According to new research[1], 95% of adults in the UK are worried about the anticipated rise in the cost of living in 2022.
The expense most UK households are concerned about is the rise in energy bills (92%), with three in ten (29%) being apprehensive about this, followed by food shopping (87%). Cost hikes to phone and internet contracts, which typically increase by more than the Consumer Price Index (CPI) rate, concern 84% of UK adults.
The level and speed of price rises mean nine out of ten of us (89%) are looking to make changes to pay for the cost-of-living increases. Worryingly, the option for a fifth (21%) of people is to borrow their way out of trouble, with 7% admitting they don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan.
Two-thirds (66%) of people say they will change their food shopping habits, with half of these saying they’ll reduce the amount of food they buy. Other solutions to cut back on costs include reaching for the thermostat and reducing the length of time the central heating is on (46%), turning off the heating in unoccupied rooms (36%) and nearly a fifth (17%) taking the drastic action of turning the heating off altogether. As part of the cutting-back regime, half (48%) of full-time workers feel they’ll be forced to reduce or stop saving overall.
On top of rising costs, National Insurance contribution rates increased from April, just as energy bills rose more steeply, dramatically affecting take-home pay. Worryingly, a fifth of workers (20%) say they are not aware of these changes, and two-fifths (43%) say whilst they are aware, they are not prepared for the changes to start.
Anxious About Finances
Just as families in the UK felt they’d seen the worst of the financial impact of COVID, they’re facing a dramatic rise in their household bills. People are having to make difficult choices to reduce the impact of rising energy bills, higher inflation, tax hikes and potential interest rate increases. This has made many people anxious about their finances, but it’s also testing their financial resilience.
Household bills are rising steeply, with the cost of filling up the car at the pumps having reached eye-watering levels, leaving families up and down the country worried about their ability to make ends meet. The concern is so widespread that families who, on the face of it, would be considered financially comfortable and even those with six-figure incomes are worried.
Ten ways to help manage your finances
1. SAVE ON YOUR ENERGY BILLS
If you’re finding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling.
Switching your energy supplier used to be a good way of saving money on your household bills, but with energy prices soaring, you’re probably better off staying on the standard tariff with your existing supplier once your fixed tariff ends. That way, you’re protected by the energy price cap. The government-backed website – Simple Energy Advice – has tips on keeping your energy bills down.
2. SAVE MONEY ON PETROL
Try using a fuel price checker site to check that you’re always getting your fuel for the lowest price possible. Other ways to save include driving at a lower speed, avoiding accelerating and braking quickly if you can, making sure your tyres are at the correct pressure and taking out anything heavy in the car that you don’t need to carry.
3. FOOD BILLS
Grocery bills can make up a considerable proportion of your household spending, so it makes sense to look for savings. Plan your meals for a week and then write your shopping list – this will help you avoid buying unnecessary items. Consider changing to a cheaper supermarket or different brands if you prefer a particular supermarket.
4. WATER BILLS
You can’t switch water suppliers, but there are steps you can take to keep your bills down. Check if you’d save money by switching to a water meter. You can use the Consumer Council for Water’s calculator. If you’re on certain benefits
and have a large family or someone with a particular medical condition, you may qualify for the WaterSure scheme, which caps water bills. Meanwhile, if you’re on a low income or receiving benefits, check what additional assistance your water company offers.
5. COUNCIL TAX
Depending on your circumstances and who is living with you, you may qualify for a Council Tax discount. For example, you can get a 25% discount if you’re the only adult living in the property. Find out what discounts your local council offer at GOV.UK.
If you’re on a low income or certain benefits, you may be able to get a Council Tax Reduction. Your bill could be reduced by up to 100%, and there’s a different scheme in Northern Ireland.
6. CHECK IF YOU’RE ENTITLED TO STATE BENEFITS
Billions of pounds of state benefits go unclaimed each year, and you could be missing out. The national charity Turn2us has a free and confidential benefits calculator on its website (https://benefits- calculator.turn2us.org.uk/), which can help you work out, which means-tested benefits you’re entitled to. It also has a grant search tool (https://grants-search. turn2us.org.uk/) for information on grants you may be able to apply for.
7. FIND OUT WHERE YOUR MONEY’S GOING
Start by finding out where your money’s being spent. It sounds obvious, but we may not realise how much we’re spending each month and what we’re spending it on until it’s in front of us.
Review your last three bank statements and credit card bills (or check online) and spend some time going through them, highlighting any areas where you think you’re spending money unnecessarily or spending too much. This could be on anything from a top of the range broadband package you don’t need to a mobile phone contract where you’re paying for data you don’t use.
Money is wasted on unused subscriptions every month, with the most common wasted money on gym memberships. A fifth (19%) of UK adults said they planned on cancelling TV subscriptions (e.g. Netflix, Amazon Prime). Even magazine subscriptions of a few pounds a month are money down the drain if you don’t have time to read the magazine. Take a few minutes and cancel any subscriptions you don’t use to save yourself a bit of cash.
8. DRAW UP A BUDGET
Drawing up a weekly or monthly budget will help you get your finances under control. It’s just a list of money you have coming in and what you spend, and it doesn’t have to take long to set up. There are plenty of templates online to get you started. Alternatively, budgeting apps can also help you plan what you want to spend and keep track of it.
9. SEE IF YOU CAN PAY LESS INTEREST
If you owe money on an expensive credit card, it may be worth considering whether you can transfer the balance to a credit card charging 0%
interest. Although these cards are interest-free, you will usually be charged a balance transfer fee of between 1 and 3% of the amount you transfer. Because you won’t be charged interest on your balance, more of your money can go to repay what you owe.
These cards aren’t suitable for everyone, and it’s essential to make sure you can pay off your balance by the time the 0% interest deal runs out. It may also affect your credit score, especially if you do it multiple times.
10. GET HELP WITH UNMANAGEABLE DEBTS
If you are struggling to pay for the essentials, using one credit card to pay off another, or your debts are causing you to worry, then contact a debt advice charity, such as StepChange. They will be able to give you help with your debts, free of charge.
NEED HELP TO MAKE THE MOST OF YOUR MONEY? Rising inflation and increases in taxes are set to leave millions worse off in 2022. We’re here to help you review your current financial situation and answer any questions you may be concerned about.
[1] [1] Royal London commissioned a survey by Opinium between 25 February and 1 March 2022 with a sample of 4,001 nationally representative UK adults
