How to navigate the cost-of-living increases and what to do about rising costs? - Evolution Financial Planning

With the rising cost of living, it is easy to feel overwhelmed by how much essentials have increased in cost. The feelings of uncertainty around your finances or worrying about not falling into debt is a very real and understandable source of stress. This stress is increased if you are not sure what to prioritise or how to feel confident in your financial decision-making. According to the debt charity StepChange, the annual average for how much people pay for their energy has gone up by £700, in addition to this, the Thinktank Resolution Foundation has named 2022 the year of the squeeze.

The rising costs of living in 2022

The rate of inflation is at the highest it has been in 30 years up to 5.4% which is not being matched by a high enough increase in wages and government support is not enough to help with the steep increase in the price of living in the UK. As a result, many people are turning to use credit cards to try and improve their current situation. Whilst credit cards are useful for emergencies, this is very likely to just exacerbate the problem. According to a Which survey, only a quarter of people have not acted in response to the financial strains and 58% of people have been negatively affected by the rising price of food and other essentials.

Your 4 step plan to get your finances in order

The first step to navigating the cost-of-living increases is to get your finances in order:

  1. Work out how much to can spend per week based on your income
  2. Focus on which bills are for essentials and deduct these from the amount
  3. Explore possible ways to increase your income such as a side business or part-time job in addition to what you are doing now
  4. Try and see if there are any costs that are not essential to reduce around different areas of your life – even switching to something more sustainable such as buying second-hand clothes from websites such as Thrift+ or Vinted.

If you feel unsure about your financial situation, putting off big extra costs such as holidays can really make a difference; you won’t be alone in this either as many people are having to adapt their finances as a reaction to the crisis. It’s also a good idea to seek help from a financial advisor to help with big financial decisions, for example taking out a mortgage or pension advice.

The cost-of-living increases and the rising costs of energy

With the steep rise in energy bills, it goes without saying that we should all be trying to reduce our energy bills as much as possible which is coincidentally great for the environment too. Small steps you can take to reduce your energy bills include switching out your light bulbs for energy-saving bulbs and using cold washes. In addition, try to use less hot water and instead of using a running tap, you could wash up in a bowl. If you have a power shower, in 5 minutes these can use more water than it takes to run a bath, so it could be worth fitting an eco-shower head to reduce your energy usage.

Check if your supplier is giving you the best rates and see if a different supplier is more suited to your budget. Some companies also actually require you to pay more for paper copies of your bills as well – not only is this bad for the environment but going digital is a good way to reduce smaller costs. Paying by direct debit frequently works out to cost less and if you notice any increases make sure to query this with your supplier.

The rising costs of food in 2022

Keeping an eye on how much you are spending on the weekly shop is important and sometimes the food shop is largest part of your budget, especially if you’re feeding a family. Stay informed on which supermarkets offer the best prices for what you want to buy and try not to buy more than you need. Lidl and Aldi continue to be the frontrunners on low-cost food and although Waitrose and Marks and Spencers sometimes have better quality items, they are almost always overpriced. Having a loyalty card can also help, Tesco Club cards have massive reductions that change every day especially when you buy own-brand products rather than big brands. Own-brand products are often rated as very similar to big brands if not better according to surveys on Which.

How you can get support to navigate the cost-of-living increases

Know that with the rising costs we are all experiencing, it is completely normal to feel out of your depth or unsure about your financial future but the stress does not have to take over your life. It may well be worth using an independent financial adviser who can look at your finances and help you feel confident in your next financial steps.

 

For unbiased advice and support, get in contact with a female financial adviser who understands your needs.

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