How Can You Deal With Rising Living Costs?

The cost-of-living crisis is impacting millions of households across the UK, even as government-sanctioned relief plans come into action. As costs continue to inflate across the board, more people are looking for ways to weather the storm. Here are some simple approaches to dealing with increased living costs.

Draw Up a Monthly Budget

Your first step, no matter what your situation or needs, should be to sit down with your expenses and draw up a good old-fashioned spreadsheet. Start with two simple columns, looking at your income for each month and your guaranteed outgoings. How much money is coming in, and how much leaves each month to rent/mortgage payments, utilities and grocery shopping?

With your basic cashflow situation outlined, you can start to get a little more forensic. What does your weekly expenditure look like? What percentage of your income is spent on leisure activities, and what is the average make-up of your home’s grocery shop? These are potential targets for cutbacks, and being able to attribute real figures to them can illustrate to you just how big an impact that certain concessions might make.

Review Your Energy Bills

The primary reason for increased financial difficulty amongst UK families is the considerable rise in the cost of energy. Fuel costs skyrocketed at the end of 2021, and the Ofgem price cap is set to increase even further in October – representing a doubling of energy costs compared to the previous year for some households.

Previously, it was possible to shop around for better deals and keep costs low – but this is no longer a viable approach. The best way to address your energy bills is to submit your meter readings at every opportunity, and to make household changes that reduce your reliance on energy. These changes might include replacing your lightbulbs for LED bulbs, or using draught excluders to eliminate draughts.

Additional Income Opportunities

Of course, limiting your outgoings is only one way of approaching your finances. You should also seek ways in which you can boost your income, in order to better weather additional expenses without sacrificing necessities or quality of life. Starting up a freelance side-business can be a useful way to leverage your skills and earn extra pocket money. If you are over 55 and own property, you may be able to leverage its value to give you more financial stability in the short-term using something called an equity release mortgage.

How equity release works is that homeowners are able to access a portion of the value of their property in advance, either as a lump sum or annuity. They can pay only the interest on this advance for the duration of the mortgage, the remaining sum of which is paid by the sale of the home on the owner’s death or movement to a long-term care facility.

Downsizing

As a last resort, you may find it more financially viable to downsize completely; by selling your home and moving to a smaller, cheaper property – or by moving to a cheaper rental in a different area – you may be able to reduce your outgoings a little more meaningfully. This should only be considered where all other options have been exhausted, though – the cost-of-living crisis should be a temporary one, and weathering it in the short term may enable you to relax in the long term.