How to manage money better during the cost of living crisis
Looking for ways to manage money better during the cost of living crisis? I was at the supermarket at the weekend and overheard an outraged couple discussing the dramatic increases in prices They’d noticed that the price of a loaf of bread had gone up from £1.06 to £1.36 in the last 12 months – an increase of 28%. The price of a pint of milk had more than doubled in 12 months from 42p to 95p an increase of 125%. With wages increasing at 5% on average, they had every right to be outraged.
I was taken aback by two things:
- The incredible awareness this couple had on the price of their shopping (I thought they must be accountants).
- The dramatic real-world increase in the cost of essentials like bread and milk.
So how do you manage money better during the cost-of-living crisis?
It got me thinking that perhaps we should all be thinking like them. Fundamentally, for those able to make adjustments, a bit of short to medium-term financial planning can really help. Read the rest of this article for tips on how to manage money better in the cost of living crisis.
How do you cut costs in a cost-of-living crisis?
There are many ways to deal with the cost of living crisis. One of the best ways to save money is to track your spending and cut down where you can. Start by creating a budget, which is a list of all your expenses. Include everything. Daily expenses like travel, weekly expenses like groceries, monthly expenses like direct debits and annual expenses like holidays.
Measure this against your income. Even if there is a healthy surplus, get a red pen and circle anything you think you could be saving on.
Where can you make savings?
Is the petrol station you use regularly the cheapest? Could you walk to certain places instead of driving? If you buy lunch at work, could you prepare your own? Could you eat out less and cut down on socialising? Have you considered switching energy suppliers? Could you be paying less interest on your credit cards by switching?
There are so many ways to manage money better during the cost-of-living crisis. Small savings here and there could make a big difference.
Where you shouldn’t compromise.
Whilst you may be looking at ways to manage money better during the cost of living crisis, getting that red pen out can be dangerous. You may see entries for life insurance, pension contributions and regular savings on your list. You may be tempted to circle these with your red pen, thinking you could pause them for now and restart them later.
Don’t! There are certain things you shouldn’t compromise upon when trying to make savings. Your insurances, pensions and savings plans are top of that list. If you’re really feeling the squeeze, speak to a financial adviser first before making any cuts.
Will the cost of living ever go down?
Experts predict that this cost of living crisis will last another few years, possibly until 2028. But it’s unlikely that prices will normalise in the short term. There will always be inflation however the rate of the increase in prices will hopefully slow.
The Bank of England says that wages will probably keep closer pace with the prices of goods and services in a few years’ time. Whether this will be felt in our pockets remains to be seen. This has certainly been a tough time for many, with homeowners also having to prepare themselves for interest rate rises too
Get support where needed.
If you’ve gone through all the above exercises and still find yourself sinking, you may be entitled to support. You don’t ask, you don’t get, so ask for help. Don’t wait! Energy suppliers, mortgage lenders, bank loan and credit card providers all have departments and schemes dedicated to helping those who are struggling.
They could help you without destroying your credit rating. Speak to your financial adviser if you have one and see what they suggest. The Citizen’s Advice Bureau is also a useful source of information and help. Get in touch to see how they could support you.
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