Tips on tackling the cost-of-living crisis | Makala Green

The cost-of-living increasing to record highs has left many on tight budgets and has drastically decreased disposable incomes.

Food and energy prices have shot through the roof due to inflation rising to record levels in over 40 years. Yet there are further energy increases expected in October 2022, so it’s certainly worth dealing with your costs to curb the effects of the cost-of-living crisis. Here are some tips:

Check your state entitlement – Check to ensure you’re not one of up to 7 million people in the UK who are missing out on income state benefits. You can check benefits whether you’re entitled on Gov. UK free benefits calculator. Alternatively, contact your local Citizens’ Advice Bureau

Cut unnecessary expenses – Rising inflation can be frightening to your finances. However, small sacrifices can help provide some comfort for your finances. So, aim to cut back on spending where possible. Review your spending and identify any opportunities to reduce it.

It may be regular subscriptions, reducing the number of times you eat out or socialise during the week or recycling clothes instead of buying new ones. If there is little room to cut back, try shopping around and seeking alternatives for purchases to create extra room for your finances.

Prioritise your spending – During rising inflation periods, it’s important to prioritise you’re spending. Explore what is important such as essentials, insurance, and self-care. Then see what’s left over for other expenses (if any). This will help you gain better control of your finances and keep you out of debt. Creating a regular budget will assist you in allocating your finances in order of importance.

Seek free alternatives – Inflation may be rising, but that shouldn’t stop you from having fun. It’s all about being more creative with your enjoyable expenses. Try to opt for picnics in the park, going to galleries and nights in with friends. You can also look for offers on attractions in newspapers, magazines or online and plan events in advance to get the best deals.

Shop around – To help beat rising prices, you may benefit from shopping around for cheaper deals on your energy bills, mortgage, and food shopping. When shopping, aim to look for alternative cheaper products such store brand cleaning and staples- you may even discover there is little difference in quality or taste. Make use of store coupons and vouchers to help your money go that little bit further each month.

Speak with providers – If you are facing financial difficulties and struggling to make essential payments such as bills or food, speak with your providers, who may be able to suggest ways to lower or reduce bills.

Secure a fixed-rate mortgage– If you have a deal about to expire in the next six months or are on a variable rate mortgage, you may want to consider fixing your rate. As inflation is expected to increase even further, this could mean increased mortgage rates, and therefore fixing early will help shelter you from the rises.

Be energy efficient – Using less energy is a smart way to save on your energy bills. With energy bills rising at the fastest past in years, we all need to be adopting energy-saving tips to keep bills as low as possible. This may include:

  • Switching lights off when not in use
  • Using a washing line instead of the tumble dryer
  • Keeping doors closed in the house to keep heat in
  • Filling the washing machine and dishwasher before use
  • Using energy-efficient lightbulbs
  • Opting for solar garden lights as opposed to electric

Inflation debunked – what it means and what to expect going forward.

The current increase of inflation to 9% means for every pound you spend on a basket of goods or services, you will see an increase of 9p, equating to £1.09. Therefore, the value of your money is being eroded in quite a short space of time. The major contributors are fuel cost increases and surging energy bills largely resulting from the Ukraine war on oil and gas prices.

Rises are expected to increase even higher and peak as high as 10% this year. This means brits will see further rises in food, fuel, energy and other things such as raw material and postage. This will continue to affect many more households as the average pay, including increases, is not keeping pace with inflation.

Investments – what’s changed in the past few months?

There has been a lot of volatility (ups and downs) in markets over recent months due to inflation, interest rate rises, consumer confidence and the economic outlook. At the beginning of 2022, markets increased as a result of higher rate prospects. However, the Russian-Ukraine tension added strain to markets and caused further fluctuations. However, markets are prone to ups and downs, but that does not mean investing is not a good place for growth and to hedge against inflation. If you look at markets over the last six years, there has still been a strong rise in overall market performance.

Makala Green is the author of The Money Edit published by Yellow Kite on 31st March 2022, £16.99. Available as a Paperback, Audio and ebook.  

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