How to cope with the rising cost of living as the energy price cap jumps

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meIt seems as if the British jumped out of the frying pan to fall straight into the fire as the main the cost of living crisis captures the nation.

With the average price of a full tank of gasoline exceeded 100 GBP for the first time this year and with totals creeping up with each weekly shopping spree, millions of people have been faced with the choice of “eat or heat” – forced to choose between forgoing a meal or heating their home.

According to the Office for National Statistics (ONS) around nine in 10 (87 per cent) adults in Britain reported that their cost of living rose in March alone, with rising energy prices promoting ripples. The wholesale price of gas was almost four times higher in January 2022 than at the beginning of 2021, and gas prices have risen globally due to limited natural gas supplies and supply problems.

It doesn’t stop there. When Ofgem published the latest review of the energy price cap at the end of August the average household energy bill is set to rise to £3,549 from October. This would represent an 80% increase on the previous quarter’s £1,971 if it had a new prime minister Liz Truss did not intervene to freeze the cap at £2,500 for two years.

Furthermore inflation climbed to a new 40-year high of 9.9 per cent in September, while the ONS revealed that British workers regular wages fell in real terms at the highest rate on record.

As the cost of everything increases, long charity StepChange he warned that more people will fall into debt as they struggle to pay bills and other obligations. The organization said on February 3 that “cost-of-living pressures” ranked among the top five reasons for debt among people who came to it for help in November 2021, and it has remained there ever since.

So how can people cope with rising costs and what help is available?



It’s normal to have money worries, but it’s better to face them than ignore them

Nick Hill, Money and Pensions Service

How concerned should we be about the rising cost of living?

Right now, it’s easy to feel panicked and overwhelmed by headlines saturated with the cost of living crisis. This is a serious problem and heralds “worrying times for many households”, says Nick Hill, money expert at the Money and Pensions Service (MAPS). The Independent.

“One out of three [households] they say thinking about their financial situation makes them anxious and almost half admit they don’t feel confident managing their money on a day-to-day basis,’ she says.

“While we cannot ignore the challenges that people face, it is important to know that you are not alone. It is normal to face money worries, but it is better to face them than to ignore them.”

But if you’re experiencing feelings of anxiety and panic over the news, it might help to turn off the news and focus on your financial situation. You might find you’re not in as much trouble as you think you are, says Jasmine Birtles of MoneyMagpie.

Ms Birtles, who set up a financial advice website, tells The Independent: “We’ve had a lot of people contact MoneyMagpie and understandably panic about the state of affairs. It could be really helpful to turn off the TV, take a deep breath and look at your circumstances, because it’s quite possible they’re not as bad as they’re made out to be.’

Where should I start managing my finances?

Both Mr Hill and financial coach Bola Sol recommend that people start learning how to budget in order to better manage their money.

Ms. Sol, author How to save ita guide to arranging finances, he tells The Independent: “I would always say that you have to start with a budget. At this point, manual budgets—like spreadsheets or using notes on your phone—aren’t enough.

“Use an app that’s linked to your bank account so you can keep track of your money and see clearly what’s coming in and what’s going out. Apps like Emma will show you where some bills have gone up and compare where you can get cheaper service.

“Once you understand your spending, you can re-prioritize things. Maybe stop buying lunches, or cut down on takeout to, say, twice a week.’



Use an app linked to your bank account so you can keep track of your money and see clearly what’s coming in and what’s going out

Bola Sol

Mr Hill adds: “It doesn’t have to be hard to get started [on budgeting] – there are many free budgeting tools available online, such as the MoneyHelper Budget Planner, which will help you understand exactly where your money is spent and how much you have received.”

Constantly checking your budget is one of the most “essential” things you can do to impact your savings. Incoming and outgoing transactions fluctuate according to our needs, so it’s good to stay on top of them, says Mr Hill.

“Checking your direct debits and standing orders will allow you to identify where you could cut costs. If you’re not using a particular subscription, check to see if there are any exit penalties and cancel where you can.

