantage and you could earn up to £500 in interest. See the'Savings' section for more details.
6. Consider other ways you can reduce your monthly bills, such as TV, Landline and Broadband. Bundle deals might be a good option, or you might want a reduced tariff. Be sure to shop around. You can easily save around £600 a year. See the 'Landline, TV and Broadband' section for more details.
7. Effective budgeting is the best way to save money. When drawing up your household budget make sure you take factors such as upcoming cuts to child tax credits into consideration.

Tax rises from the 6th of April 2011, coupled with the changes made to benefits, will have an impact on the finances of almost all of us. According to the think tank, The Institute for Fiscal Studies, the combination of shrinking benefits and increasing taxes will lead to households being around £200 worse of per year on average.

You can, however, do something about it. By taking a close look at your finances you may be surprised to find a number of relatively simple ways that you can cut back on spending and compensate for the tax hike. Here is our guide to how the changes are going to work and how you can plan your finances around them.

Take Home Pay

From the 6th of April 2011 around about 750,000 workers were dragged up into the higher tax band of 40%, as the threshold for higher rate taxes fell from £43,875 to £42,475. For households earning the higher rate this rise was compounded by a 1% rise in National Insurance Contributions, which now stand at 12%.

Then there's inflation, which hit an annual rate of 4.4% in February. The accountancy firm Price Waterhouse Coopers predict this will increase house hold costs by £950 a year, meaning that, should your earnings stay the same, you will be considerably worse off in real terms.

Child Tax Credits

Child Tax Credits are of huge importance to households looking to raise children and beat the squeeze at the same time. Unfortunately for higher earners, these benefits are being reduced. The threshold at which child benefits, worth up to £545, start to taper away has been lowered from £50,000 to £40,000 and the rate at which they taper has been increased to 41p for every pound over the threshold. There is worse news for those with children under one year of age, as the 'baby element' of family tax breaks, worth another £545, has been scrapped.

Mortgages

Last Thursday the Bank of England held interest rate at 0.5%, however, almost all economic forecaster are expecting the cost of borrowing to go up. These increases are expected to come soon, by as much as a quarter-point by May.

Remortgaging can be a great way to save, but it's always best to think long term. Whilst, at present, there are many attractive offers available on tracker rate mortgages, if the majority of predictions are to be believed, rates will be going up.

Now looks to be a great time to get on a fixed rate mortgage, ahead of the increases whilst prices are still competitive. It is always worth considering other factors, such as arrangement fees and whether legal work is included in the price. A shrewd move could save around £400 a year. You can compare deals to find the best mortgage for you here.

Credit Cards

In the face of inflation, every penny counts. The last thing you need is a credit card balance with a high interest rate. Many cards offer 0% on balance transfers for periods in the region of 18 months, some with relatively small transfer fees.

Depending on your current rate on interest you may be able to switch and pay off your debt by the end of the balance transfer period, whilst paying an amount not too much larger than the minimum fee on your current card. This could typically save you around £300 in interest payments. Have a look at these credit card providers and asses your options.

Energy

Due to an imbalance in supply and demand, compounded by instability in the Middle East, energy prices are set to increase by 15% next year. To avoid the full brunt of this increase it is vital to shop around. Remember, you may not face a fee for switching provider, depending on your current contract. One thing to look out for with fixed rate deals is suppliers playing off consumer fears. Many think costs may not rise quite as much as predicted, so don't get stuck with a rum deal. Pick a winner and you'll save close to £500. You can compare deals here.

Savings

One very easy way to lessen the blow of tax increases is to stow away as much of your money as possible in a tax free savings accounts such as an Isa. In fact, this is one area where the changes made on April the 6th may help reduce your tax bill as the amount you are allowed to place in an Isa has risen from £10,200 to £10,680.

If you are able to get money into accounts such as these some providers are offering up to 5% interest. Fill your Isa to capacity and you'd earn over £500 in a year. Shop around and see how much interest you could earn with a cash Isa here.

Landline, TV and Broadband

Now is a great time to reassess your needs with regards to these amenities. If you use separate providers for each, you may be able to get a better service for a similar price by finding a bundle deal with a single provider.

If you are looking to save money you may be able to very simply downgrade your tariff without having to switch providers. For instance you might remove the sports channels from your package once the football season is over. Perhaps you have kids about to leave home and will be able to get by with a smaller bandwidth for your internet connection. There are hundreds of ways to save, the most basic is to shop around for Landline, TV and Broadband providers here and here.

Further Reading

• You can now save more in an ISA than ever before. Find out more with this guide to ISAs.
• Pick up great money saving habits by reading this guide to energy efficiency.
• Use this guide to cutting your line rental bill and stretch your wages further.