Personal Finance - Look closer to home for ways of saving money.

Do you remember the saying ‘Look after the pennies and the pounds will look after themselves’? It is a maxim too often ignored in personal financial planning.

In the rush to capitalise on exotic investments like Peps and Isas, or the angst of pension planning, it is easy to overlook more mundane ways of efficiently managing our money.

Take utility bills, for example. The average household pays almost #100 a month for gas and electricity. In bigger or older properties, the energy bill can be two or three times this. Yet the vast majority of homes have failed to take advantage of the money-saving opportunities created by the liberalisation of the utility markets.

Competition in domestic gas supply started in 1997, spreading across the UK in 1998. Electricity markets deregulated during 1998 and 1999.

Households can now pick and choose who supplies these basic services, without the need to change any wires, pipes or meters.

Consumers have been incentivised to change, with introductory offers and dual fuel discounts for those who take both gas and electricity from the same supplier. Despite this, uptake has been slow.

The latest figures, from May this year, suggest that around 75% of gas customers have stuck with British Gas and 85% of electricity consumers remain with their existing regional electricity company. With theoretical savings of £100 to £150 a year on offer, why have more homes not taken the chance to switch?

One reason is that customers have already seen savings without lifting a finger. The threat of competition has forced incumbent suppliers to lower prices to existing customers. British Gas, for example, scrapped the standing charge earlier this year.

Confusion is another reason for customer inertia; the range and choice of energy tariffs is baffling. Charges can vary according to how you pay, how much energy you use and whether you take one or two fuels from a supplier.

Making head or tail of the different offers requires a degree in higher mathematics and deal of patience.

However, the internet has come to the rescue of baffled consumers. Online price comparisons are now a piece of cake.

Try www.buy.co.uk for a straightforward price comparison of either gas, electricity or both. All you need is last year’s bills and your post-code to get a penny-perfect estimate of potential savings. You can check the computer’s verdict, by logging on to energy regulator Ofgem’s site at www.ofgem.gov.uk This site allows you to print out up-to-date tariff information from each supplier.

But the internet is promising more than just easy price comparisons.

It may in itself be a route to cheaper domestic energy.

New internet-only suppliers hope to steal a march on traditional rivals with different pricing structures and lower operating costs.

Servista, for example, is offering gas, electricity and telephone services through www.servista.com. There are no paper bills; all three services are billed monthly on a combined electronic bill. And the company claims to be able to save the average household paying quarterly around £152 a year because of its lower operating costs.

Richard Branson is having a go at the energy market too. Virgin Energy, available via www.virgin.com, is so confident of cutting bills that it is running a price guarantee. Customers who switch and then a year later find they would have paid less elsewhere get the difference plus 20% back.

Both Servista and Virgin are experimenting with environmentally friendly energy policies. Servista has a green tariff, where customers pay slightly more for electricity generated by wind or water power. Virgin, meanwhile runs a reward scheme which pays customers cash if they cut consumption.

So put aside the £5,000 investment for just a minute or two and re-examine your domestic energy bills. A saving of £100 a year is not a bad reward for half an hour’s effort.

Useful websites for energy savings

www.virgin.com

www.buy.co.uk

www.ofgem.gov.uk

www.servista.com

SAVINGS IN THE HOME

Shopping around for a cheaper supplier is one way to save on fuel bills. An even better way to save money is to use less energy in the first place.

Being energy efficient does not entail a return to the war time strictures of a single shallow bath for the whole family; it is possible to make substantial energy savings without changing your life style one jot.

Power company Eastern Energy has calculated the potential cost savings of a whole host of energy efficiency tricks. These include:

– Turning off a TV rather than leaving it on standby – annual saving of six pounds

– Boiling a kettle with only the amount of water actually needed, for example to make two hot drinks – annual saving £15

– Washing clothes at low temperatures, not boil washes – annual savings £15

– Fitting long-life, low energy light bulbs – annual savings #10 per room

– Turning down the thermostat on your central heating by one degree Celsius – annual saving £20

All told, the average family in a three-bedroom semi could save an estimated £306 a year on their fuel bills if they followed the whole lot.