The three main factors that contribute to the high cost of living in London are housing costs, transport and leisure: but there are ways to make those costs more acceptable.

ACCOMODATION

Bottom line: Do your research. Prepare to live far out.

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House prices in London are the highest in the country, and among the highest in Europe. Rental costs for flats and houses, although relatively less extortionate can still be very high, although there is significantly more opportunity to find something reasonable. The costs of living in shared accommodation and rented rooms is probably, in comparison with the rest of the country, least obviously inflated, but can still be pretty high, especially in more pleasant or more central districts.

Assuming you don’t yet own a house in London, it pays to do your research: generally speaking, the housing costs are lower as you move away from the centre of the city, although there are also huge differences between various outlying districts. Some areas further out might be more expensive than more central ones, especially for smaller flats. This article is not a place to discuss which districts are best and for whom (whole books have been published on the subject), and your preferences will depend on your lifestyle, personal circumstances and - crucially - your commuting routes.

For obvious reasons, it’s better to live near to your place of work or study, and ideally live on the same side of the city as avoiding the central zone of London might significantly reduce your transport costs.

Spend time and effort looking for accommodation, as all the investment will definitely pay: both in money and contentment.

TRANSPORT

Bottom line: Don’t drive. If you do, get a hybrid, LPG or other alternative fuel vehicle. Use Oyster card for single public transport journeys. Get a season ticket travelcard, annual if you can afford it. If seriously strapped for cash, use buses only.

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Driving in London is expensive for anybody who need to drive into Central London, covered by the congestion charge (8/10 GBP per day depending on when it’s paid), while parking prices, especially in the centre, are extortionate. If you want to save money living in London, especially if you need to travel to the centre of the city regularly, don’t drive. Or if you do, seriously consider getting an alternative fuel or dual fuel car which are exempt from the congestion charge (this is depending on emissions, so check if your car would qualify).

London has a good if crowded public transport system which is integrated and divided into 6 (plus additional three on the very outskirts) concentric zones and there are numerous season tickets called Travelcards available whose price depends on the number of zones covered.

Any travelcard (or individual Underground ticket) that includes Zone 1 (the very centre of the city) is significantly more expensive.

The cheapest way to pay for single tickets, regardless of the zones, is by using an electronic Oyster card.

Buses and trams are significantly cheaper. A single fare paid with an Oyster card is only 1 GBP, 2 GBP if paid in cash, regardless of the distance travelled.

But anybody travelling regularly in London will undoubtedly obtain a season ticket, or a pass. There are two types of those: travelcards (which include Underground, other trains, buses and trams) and bus & tram passes.

The bus pass is by far the cheapest way of covering travel costs: the monthly bus & tram pass for the whole of London costs 53 GBP which is cheaper than the cheapest available travelcard which would only cover two zones (not including the most central Zone 1). The cheapest travelcard that includes Zone 1 is almost double the price of the bus pass (and costs, at the time of writing, over 99 GBP). There is, of course, a reason for that: bus travel is subject to the vagaries of traffic and, especially in Central London, slow and terribly inefficient in comparison to the Tube (Underground trains). But if you are seriously strapped for cash, using a bus pass is a straightforward (if very painful) way to save some money on travel.

The annual travelcards offer substantial discounts (over 20% in comparison to the cost of the 12 separate monthly travelcards) and are refundable pro-rata if you move jobs, addresses or decide to stop using the ticket altogether. If you can afford one, it’s a good deal. Some employers will subsidise such tickets, other will offer a non-interest loan for the purchase of one.

LEISURE

Bottom line: Avoid the centre. Take advantage of free entertainment. Prepare for temptation.

As probably most capital cities, London is the centre of culture and entertainment and the prices for everything, from a pint of beer to a cinema ticket can be very high in comparison to other places. Apart form staying at home (though one doesn’t live on bread alone) there are two main ways to reduce these costs.

The first one is to go out rather into town: locate attractive and interesting places on the outskirts of the city, in further out places that are less popular with both the tourists and the overpaid City bankers. This will not necessarily work very well for major theatre or music performances, but as far as eating out, pubs or cinema go, you can certainly find a lot of great (if not better) stuff outside the West End, and with considerably lower prices.

The second is to take advantage of many opportunities for free leisure activities that London provides. There are whole guides devoted to Free London and you will find that in addition to major museums and galleries, there are countless events and performances that don’t charge entrance prices: free comedy, free music (in pubs, churches, classical venue foyers), free talks and lectures, free cabaret, free club nights and even free theatre tickets (sadly, only for 15- to 26-year-olds).

Seeing art in London is almost entirely free - none of the great national collections charge entrance fees, and commercial galleries are similarly gratis.

London parks, riverside and streets offer fantastic opportunities for walks (remember to bring provisions to avoid temptations from tourist-trap sellers)

DAY TO DAY LIVING

Bottom line: Plan well. Use markets. Swap and freecycle.

Shopping for food and other daily essentials is not any more expensive in London, and the sheer scale of the place means that it’s actually fairly easy to get better deals on the number of things than in smaller places.

Avoid Central London smaller “convenience supermarkets” which have heavy premium on their wares and head to your local supermarket (or order on-line) for your regular groceries. Ideally, go near the evening, when “reduced to clear” cabinets are being filled and you can buy things that are perfectly fit for consumption or freezing for what often is a fraction of the price.

Use street and covered markets (not the tourist-orientated or fancy-posh-organic ones) in poorer outlying districts for good deals on essentials and seasonal produce. If you go near the closing time, you can get stuff with huge reductions.

Check out ethnic shops, especially large ones. They are the best place to buy a lot of products, from spices and herbs to unusual tinned goods and kitchen equipment.

London’s concentration of people and good transportation links make it a fantastic area for community-centred, cash-free initiatives that allow people to swap, give away, barter or sell very cheaply goods and services. Check out London’s freecycle groups, LETS and gumtree. London Loot is a classified ads paper which lists stuff for sale (as well as a lot of private ads for accommodation, especially rooms). Local car boot sales can be a great source of bargains, and there is bound to be one near you. Charity shops in the posher areas of the city can be a source of high-quality stuff including designer labels.