With this in mind, we've come up with 20 ways to boost your savings in this high-inflation environment.
1. Keep your savings away from the taxman
If you aren't using your cash Isa allowance for the year then what are you waiting for? You can save up to £3,600 a year in a cash Isa and you don't pay any tax on the interest you earn. So if you have spare cash sitting in a current account move it into a cash Isa now. The NatWest Cash Isa has a rate of 6.67% although this includes a 2% bonus and you can't just invest this year's allowance - you must transfer funds from an existing Isa. Alternatives include the Post Office Cash Isa at 6.25%, although this also includes a 1.50% bonus for the first 12 months, and the Barclays Tax Haven Isa also at 6.25% with a 1% first-year bonus.
2. Get the best savings rate you can find
Once you've used your Isa allowance, earn more interest on your savings by putting your remaining spare cash into a market-leading savings account. If you're willing to lock your money away for a year you could earn as much as 7.20% with the ICICI HiSAVE Fixed Rate Account, or for easy access you could earn 6.60% with the Alliance & Leicester eSaver Issue 2 although no money is paid during a month when a withdrawal is made with the exception of July. Remember if you have more than £50,000 in savings, spread your cash around as outlined in our article 'How to keep your savings safe'.
3. Claim what you are entitled to
Around £9.9bn in tax credits and benefits went unclaimed last year so make sure you're getting the extra money you deserve by visiting entitledto.co.uk.
4. Earn a little cashback
If you pay off the balance of your credit card in full each month then you needn't worry about interest rates and fees - you should focus on making your credit card work for you. There are many cashback and reward cards on the market, such as the American Express Platinum Cashback which will give you 5% cashback on spend up to £4,000 in the first three months. Visit our new credit cards section for more.
5. Sell unwanted items
Set up an eBay account or hold a car boot sale to get rid of items you just don't want any more - you could be surprised at the amount of money your unwanted goods can net you.
6. Adjust your daily routine
Taking a shower instead of a bath will mean you typically use a third less water every day. Think about foregoing the morning coffee and taking a packed lunch instead of buying sandwiches at work. By making your own sandwiches you could save £40 a month or £480 a year. A latte a day can cost in excess of £12 a week - or £624 a year. So why not invest in a Thermos flask and brew your own?
7. Don't buy, swap
Online book swap clubs are increasingly popular and even a leisurely reader who gets through just one book a month could save £100 by using a site such as readitswapit.co.uk. There are similar clubs available for computer games, DVDs and more.
8. Shop online for bargains
Many retailers offer their best prices online, so use a shopping website to buy your Christmas goods this winter. This way you'll also avoid the temptations of window shopping and save petrol by staying at home.
9. Buy in bulk
You can often save money by buying items such as toilet paper and kitchen roll in bulk. However, be careful about stocking up on goods that have expiry dates as it could prove a false economy if you end up binning them because they've gone off.
10. Take advantage of loyalty schemes
While store cards are to be avoided unless you clear your balance in full each month, due to high interest rates, many shops offer loyalty schemes with savings every time you shop. So if you shop somewhere regularly, then why not take advantage of the offer?
11. Give up your bad habits
Drinking less and quitting smoking has plenty of health benefits - but it can also boost your wallet too. Aside from the fact that you'll be paying out less on booze and cigarettes you can also earn savings on life insurance, with smokers on average paying around 50% more for policies. Remember though that your existing insurer is unlikely to simply reduce your bill, so instead shop around and apply for a new policy.
12. Don't pay the price for loyalty
Many insurance companies increase premiums every year regardless of whether or not you have made a claim. You can save cash by taking advantage of introductory offers on car and home insurance every time your renewal is due.
13. Pay for cover upfront
By paying for car insurance or home insurance upfront you can avoid interest charges and slash your annual premium. Also consider increasing your excess to a level you can comfortably afford to further reduce premiums.
14. Join a car club
If you don't rely on a vehicle for a daily commute then ask yourself if you really need it at all? There are a number of car clubs across the UK, such as City Car, WhizzGo and Streetcar, that allow you to 'pay as you drive' helping you avoid traditional car expenses such as repair costs, insurance, tax and fuel.
15. Car share
See if there is someone at work who lives close to you and who you are willing to take turns driving with - one day in their car, the next in yours. It will increase the lifespan of your vehicle and slash your fuel costs.
16. Cut petrol costs
Shop around for the cheapest petrol prices in your area using petrolprices.com - registration is free and you can get regular updates on fuel price changes in your area.
17. Get rid of your phone line
If you have a mobile phone, do you really need a home phone too? If you're only keeping a home phone for broadband, then ditch a landline telephone and buy a "dongle" from the likes of 3 Mobile, Vodafone, Orange and T-Mobile instead. All you need to do is plug the gadget into your USB port and you'll get high speed internet access. Monthly subscriptions are available for as little as £10.
18. Bundle your services
If you have a TV, phone, mobile and broadband then you could probably save money by 'bundling' the services so you receive them all from the same provider. The likes of Sky, Virgin, Tiscali and BT all offer competitive bundled deals. If you're a Sky TV subscriber for example, you could pick up Sky Base broadband for free.
19. Be a cut above the rest
A simple cut and blow dry could set you back as much as £50 at a salon. However, if you get your haircut by a trainee - such as at Vidal Saloon's Advanced Academy - cuts start at just £11.
20. Give your wallet a holiday
When booking a flight or accommodation shop around for the best rates. It's worth travelling during the week if you can, such as on Tuesday-Thursday, as this is when prices tend to be cheaper. Make sure you consider all aspects of your holiday too, including travel insurance and airport parking as there are significant savings to be made by booking ahead and booking online.
Have your say: What are your tips for surviving the recession? Share your your ideas and talk them through with our members in our forum.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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