Nine in ten adults make stark spending decisions as anxiety runs high
The pressure of spiralling living costs is a major concern among many UK households, with the vast majority looking to make significant lifestyle changes in response to price rises.
According to new research[1], 95% of adults in the UK say they are worried about the anticipated rise in the cost of living in 2022. Women are the most worried, with a third (33%) mentioning they are extremely worried compared to a fifth (22%) of men.
Cost
of
living
increases
The
expense
most UK
households
are
concerned
about is
the rise
in
energy
bills
(92%),
with
three in
ten
(29%)
being
extremely
worried
about
this,
followed
by food
shopping
(87%).
Cost
hikes to
phone
and
internet
contracts,
which
typically
increase
by the
more
than the
Consumer
Price
Index
(CPI)
rate,
concerns
84% of
UK
adults.
The level and speed of price rises means 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 simply don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan.
Cut
back
on
costs
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
fulltime
workers
feel
they’ll
be
forced
to
reduce
or stop
saving
altogether.
On top of rising costs, National Insurance contribution rates increased from April, just as energy bills rise more steeply, which will dramatically affect take-home pay. For an individual on a salary of £50,000, that will mean an extra deduction of £464 a year, or £214 for someone earning £30,000. 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
in an
attempt
to
reduce
the
impact
of
rising
energy
bills,
higher
inflation,
tax
hikes
and
potential
interest
rate
increases.
Understandably,
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. 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 deeply worried.
10 ways to help manage your finances
1.
Save
money
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 comes to an end. Some suppliers aren’t taking on new customers, and that way you’re protected by the energy price cap. The government-backed website – Simple Energy Advice – has tips on how to keep 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
cheapest
price
possible.
Other
ways to
save
include:
driving
at a
lower
speed
and
avoiding
accelerating
and
braking
quickly
if you
can;
making
sure
your
tyres
are at
the
right
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 big
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 to
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
are
offered
by your
local
council
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%. 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
exactly
how much
we’re
spending
each
month –
and what
we’re
spending
it on –
until
it’s
laid out
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 that you don’t need, to a mobile phone contract where you’re paying for data you don’t use.
Every month money is wasted on unused subscriptions, 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 really 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 be
used to
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
normally
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 right for everyone, and it’s important 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,
you are
using
one
credit
card to
pay off
another
or your
debts
are
causing
you
worry,
then
contact
a debt
advice
charity,
such as
StepChange.
They
will be
able to
give you
help
with
your
debts,
free of
charge.
Source
data:
[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.
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