Wages in the UK are rising faster than they ever have in 20 years, but inflation appears to be keeping pace almost easily, reaching a 40-year high just last year. The Financial Conduct Authority found that about 11 million adults in the UK struggle to pay their bills, almost a 40% increase from last year’s 7.9 million.
The escalation in conflicts around the world (including the latest Israel – Gaza war) means that people can look forward to having the nightmare of household finance management getting significantly worse, although it seems to pale in comparison with the tribulations the people living in areas of conflict must be going through. High inflation eats into people’s savings, limiting their purchasing power and thereby making it harder for them to maintain their standards of living. The mental strain of managing the finances of an entire household, even if that household consists of one person and their cat is a very real thing, which is why we’ve come up with a helpful list of items for you to look into and check off.
Managing the pantry
The first part of making the most out of your money when it comes to the food bill starts in the home. It’s important to make sure that good use is made of the food bought the previous week or the previous shopping trip. Keeping the refrigerator and the pantry well organised, with constant reviews of what you have and what you don’t will help ensure nothing gets thrown away or gets overstocked. Keeping the freezer organised is an important part of this – it’s easy to miss things packed away in Tupperware boxes. You should also be able to take out a pre portioned container of food without having to defrost an entire pot every time, which speeds up the rate at which food goes bad. Buying in bulk, and putting things away for later on in the week is also a cheaper way of meeting your food costs.
Shaving the cream off the weekly shop
With that, it’s important to consider how a few corners can be cut during the shop itself. One way of doing so is by buying supermarket-brand goods. Supermarkets nowadays offer their own version of most of their bestsellers for obvious reasons. Unless the difference in quality is significant enough to warrant paying a higher price, it should be cheaper for supermarket brands to save a few extra coins. Loyalty cards are also a good way of saving on a shopping trip. Most supermarkets nowadays offer very lucrative deals and allow you to earn points for every pound spent on purchases. The cost of living crisis is also seeing the use of cash in the UK climbing at unanticipated levels this year. According to UK Finance, the rise in popularity of physical money is a result of people trying to manage their finances.
Using cash and coins
The use of physical money has seen a surge in popularity since last year with the number of people living cashless lives, relying almost exclusively on plastic and online payments falling from 23.1 million to 21.6 million. UK Finance forecasts that this number is only set to rise this year, with about 7% of all payments in the country being made with cash. This is also a rise in the previous forecast of 6%. Paying exclusively in cash cuts back on bank transactional fees and in the case of credit cards at least reduces the possible penalty fee that could be incurred were you to miss out on a monthly payment. Last year also saw a substantial increase in all kinds of payments made through all channels in the country. This is attributed largely to people making an increased number of smaller shopping trips, and visiting different stores to get the best deals in town.
Saving on the energy bill
According to British Gas, 23% of the country’s energy use is due to devices and systems that are always on standby for easier use. Checking up on these regularly and switching anything that does not need to be on standby consistently off will help with energy costs. There are other ways in which you can increase the efficiency of your home’s heating system. One important thing to look into is the insulation in your home – investing in good insulation for your home, especially in the loft is an investment that will pay off within a very short period of time. If you’re looking to really optimise your central heating system, sealing up the openings in your home that leak out the heat – like floorboards (carpeting should help), post box openings/slits, windows, and gaps around doors can help.
What bills to prioritise
Identifying the most urgent demands on your money is an important part of managing the cost of living crisis – albeit a very stressful one. The debts and bills that have serious repercussions for non-payment should be on top of the list. This includes mortgage repayments and rent, the non-payment of which can see you out on the streets or in court. Other payments that should take priority next to your essentials should include child support, utility bills, loans with the house as security, taxes, TV licence payments as well as court fines and payments. Other debts should follow – including buy-now-later payments, credit cards, store cards, overdrafts, and the like. However, failure to meet these debts will still get you into legal trouble and locked into a neverending spiral of debt.
Help, I can’t pay my bills
Sometimes, it is impossible to meet your financial obligations despite your best efforts, in which case it may be necessary to consider a form of personal insolvency. This will require professional advice on what could be most beneficial for you as well as what is possible depending on where you live and what your financial circumstances are.
Some possibilities include getting a debt relief order, an individual voluntary arrangement, and declaring bankruptcy outright. Scotland offers debt arrangement schemes, debt management plans, and a trust deed. UK folks undergoing mental health crisis treatment can also apply for a scheme that offers them more time to settle their finances for the length of the treatment and an additional 30 days. Northern Ireland is also currently considering a scheme to alleviate the burden on people undergoing mental health treatment. England also offers ‘breathing space schemes’ to shelter people from getting mired in debt.
(Theruni Liyanage)