As we emerge from the restrictions of the COVID 19 pandemic, celebrations may well be short-lived as we face a cost-of-living crisis over the coming months. With furlough payments finishing at the end of October, and a double whammy of increasing food and energy costs, the winter looks to be another challenging period.
For many, particularly those on low incomes, this is a worrying time. Media reports indicate that the anticipated rise in inflation could cost lower-income families an extra £900 per year. That is without the impact of losing an additional £20 a week for those receiving Universal Credit. However, there are some steps which we can all take which can help to reduce household expenditure and encourage us to live more efficiently.
We are often tempted to ignore our spending but the only way to control it is to track it carefully. The first step is to write down everything you spend – from a Starbucks coffee to the electricity bill, from the Friday takeaway to the rent or mortgage payment – no matter how small the amount, record it. Then compare your spending with your income to see if you have either a surplus or a shortfall. In an ideal world, we would all have a surplus that we can save for that inevitable rainy day, but the truth is most of us will find we have a shortfall.
Once you understand your financial situation, you can take some easy and practical steps to reduce your spending and decrease that shortfall.
If shop bought coffee features on your expenditure list and necessary purchase, look at cheaper options. Some fast-food chains provide take-out coffee at half the price of well-known coffee chains. That is a good place to start.
Another cost cutting idea would be to consider getting together with your extended family, work colleagues or neighbours to group together to get a membership to warehouse shops such as Costco. This way, you can buy standard household items in bulk and divide them amongst the community at a much-reduced unit price.
You could also consider buying in bulk through multipacks or three-for-two offers at various supermarkets but don’t be tempted to purchase items that will go out of date before you have a chance to use them, just because it looks like a bargain.
You may be a loyal mainstream supermarket shopper, but don’t forget to look at low-cost shops like Aldi or Lidl. Research by industry magazine, The Grocer, found Aldi to be the cheapest supermarket, with an average trolley of goods costing £45.12, compared to £51.32 at Asda and £70.18 at Waitrose – that’s plenty of change in your pocket.
And while you or your family may be brand followers when it comes to food, have a look at supermarket own brands or budget brands – it is often hard to tell the difference. Try a ‘blind’ test on your family or friends to see if they can taste the difference. Most likely, they won’t be able to tell any difference, but your purse certainly will. And remember that supermarkets are clever; they place the most expensive brands at eye level, so check the shelves above or below for cheaper alternatives.
Don’t be afraid or embarrassed to use discount coupons; you can even search the internet for discount vouchers for certain retailers. And don’t ignore the ‘reduced to sell’ section of a supermarket, where there are often bargains to be had – it is safe to eat food past a best-before date, however, do follow the use-by date after which is it not safe to eat the item.
And whether buying in bulk or day-to-day, always plan your meals for the week, make a shopping list and stick to it. The list helps reduce impulse or panic buying.
There is a small upside to the current petrol crisis, people are not using their car for unnecessary trips and either walking or using public transport more. Owning and running a car is an expensive luxury, between petrol (if you can find it), insurance, tax and maintenance, the average car costs just over £3,000 to run every year. It might be that you need a car for work or because you live in an area where public transport is not an option but do take time to consider if keeping a car is sensible.
There are options that allow you to have access to a vehicle when you need it. You just have to think outside the box. Consider car sharing with neighbours, school parents or work colleagues, or barter the use of a neighbour’s car by offering to do something for them that they cannot do or need help with – maybe some gardening or child-minding. Or look at some car-sharing companies such as ZipCar, where you can rent a car for a few hours or days at a time.
For those of us who use monthly or annual travel season tickets, it might be wise to consider a new option. With the new norm of working from home or the hybrid approach of blending workdays in the office and at home, having a season ticket might not be as economical as previous. If you only travel to work one or two days a week, then a daily saver ticket might be the better option, particularly if you can travel out of peak hours. If you are planning a train journey, it is more expensive to purchase your ticket on the day. If you have time, it is more economical to book the ticket as far ahead as you can by using Trainline
We all enjoy eating out or treating ourselves to ready meals but cooking from scratch is healthier and considerably cheaper. And if you can, batch cook and put the additional portions in the freezer for those nights when you don’t feel like cooking.
The cost of grabbing a coffee or sandwich for lunch adds up very quickly, and it is easier and cheaper to take your own drink and lunch into work every day. And if you still need more than one daily fix of caffeine, bring a portable cup as many chains reduce the price of drinks when using your own cup. Good for your pocket and good for the environment.
The current energy crisis will cost householders, so here are some quick and easy ways to reduce your energy bill.
- Turn down your thermostat by one degree or two, you will not notice the difference in comfort, but you will on your bill.
- Estimates show that by turning off your heat just ten minutes earlier every day, that by one month you will have saved five hours of heating or an equivalent of £5.
- Turn off radiators in rooms not being used. Close doors and fit draught-proofing to windows and doors to keep the heat inside.
- Don’t overfill the kettle; boiling a full kettle for one cup of tea makes that a costly drink.
- How often do we have the television on with nobody watching it – by turning appliances off rather than leaving them on standby, we not only save on our energy bill, but it is good for the environment.
- And while initially expensive, there is long term cost saving by switching to energy-efficient LED bulbs.
Know your benefits
Depending on your circumstances, you might be entitled to benefits from the government. There are financial support or allowances available for carers, childcare costs, winter energy bills and more. If you worked from home during the pandemic restrictions, you might be able to claim relief in this year’s tax return. There is also the newly announced Household Support for struggling families available from your local authority, in addition to the Warm Home Discount Scheme, which offers money off energy bills for qualifying households. You can check your benefits on entitledto.co.uk, but if the benefits schemes are too tricky to understand, talking to a representative from Citizens Advice is a great place to start – and it’s free.
If you are still in financial trouble despite your planning and efforts to reduce your outgoings, then speak to a professional who can help. Don’t bury your head in the sand as the problem will not disappear, and the more debt you get into, the harder it is to solve your situation. There are plenty of professional organizations that provide support free of charge.
Citizens Advice offers free and practical advice.