The cost of living has increased significantly in the UK over the past couple of years. And although inflation hit a 17-month low of 6.8% in July, efforts to reduce it remain challenging as it remains well above the Bank of England’s target of 2%.
Increases in interest rates have made mortgage payments more expensive. That also means many people with outstanding loans have seen their repayments go up, although this could be reined in somewhat by consolidating debts into one payment.
Food prices have grown significantly, as has the cost of energy – that’s everything from domestic electricity and gas to petrol and diesel for cars.
Impact of crisis
According to the Office for National Statistics, more than a third of adults reported it was very tough to maintain their rent or mortgage payments between February and May 2023. An even more grim picture is painted with the fact that 5% of adults had run out of food at home and not been able to afford more.
Research by the Food Foundation found that for the most deprived fifth of the population to follow the Government’s recommended diet, they would need to spend 50% of their disposable income on food[TW1].
How could you cut it down?
If you’re looking for ways to tighten your purse strings and make your income stretch a little further, here are a few tips.
Understand your situation:
Before you make any changes, create a spreadsheet detailing all your incomings and outgoings. This will help you understand where you can make significant cutbacks. Organising your expenditure into necessities and luxuries will also be useful – just be prepared to make some potentially tough decisions.
Once you’ve got a handle on your finances, you can put limits on what you want to spend in each area. A common philosophy is following the 50-30-20 rule. This is a recommendation that you spend 50% of your disposable income on needs, 30% on wants, and put 20% towards savings.
Cancel unused subscriptions:
Are you paying for things you don’t use, like a gym membership or streaming service? Or are there any that you could probably get by without? If you don’t think you get your money’s worth from a subscription, it might be time to cancel it.
Nipping to the shops every couple of days to pick things up can make it difficult to keep track of how much you’re spending. Put together a meal plan and batch cook – you’ll know exactly how much everything has cost and have leftovers to fall back on if things get a bit tight.
Reduce energy consumption:
Energy prices have dipped, but they’re still far higher than they were a couple of years ago. Still, switching to energy-saving lightbulbs, turning plugs off at the wall, and wrapping up warm instead of sticking the heating on are simple ways to keep your costs down.
It’s safe to say that we’re all feeling this pinch due to the cost of living but with a bit of planning (and self-discipline) you can comfortably save those pennies that will help to get you by. Prioritize needs over wants, and eliminate unnecessary subscriptions. Shop smart by comparing prices and using coupons. Cook at home and reduce dining out. Opt for energy-efficient choices to lower utility bills. Consider sharing services or carpooling. These things may seem minimal at first but it’s always important to remember small changes add up!