It’s getting more and more expensive to live, with increasing fuel and energy costs, food prices rising, as well as the increase in VAT in January. Increasing prices combined with job losses and pay freezes is spelling misery for many people. While there are a range of financial calculators to help you understand where your money and costs are online, there are some simple things you can do to also save money in these difficult times.
Figures from the Office for National Statistics this week show that the Consumer Price Index increased from 3.7 per cent to 4 per cent in January - caused mainly by the increase in VAT and the increasing cost fuel and energy caused by the soaring cost of crude oil. This means that many of the things we rely on are getting more expensive. Inflation is at its highest level since 2008.
According to Age UK the situation is even worse for older people. Their research shows that over 50s are a whopping £30 per month worse off since September 2010 because of increasing prices.Age UK’s research shows that inflation for over 55s has been much higher than inflation for the rest of us over the last few years. It can be helpful to understand how much price increases affect us and could help us to plan for our financial futures taking future prices into account.
Gordon Morris, Managing Director, Age UK Enterprises said: ‘There is a widening gap between the inflation experienced by the general population and those in later life, and this worsens with age. The rise in everyday costs is in part due to over 55s spending proportionally more on products and services, such as utilities, that have increased rapidly in price in the last quarter.’
Some of the ways you could save money:
- Now is a good time to review your mortgage – As a result of inflation being higher than targeted the Bank of England may be forced to increase interest rates sooner rather than later. If you are on a variable rate mortgage this could mean your monthly repayments start to increase significantly later this year. If you are worried about paying out more money you could think about moving to a fixed rate mortgage deal. Although you will pay more in the short term you will be protected against future rises for the length of the fixed rate period.
- Pay off or consolidate your debts – You may be better off paying off debt if you have spare money in savings although you should keep an emergency fund of at least three or six times your monthly income. You could save money moving your existing debts to a 0 per cent credit card or even a low rate unsecured loan.
- Make the most of tax-free savings – If you pay tax make the most of your tax-free Isa allowance and put money into a cash Isa or stocks and shares Isa.
- Save money on your gas and electricity bills – You could save hundreds of pounds switching to a cheaper gas and electricity provider.
- Reduce your travel costs – See if you could save money switching your car insurance when it is due for renewal. Given the high cost of motoring with insurance and fuel costs rising switch to public transport if you can and possibly ditch your car altogether.
- Use cashback sites and discount vouchers – If you shop online you could save hundreds of pounds a year using cashback sites, like, Quidco or Topcashback and voucher sites to get extra savings.