A recent survey carried out by Financial Fairness Trust shows that 60% more UK households are facing financial difficulty following the recent surge in living costs.
This equates to around 4.5 million families in the UK who have seen their energy bills spike a further 11% since October last year and additional living cost changes in food and petrol whilst wages have remained stagnant and have not kept up with rising inflation of 9.1%, the highest in 40 years.
For some owning a car or going on holiday are considered luxuries or essentials, but these are now disproportionately more expensive than before – with the cost of petrol increasing rapidly and holiday companies pushing the boundaries on what they can charge.
The survey showed that of those in serious financial difficulty, 71% have reduced the quality of food they eat, 36% have sold any valuable possessions and 27% have canceled or not renewed their health or life insurance.
“Economically, we may find that high inflation and increased living costs will put the UK into another recession – and this could mean job losses and more borrowing in the form of credit cards and personal loans,” explains Richard Dent of consumer finance company, Finger Finance.
“Credit card debt reduced massively during the pandemic, because people were stuck at home and had nothing they could spend on – so the repayment date and number of people clearing their credit card debts was at a record high.”
“But with living costs spiralling and the war in Ukraine impacting the cost of our food bills, more and more households are going to rely on revolving credit again and on this occasion, there also needs to be lenders and banks who can support this lending.”
How families can save money
“There are some ways to save money and avoid selling off your valuation possessions or cutting back on essentials such as food and heat,” explains Justine Gray of finance startup, Dollar Hand.
“You may have to assess whether or not you actually need to run two cars. For more households, one car may be sufficient, especially with people working from home.”
“If you can replace your petrol or diesel car with an electric car, this can offer huge savings in petrol – and if you can walk to work, cycle or get the train, there are some savings to be made.”
On the subject of working from home, Richard Allan of funding startup, Capital Bean, agrees.
“Working from home has never been more commonplace and something that you can choose or ask your boss to participate in. When working in an office, you are investing in the commute, your parking, your clothes, your lunch and your time – and just consistently working from home can save you around £3,000 per year if you live in London.”
“Some other budgeting hacks include looking at your food bill,” he continues. “Britons notoriously waste around 33% of their food per year, but can you be more economical with this? Can you choose meals that last longer or can be used as lunch the next day? If you truly assess your food bill, you can get a lot more out of it, for less money and without giving up the essentials or quality.”
This is a sponsored post.