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What is the Cost of Living Crisis and how can you manage it?

Gauri Chandra
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August 18, 2022
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What is the Cost of Living Crisis and how can you manage it?

Illustration by pch.vector.

The cost of living crisis that we are currently facing is becoming more and more prominent every time we step out to buy something. McDonald's cheeseburgers were raised to £1.19 at the end of July, which had remained at 99p for the last 14 years, so you can imagine we’re all pretty bummed.

Here are some ways it might affect you:

Energy prices

The average household energy bill has gone up from a cap of £1,277 to £1,971 a year. That is a 54% increase within the last few months. These figures are affecting everyone and they are predicted to only continue rising. 

Petrol/Diesel prices

While these are falling from their extreme peaks, they still remain high. On 21st July the average cost of unleaded petrol and diesel stood at 187.19p and 195.88p respectively.

Groceries

The average weekly food shop is at £108, which is up around 8% from a year ago. This is an indication of how the cost of food has gone up, such as for common grocery items like a pint of milk. This comes after climate change and even driver shortages in some areas.

Interest rates and Mortgages

The interest rates were increased to 1.75%, which is the highest bank rate since 2008. This can affect any mortgages you might be planning to  set up, or even existing loans repayments.

So the recession is making your soul hurt and your pockets bleed - dramatic but true.

Here are some handy tips that could lower your costs and save you a few quid:

Loyalty schemes

This one is a personal favourite. It is such a good way to get things on discount, or even for free. Find yourself buying a Starbucks every morning? Get a Starbucks card, you can occasionally get free drinks. Buying petrol at ridiculous prices? Get a Clubcard, Nectar card or any loyalty card connected to your local petrol station. Those points can fund your next grocery shop. Cost of living aside, loyalty schemes are so beneficial!

Being mindful of energy usage

Turning off unused appliances is such a basic one, but something that is so easily forgotten. Reduce your home energy consumption as much as possible to keep your bills at a minimum. Further, you can walk to places that might be close enough instead of driving and consuming petrol. There are different ways you might be able to adjust your lifestyle to reduce energy costs at home.

Switch to alternative brands

This one is quite hit or miss, because choosing Aldi’s Finton's Gin over Gordon's might look daunting to some. However not all substitutes are bad, and some are even manufactured identically to branded products. Saving on name brands is a good way to reduce your weekly shopping costs and help keep inflation from drilling a hole in your pocket. 

Plan your spending

It is easy to get carried away with your spending, especially if you don't have a good spending plan. Even with rising prices, you probably still want to enjoy your money. Set a budget of how much you’re willing to spend on each area of your life so that you can balance out the rising cost.

Cancel unwanted subscriptions

These are such a big portion of your monthly outgoings that you might not even realise exist. Cancelling these subscriptions can save you some money every month that you can put towards your higher costs. This goes for apps too. If you are paying for apps you barely use, you can pause or cancel these subscriptions until you need them again (or find similar ones for free! Quirk is a great free budgeting option). You can also combine subscriptions! Split the cost of a Netflix account with your friends or family to save yourself some money.

Tbh, you don’t need to drastically change much of your lifestyle to navigate this rise in prices. Just make some handy decisions such and make sure you're planning efficiently!

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