The cost of everyday living has risen by more than a quarter in the last two years, according to a study by Combined Insurance.

Its figures show that average monthly living commitments have soared by 26 per cent since June 2006, and that Brits are spending up to 30 per cent more on everyday bills, like water rates and TV subscriptions.

Average monthly outgoings have increased by £336 per month, up to £1281 in June 2008, from £945 two years earlier.

Londoners were hit hardest, as people are spending 55 per cent more of their household income each month on bills than June 06.

Combined Insurance’s Nigel Brittle says: “The many cost of living hikes are taking their toll on the monthly budget and many Brits are living on the edge with their finances.”

Chiltern’s Nathan Gladwell says: “Cut backs in personal expenditure are inevitable in this current climate, as households become more disciplined on how they spend their cash.

“Unfortunately everyday household bills can’t be avoided, which means that other financial commitments can often go into arrears – as people struggle to make payments.

“Informal arrangements enable debts to be paid but at a more affordable level, which can provide relief from creditors chasing payments that otherwise would remain unpaid and could build up further interest and charges.”

To ensure you’re on the cheapest energy tariff for your area, go to www.chiltern.uk.com/energy, and switch providers now.

For more money saving ideas, visit www.chiltern.uk.com/pages/resource-directory