As the cost of living skyrockets, here are some basic tips to help you cut back on your expenses
That surge coincided with a dramatic spike in inflation, which rose to 5.1 percent in November, more than double the Bank of England’s target of 2 percent.
Household spending on everyday items rose 15 per cent from £1,682 in the fourth quarter of 2020 to £1,931 in the final quarter of 2021, an analysis of data from 500,000 users by budgeting app Plum shows.
Energy costs have become the biggest drag on Britons’ disposable income, with three in ten respondents pointing to rising bills. One in four pointed to higher grocery costs, one in five pointed to rising utility bills and increased fuel costs were raised by 16 percent of Plum users.
With prices soaring, nearly half of UK households are finding it harder to manage their finances than they were three months ago.
Victor Trokoudes, CEO and co-founder of Plum, commented: “The scenario we now find ourselves in, with the economy faltering and the cost of living rising rapidly, is completely new territory for most working adults in the UK.
“The last time this happened was in the 1970s — an era of vicious stagflation — so it’s a testing time for many families.”
He added: “Prices have risen across the board in recent months but it’s rising energy costs that are hurting families most and unfortunately suppliers are warning it’s going to get worse before it gets better.”
Mr Trokoudes warned that the inflation rate could reach as high as 7 percent, although economists generally agree that consumer price inflation will average around 5 percent this year.
“This will put even more strain on household finances, so now is the time for people to use their savings and build up as much buffer as possible,” he added.
“This will help deal with all expected costs and provide a pot of money to fall back on in an emergency.”
While costs can increase across the board, there are a number of steps people can take to lower their bills. I check it out
Rising energy costs are currently hitting families particularly hard. While the energy price cap limits some of the damage, consumers can take steps themselves to reduce their bills.
Simon Crowther, the founder of FPS Environmental, urged Brits to look at what other supplier options might be available. He said: “Changing suppliers. So many people stay in the same tariff.
“I’ve saved £ 140 a year by switching, and not only do I look at gas and electricity, there are different water tariffs, and most of them offer discounts for families and can send a water saving kit. If you can’t save on fuel, you can at least make up the difference in savings with another provider. “
Stephen Hankinson, managing director of Electric Radiators Direct, suggests households keep track of when the heating turns on and off.
“It’s a surefire way to keep track of energy usage and consequently how much money is being spent each month,” he said.
“It’s a lot easier to do this if you have electric heating installed in your home, as you can control the temperature in each room and make sure unused spaces aren’t being heated unnecessarily.”
Reducing fuel costs for one’s car could be achieved simply by prioritizing price over convenience. Paul Day, a support worker for the charity CABA, explained: “With the ongoing fuel crisis, the price of petrol is incredibly high. The best way to keep track of these particular costs is to find out where the cheapest gas stations are.
“Don’t go straight to the next one. Also, make sure you don’t leave it until the last minute. Try to plan your trips accordingly so you don’t rush to fill up at the nearest – and possibly most expensive – gas station.”
When food costs rise, families want to avoid what they have. Food waste costs Brits around £700 per year per household, according to the Waste and Resources Action Program (WRAP).
Tessa Clarke, the co-founder of OLIO, shared tips on how people can reduce their waste and lower their costs: “Store your food properly – by not storing tomatoes in the fridge, by keeping potatoes and onions separate, and by storing herbs in water – do it.” Make sure you know how best to store each item.
“Serve smaller portions – using smaller plates is an easy trick. Save your leftovers—they’re often tastier the next day, too.”
General household bills have also emerged as a major concern for families, as unexpected expenses can quickly take their toll.
Thomas Allder, customer director at Vanquis, recommends taking the time to review your spend, which he says can be “very beneficial across the board.”
He added: “Before you set your savings goals for 2022, make sure you have a clear picture of your regular spending and debt. You’ll feel much more confident about your financial situation, how much you can realistically save, and when to start. It’s a good idea to prioritize paying off all debt before you start saving.