You've been given a £910 pay cut this year!

Rising prices and taxes will cut your pay by £910 this year. We reveal how to get this back.

According to a recent report from economics consultancy the Centre for Economics and Business Research (CEBR), our disposable incomes are about to be squeezed more tightly than at any time in living memory.

Effectively, rising prices and taxes will cut your pay by £910 this year. Excluding the sharp drops in income caused by World War II and the 1926 General Strike, you'd have to go back to 1921 to find a bigger squeeze on British incomes than we face right now.

Bad news for Britain

The CEBR reckons that, thanks to unemployment remaining high, earnings growth will be very weak this year. In fact, it estimates that pay will rise by a mere 1.9% in 2011 (with millions of us getting no pay rise at all).

What's more, the CEBR expects the Consumer Prices Index (CPI) measure of inflation to reach 3.9% in 2011. If correct, this would be the highest yearly increase in the cost of living since 1992.

Thus, if pay rises by 1.9% and the cost of living climbs by 3.9%, then we're 2% worse off, on average. Thanks to this 2% cut, the CEBR claims that Brits' spending power will be cut by a huge £27.3 billion this year.

How to get your money back

There is one simple way to fight back against this spending squeeze. Pump up the pound in your pocket!

Here’s how to do this:

1.     Shop around online

As I often remark, "Convenience really costs." What I mean is you pay the highest prices when buying on impulse, and the lowest prices when you take your time and do your homework.

The savings can be immense. Just last week, I got a £200 discount off a trampoline by shopping around for it online. Read Shop online and save £££ to find out where you can most easily make the savings online and watch this video for tips on the best ways to shop online.

2.     Crush your credit card

The Bank of England's base rate has been stuck at 0.5% a year since March 2009. Nevertheless, over the past two years, the interest rates charged by credit cards have climbed sharply.

Today, a typical credit card charges a rate of 18.9% APR on purchases, or 1.45% a month. If not paid off in full, a balance of £2,000 would incur monthly interest of around £29.

The simple way to 'stop the clock' on your interest bill is by using a 0% credit card. For instance, after paying a 3.2% fee, you can avoid interest for the next 20 months.

3.     Switch your savings

Thousands of savings accounts pay yearly interest rates of 0.1% or less. On a balance of £5,000, this works out at a pathetic £5 a year in interest.

However, by switching to a Best Buy savings account or tax-free cash ISA, you could earn 3%+ a year. Thus, switching your savings give you thirty times as much interest as in a poor-paying account.

4.     Save a bundle with a bundle

By bundling broadband, phone and digital television together, it's possible to save £300+ each year. When moving house recently, I switched to a bundled package and saved £15 a month. Read Save a bundle of cash by bundling to find out more.

5.     Claim benefits and tax credits

The start of this tax year on 6 April saw 45 different changes to personal taxes and benefits. Financial think-tank the Institute for Fiscal Studies reckons that these changes will leave a typical household £200 a year worse off.

Of course, the government takes with one hand (in taxes), only to give back with the other (in benefits). The best way to find out what you can claim in benefits and tax credits is to visit free, independent website Turn2Us.

6.     Pay less for car insurance

According to the latest surveys, the cost of car insurance has risen by two-fifths (40%) in the past 12 months. You can fight the steeper cost of motoring by reading 10 tips to beat rising car insurance costs.

7.     Bash your energy bills

On 31 March and 1 April, 15 different gas and electricity tariffs got a whole lot more expensive. If you don't want to be caught out by this April Fool, then here's how to Beat the spring energy rip-off.

8.     Get cash back as you spend

As I shop, I earn. I do this by always using a cashback credit card to pay for all my purchases (online and on the high street). Last year, I spent about £6,000 on my credit card, didn't pay a penny in interest, and bagged a cash rebate of £60 (1%).

Likewise, I always collect Nectar points and Tesco Clubcard points whenever I can. By the way, did you know you can earn Nectar points when buying on Amazon?

9.     Pay less for holiday treats

As I write, glorious sunshine is pouring through the window and my children are enjoying their Easter break. However, the spring and summer holidays can be really expensive for parents, especially when it comes to treats such as trips to the cinema, theme parks, etc.

That said, I never pay full price when visiting theme parks and the like. For example, my family and I use Tesco Clubcard vouchers to pay for our yearly visit to Legoland. This works out at about a quarter of the gate price, so look out for similar special deals before booking.

10.           Don't get ripped off

When every penny counts, there's no point in needlessly throwing money away.

Therefore, don't be duped into buying low-quality, rip-off insurance products, such as payment protection, extended warranties, mobile-phone cover, identity-theft insurance, and so on. These products charge far more than they're worth!

What's your favourite money-saving tip? Please let us know in the comments box below...

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