How are Brits Coping with the Cost of Living Crisis
A cost of living crisis is now undeniable with Bank of England confirming that interest rates will be raised by the most in 27 years with inflation now set to hit over 13%!
Even with current government plans and measures, hard times are likely to hit many this winter. With the new UK Prime Minister capping energy costs at £2,500 a year on average some still have genuine concerns about how they will manage in the coming months. Before Truss’ announcement, the Bank of England initially predicted that energy prices would reach highs of £3,500. This cap might relieve some of the burdens on households but with inflation peaking at 13.5% and interest borrowing raised to a shocking 1.75% it might be no surprise that some people are looking to change their daily habits.
With this in mind, Viessmann surveyed everyday UK citizens to try and understand the most significant concerns during this difficult coming time and who is most concerned with these turbulent changes to living.
Viessman found that less than 2% of those surveyed did not plan to make any of the listed significant changes to their daily life with rising concerns. Whilst just over 16% of those surveyed suggested they have made reductions in their weekly shop. 10% have said they would cut back on entertainment and leisure activities.
The financial situation, in particular the rising energy costs, is something that most people have concerns. 43% of those surveyed by Viessmann discussing energy prices weekly or daily.
How to stay on top of the cost of living crisis.
One way of staying on top of this financial situation is to keep close track of your money. By keeping a set budget for your money, you can try to ensure that you can cover the costs of typical living bills. You can do this in many different ways. For example, having a bank account dedicated solely to household bills, or cash stuffing!
Choosing to save differently from usual might also help you. Changing the way you save and spend can help you become more familiar with your finances. Many people struggling with daily costs have turned to cash stuffing, which is the method of organising physical money into envelopes. Popularised by Tiktok Trends, cash stuffing is where assigned specific purposes. For example, some common cash stuffing envelope titles are Groceries, Fuel, Prescriptions, emergencies, and entertainment.
Separate your direct debits and day-to-day spending.
Whether you choose to split your money over different accounts, one for scheduled expenses such as electricity and rent/mortgage, and another for out-of-the-ordinary and daily expenses such as food shopping and celebrations.
Another option would be if you choose to withdraw your cash and split it over the month, leaving a portion of money in the bank for just the scheduled expenses/savings. Many households are returning to the traditional method of budget sheets/boards, which has helped many keep track of their scheduled and unexpected spending.
I personally use Monzo for my day-to-day expenses and my direct debit for bills. It means I’m not tempted to overspend or use my savings. Monzo also tracks my expenses and tells me where my money is going, an eye-opener.
How to supplement your income.
Over the few years, many have turned to run side hustles in order to have a supplementary income to deal with the cost of living crisis. Including myself as a journalist and public speaker.
This might seem like an excellent idea. However, you should be wary of how much time and money you put into it compared to the benefits it brings. It may seem obvious to say, but avoid spending more money than the hustle brings in as well. Consider if you are seeing any financial benefits.
In addition to balancing the books, with a side hustle, you must also consider how much time you spend on it. Try not to overwork yourself as working full time in addition to running a side hustle can often lead to burnout. Take breaks where necessary and ensure that you still have some free time to yourself and relax
Be wary but live your life.
Times are hard right now but remember you have to enjoy your life. As much as I want to put away savings and not overspend, I also want to do things. It just means careful budgeting.
I know a lot of people have been questioning me about money as I mention it quite a lot. But it’s how I hold myself accountable. As a single woman with one income, I have to be cautious of where my money is going. But it’s not impossible for me to enjoy my life either, I just have to be sensible about it. Reduce spending where I can, and budget carefully and in advance without giving up things I truly enjoy.
This post is in collaboration with Viessmann.