The UK is embroiled in a severe cost of living crisis, which has brought the need to have control over your finances into even sharper focus.
But just what is a cost of living crisis? Why is it happening right now? And are you concerned how it is impacting on you?
Such an event materialises when the prices of everyday essentials, such as heating costs, food and fuel, rise faster than average household incomes.
2022 has seen a whirlwind of price rises that has badly hit the finances of the UK population.
The increase in the costs of everyday goods is measured by inflation.
Inflation is typically a broad measure, showing the overall increase in prices or the cost of living in a country.
This year inflation has hit a 40-year high – and threatens to go higher still.
The current cost of living crisis is particularly acute because a variety of different pressures are pushing up the rate of inflation. This means your bills are higher across the board, from food to petrol to energy.
The impact of such a crisis is being felt globally. Unsurprisingly, the usual suspects were involved – food and energy costs.
The Government, under new Conservative Prime Minister Liz Truss, has announced a new energy price guarantee.
From October 1st 2022, the new ‘price guarantee’ will cap energy prices at £2,500 (per annum) for the next two years.
Also, the green levy, which currently adds around 8% to average energy bills, will be suspended temporarily.
How much this guarantee will be worth to you in pounds and pence will depend on how much energy you use and how energy prices change over time.
Please be aware that energy prices will still be going up in October but by much less than previously forecast.
The government hopes that the introduction of the price guarantee, along with the other support measures, will help protect the average household from any catastrophic increase in their energy costs.
Various other measures were announced in May 2022, and some of these payments have already been made.
The energy bills support scheme provides a £400 discount to every household with a domestic electricity connection.
This is not a means-tested benefit, so you won’t have to apply for it and you won’t have to repay it either, as it is no longer classed as a loan.
The support is to be administered by energy suppliers and paid in near-equal monthly instalments of around £66, from October 2022 to March 2023.
If you pay by direct debit, your bills will be reduced.
Energy payment cards and pre-payment meters will be credited with the discount at the start of each month.
However, even with these support plans in place, people are finding it tough to make their money spread around sufficiently.
Times are tough. We acknowledge and appreciate that. So it’s important to have a clear, undiluted understanding of your own financial situation.
There may be a temptation, if money is particularly tight, to consider dipping into any savings you may have, take out credit, cancel any protection policies, or even withdraw from your workplace pension.
We would urge caution. It is crucial that you have a full understanding of your financial situation, and the benefits and reassurance that things like a pension or an insurance policy can bring, before making any big decision.
Have you a full understanding of where your money goes? Do you know, with certainty and clarity, the areas where you could perhaps save money, so that it can be utilised elsewhere?
‘Will I be ok? Do I have enough?’
It can cause all sorts of worry if you don’t know the answer!
For many, financial worries directly impact their daily life – whether that is at home or at work. By having a plan you may be able to offset anxiety and stress, and in doing so make good financial decisions, rather than merely guessing.
Lifetime can provide a visual picture of exactly where you stand when it comes to your money.
The times are uncertain.
Our commitment to your financial health is not.