While the recession has been particularly tough for people who've lost their jobs, those who are still employed also face difficult times ahead.
Not only is the future uncertain for many, with plenty of job cuts yet to be announced, but public sector staff earning £21,000 or above had their pay frozen for two years starting last summer.
Even with predicted average pay rises of 3.00% in the private sector this year, according to Incomes Data Services research, most homes are facing a drop in their spending power, as inflation remains stubbornly high.
The consumer prices index is currently at 3.3%, while the retail prices index is even higher at a painful 4.7%. Plus, with the VAT hike expected to add up to £500 a year to average family bills, it's hardly surprising that so many of us are feeling the pinch
But in this article, we reveal how you can potentially save yourself up to £5,166.69 over a year.
With the average gross annual salary at £25,900, according to the Office for National Statistics, that would be a very healthy 21% pay rise!
Of course, not everyone will qualify for every saving outlined in this article, but even if you could make just a third of them, you'd still be boosting your salary by an inflation-busting amount.
Use salary sacrifice for childcare
Childcare can eat such a hole in your earnings that it sometimes feels like there's little point working.
But if your employer offers childcare vouchers under a salary sacrifice scheme then you could pay for that expensive service out of your pre-tax income.
That means you don't pay tax and NI contributions on the money you spend on childcare. You're effectively agreeing to be partly paid in childcare vouchers and you can request up to £55 a week or £243 a month.
Higher-rate taxpayers could save up to £1,225 a year, while someone in the basic rate tax band could save up to £933 a year.
So, a two-parent family where both parents are higher-rate taxpayers could be £2,450 better off a year.
HIGHER AND TOP RATE TAXPAYERS BE WARNED: From April, higher rate taxpayers will only be able to take £28 a week in vouchers, meaning a total potential save of £623, while those who pay the top rate of 50% tax can claim a maximum of £22 a week - saving potentially £606 over the year.
But taxpayers already in the scheme will not be affected, so you need to join now in order to save the maximum amount.
Check your benefits
If you struggle to make ends meet every month, make sure you're getting all the financial help you're entitled to.
In 2010, a group of charities, including Citizens Advice and Save the Children warned that more than £16billion of means-tested benefits and tax credits go unclaimed each year. In fact, the organisations worked out that half of working families entitled to housing benefit don't claim it, meaning they are missing out on an average of £37.60 a week - £1,955 a year.
Check your household isn't going short, by using the benefits calculator on the Turn2us website, or by booking yourself into your local Citizens Advice Bureau for a benefits check.
Make more of your company pension
If your employer offers a pension scheme into which it makes contributions, join it.
Taking advantage of that gives you an effective pay rise, as your employer contributes an extra percentage of your regular income.
So, for example, the average annual salary is £25,900. If you earn that and your employer matches your pension contributions up to 5.00% then that's a pay increase of £1,295 a year.
Of course, you will need to contribute a proportion of your monthly income, which won't boost your immediate spending power, but it is money for nothing.
Use tax-free savings
The returns you make on your savings are taxable, unless you put the money into a tax-free wrapper, namely an individual savings account (ISA).
You can save a maximum of £10,200 a year into tax-free ISAs, of which up to £5,100 can be held in a cash account, and the remainder in stocks and shares. In the new tax year, starting in April, that rises in line with inflation to £10,680 a year, again, half of which can be saved into a cash account.
If you have savings, whether it's a small rainy-day pot or something more substantial, it makes sense to use your tax-free allowance to avoid the taxman taking a cut.
The benefits are clear to see. For example, if you save £5,100 into the market-leading easy access cash ISA now, which is the Santander Flexible ISA Issue 3, paying 2.85%, you would be £29.07 better off after 12 months than if you saved into a taxable savings account paying the same rate.
The returns are even better for those with bigger tax burdens. In fact, a higher rate taxpayer would be £58.14 better off and a top-rate taxpayer would be £72.67 richer as a result of saving into a tax-free account.
Use a cashback credit card
If you clear your credit card balance in full every month then you could be earning free money every time you shop.
The market-leading card at the moment is the American Express Platinum Cashback card, which gives new customers 5.00% cashback for the first three months, up to a total spend of £2,000.
At that rate, you could earn £100 in a quarter of a year. After that, you earn up to 1.25%, depending on how much you spend and if you pay for everything using the card, you could soon boost your income.
Someone spending £2,500 a month with this cashback card would earn an extra £381.25 a year.
The typical annual percentage rate (APR) on this card is 19.9%, so this is not suitable if you ever do leave a balance as the interest will quickly eat away your cashback earnings and end up costing you more.
Having said that, the card does offer six months at 0% on purchases for new customers, so you do have a little breathing space.
You can browse a full range of cashback and reward cards to find the one that's right for you.
Offset your savings
If your savings aren't earning as much as you'd like then an offset mortgage could save you money.
Once you factor in tax and inflation, higher and top rate taxpayers need to earn 5.51% and 6.61% respectively in order to make real returns on their money. However, the highest-paying fixed rate bond just now pays just 4.75%.
So potentially that money could be better used to offset expensive mortgage debt. By taking out a mortgage product that allows savings to be offset against the balance of their mortgage, homeowners can pay it off years earlier or choose to cut their monthly repayment bills.
On top of that, while they'd pay tax on their savings returns, there's no tax to pay just because they've lowered their mortgage payments.
With an offset mortgage, savers can still access their cash balance when they need to, it's just the money is held against the mortgage debt in the meantime.
For example, if you took out a £175,000 offset loan at 2.99% and held £50,000 in a linked savings account, you'd only pay interest on the remaining £125,000.
On a 25-year mortgage, you'd save £14,334.33 in interest. That's a saving of £573.37 a year, or four years and two months cut off the term of the mortgage.
Freelance? Earn money on the VAT hike
This isn't included in the total pay rise, as the amount you can make depends on the industry you're in and the VAT you regularly reclaim.
But there is a perfectly legal way for some freelancers and consultants to make money through VAT.
HMRC has a scheme designed to simplify VAT calculations on taxable turnover of less than £150,000.
The idea is that you agree a flat rate of VAT with HMRC, which varies depending on your profession, which you declare and pay.
However, the flat rate is not as high as the 20% VAT you're charging clients, so you keep the difference instead of reclaiming VAT on business purchases elsewhere.
It does simplify the payment process and can boost some freelancers' income by thousands of pounds a year.
For example, a consultant civil engineer bills £100,000 to their client over one financial year. VAT at 20% works out at £20,000 but they pay HMRC a flat rate of 14.5%, allowing them to retain £5,500.
HMRC even has a 'ready reckoner' on its website so that you can see if you'd be better off.
Best of all, you can still reclaim VAT on purchases worth more than £2,000, so if you do invest in something substantial, you can still reclaim the VAT.
By Felicity Hannah, deputy editor, moneysupermarket.com
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
