FSJ News Updates,
II feel like the British have jumped out of the frying pan to fall straight into the fire as the nation has been gripped by a major cost of living crisis.
As the average cost of a full tank of petrol topped £100 for the first time this year and the total crept up with each weekly shop, millions of people faced the choice of ‘eat or heat’ – forced to choose between giving up. food or heating their home.
According to the Office for National Statistics (ONS), around nine in 10 (87 per cent) of adults in Britain said their cost of living had risen in March alone, with rising energy prices driving the rise. The wholesale price of gas in January 2022 was almost four times higher than at the start of 2021, with tight natural gas supplies and supply issues driving up global gas prices.
It doesn’t end there. When Ofgem announced its latest review of the energy price cap at the end of August, the average household energy bill was set to rise to £3,549 from October. This would have been an 80 per cent rise on the previous quarter’s £1,971 if new Prime Minister Liz Truss had not stepped in to freeze the cap at £2,500 for two years.
In addition, inflation rose to a new 40-year high of 9.9 per cent in September, while the ONS revealed that British workers saw regular real wages fall at the fastest rate on record.
With the cost of everything rising, debt charity StepChange has warned that more people will fall into debt as they struggle to pay bills and other obligations. The organization said on February 3 that “cost-of-living pressures” entered the top five reasons for debt among people who turned to it for help in November 2021, and have remained there since.
So how can people cope with rising costs and what help is available?
How worried should you be about the rising cost of living?
It’s easy to panic and get overwhelmed right now by the headlines that are saturated with the cost of living crisis. It’s a serious problem and spells “time of trouble for many households”, says Nick Hill, money expert at the Money and Pensions Service (MAPS). The Independent.
“One in three. [households] let’s say that thinking about their financial situation makes them anxious and almost half admit they don’t feel confident about managing their money on a day-to-day basis,’ she says.
“While we cannot ignore the challenges that people face, it is important to realize that you are not alone. It’s normal to worry about money, but it’s better to face it than ignore it.”
However, if the news is causing you to experience feelings of anxiety and panic, it might be helpful for you to turn off the news and focus on your own financial situation. You might find you’re not in as much trouble as you think, says Jasmine Birtles of MoneyMagpie.
Ms Birtles, who founded the financial advice website, says The Independent: “Many people have come into contact with MoneyMagpie who have panicked about the state of affairs, understandably so. It might actually be helpful to turn off the TV, take a deep breath and look at your own circumstances, because it’s quite possible they’re not as bad as suggested.”
Where should I start managing my finances?
Both Mr Hill and financial coach Bola Sol advise people to start learning how to budget so they can manage their money better.
Ms. Sol who is the author How to save ita guide to fixing finances, he tells The Independent: “I would always say to start with a budget. At this point, manual budgets — like spreadsheets or using notes on your phone — aren’t enough.
“Use an app that’s linked to your bank account to keep track of your money and see clearly what’s coming in and what’s going out. Apps like Emma will show you where some bills have gone up and compare where you can get cheaper service.
“Once you understand your expenses, you can re-prioritize things. Maybe push back on buying lunches or limit buying takeout to twice a week, for example.’
Mr Hill adds: “It doesn’t have to be hard to get started [on budgeting] – There are plenty of free budgeting tools available online, such as the MoneyHelper Budget Planner, to help you understand exactly where your money is going and how much you’re getting out of it.”
Constantly reviewing your budget is one of the most “fundamental” things you can do to impact your savings. Incoming and outgoing transactions fluctuate depending on our needs, so it’s good to keep track of them, says Mr Hill.
“Checking direct debits and standing orders lets you see where you could cut costs. If you’re not using a specific subscription, check to see if there are any termination penalties and cancel where you can.
“If your finances allow, you can even put that money into your savings every month – every little bit helps.”
In which areas can I reduce my expenses?
Now is the time to check with your suppliers to make sure you are getting the best deal you can get. While it’s currently not possible to get a cheaper gas and electricity deal due to the price cap, you can still save on your existing broadband and phone deal.
“You should call your stream. [broadband and phone] the supplier in the first place – they may be able to give you a better price if you’re thinking of leaving,” says Mr Hill.
Another area where you can save is your groceries, Ms. Sol adds.
“Now more than ever is the best time to be really savvy about what you spend,” he says. “Keep an eye on supermarket prices and be on top of your comparison game. For example, check the prices of the same item in the big supermarket and the corner shop versions – they will usually be cheaper in the big supermarket.
“You can also get really good deals on homewares at super thrift shops like B&M, where they sell discounted cleaning products or multipacks of body soaps. Those are the types of small decisions that add up.”
Ms. Sol also recommends that people sign up for all available rewards programs to get the most out of their money.
“If you’re shopping in Tesco, make sure you have a Clubcard and if you’re going out for dinner with your mates, get a Nando’s card. You can earn M&S rewards points whenever you shop there and Sainsbury’s has its Nectar card. Just make sure you get as many rewards as possible.”
How can I get free stuff?
The best way to save money is not to spend it, but it can feel extremely limiting when you can’t get involved socially because you can’t afford it. But there are a number of things you can do or get for free if you’re savvy – and if you’re willing to share.
“There is enough for everyone if we share and help each other,” he says. “What we need to do more now is meet our neighbours, families and friends and see what we can share and how much we can support each other,” says Ms Birtles.
Ms Birtles recommends apps like OLIO where communities and neighbors can share food or other items with each other to reduce waste. She also recommends using anti-poverty charity Turn2Us’ grant search feature, which provides information on charitable grants that don’t have to be returned.
“There are thousands of grant bodies around the country that will give people money in certain circumstances, it’s just a matter of looking for them and checking if you’re eligible,” he says.
“Your local council can also potentially help you with a one-off grant from local charities or agencies. If you let your local council know you’re having problems, they can put you in touch with them.”
What should I do about the debt?
If you find yourself falling into debt, or if your previously manageable debts are now overwhelming, you should act fast.
According to debt counseling company StepChange, there are a number of ways you can start managing your debt beyond your budget, including earning extra income.
“If you are working on a reduced income or if the cost of your regular expenses has increased, you may find that even after budgeting, you will need a little more to cover your debts,” says a charity spokesperson. The Independent.
“In these cases, bringing a little extra cash can be essential and it can be easier than it seems.
“There are lots of ways to earn a few extra pounds, such as using cashback sites or selling unwanted goods online – the StepChange website is full of ideas. If you’re on benefits, remember that any other income may affect the amount you’re entitled to.’
You should also try to “avoid any loan that you can’t predict with certainty whether you’ll be able to repay at the end of the month,” in case your income takes a sudden hit.
“Instead, we recommend considering whether any purchases can wait until you have cash in hand, rather than using services like Buy Now, Pay Later. If you must use credit, try to only use it where you are sure you can pay it back by the due date.”
If you are still struggling with a negative budget or arrears on priority household bills, do not hesitate to contact a counseling company.
A StepChange spokesperson says: “Many people who come to StepChange struggle alone for months or even years and then tell us they wish they had contacted us sooner.
“The most typical causes of debt are financial shocks such as illness or unemployment rather than overspending. But whatever the reason, the experience of debt is stressful. That’s why it’s important to know that help is available online, 24/7, from StepChange. Don’t let the fear of debt rule your life – taking that first step can make all the difference.”
If you are struggling with your financial situation or debt, you can contact StepChange or any of the charities and groups listed above. StepChange offers online debt counselingor you can call them on 0800 1381111 Monday to Friday 8am to 8pm and Saturday 8am to 4pm.