“If your finances allow it, you can even put that money into your savings every month – every little bit helps.”

In which areas can I reduce my spending?

Now is a good time to check with your suppliers to ensure the best deal you can get. Although it’s currently not possible to get a cheaper gas and electricity deal due to the price cap, you can still save on your current broadband and phone deal.

“You should call your flow [broadband and phone] tier 1 supplier – they might be able to get you a better price if you’re thinking of leaving,” says Mr Hill.

Another area where you can save is your groceries, adds Sol.

“Now more than ever is the best time to get really smart about what you spend on,” he says. “Track supermarket prices and stay on top of the comparison game. For example, check the prices of the same item in the big supermarket and the corner shop versions – most of the time the big supermarkets will be cheaper.

“You can also get great deals on household items from super thrift shops like B&M, where they sell discounted cleaning products or multipacks of body washes. It’s the series of small decisions that add up.”

Ms Sol also advises that people sign up to all available rewards schemes to get the most out of their money.

“If you’re shopping in Tesco make sure you have a Clubcard, get a Nando’s card if you’re going out for dinner with friends. You can get points with M&S Rewards when you shop there, and Sainsbury’s has its own Nectar card. Just make sure you get as many rewards as possible.”

How can I get stuff for free?

The best way to save money is to not spend it, but it can feel very limiting when you can’t participate in society because you can’t afford it. But there are plenty of things you can do or get for free if you’re good at it—and if you’re willing to share.

“There is enough for everyone if we share and help each other,” he says. “Now we need to get together more with our neighbours, families and friends and see what we can share and how much we can support each other,” Ms Birtles says.



It is enough for everyone if we share and help each other

Jasmine Birtles, MoneyMagpie

Ms Birtles recommends apps like OLIO, where communities and neighbors can share food or other items with each other to reduce waste. She also recommends using the anti-poverty charity Turn2Us donation finder, which offers information on charitable donations that do not need to be returned.

“There are thousands of grant-making bodies all over the country that will give people money in certain circumstances, you just have to find them and see if you’re eligible,” he says.

“Your local council can also help you with a one-off donation from local charities or agencies. If you let your local council know you have a problem, they can put you in touch with them.”

What should I do about my debts?

If you find that you are on the verge of falling into debt or that your previously manageable debts are now becoming too much, you need to act fast.

According to debt advice provider StepChange, there are several ways you can start managing your debt outside of your budget, including with extra income.

“If you are operating on a reduced income, or if the price of your regular expenses has increased, you may find that even after budgeting you need a bit more to cover any debts,” said a spokesman for the charity. The Independent.

“In these cases, bringing some extra cash can be essential and it can be easier than it sounds.

“There are lots of ways to earn a few extra pounds, such as using cashback sites or selling unwanted goods online – the StepChange website is full of ideas. If you are receiving benefits, remember that any additional income may affect the amount you are entitled to.’

Also try to “avoid any loan where you cannot predict with great certainty whether you will be able to pay it back at the end of the month” if your income suddenly drops.

“Instead, we recommend that you consider whether any purchases can wait until you have the money, rather than using services such as Buy Now, Pay Later. If you must use credit, try to use it only if you are sure you can repay it by the due date.”

If you’re still struggling and find yourself in a negative budget or in arrears with your priority household bills, don’t hesitate to contact a debt counseling organization.

A StepChange spokesperson says: “Many people who come to StepChange struggle alone for months or even years and then tell us they wish they had contacted us sooner.

“Financial shocks such as illness or unemployment are the most common causes of debt, not overspending. But whatever the reason, the experience of debt is stressful. That’s why it’s important to know that StepChange help is available online 24/7. Don’t let debt worry take over your life – this first step could make a big difference.”

If you are struggling with your finances or debt, you can contact StepChange or any of the charities and groups mentioned above. StepChange offers debt advice onlineor you can call them on 0800 1381111 from Monday to Friday from 8 am to 8 pm and on Saturday from 8 am to 4 pm.

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