Latest in Employment Law>Articles>How to Weather the Cost of Living Storm
How to Weather the Cost of Living Storm
Published on: 27/07/2023
Issues Covered: Wellbeing
Article Authors The main content of this article was provided by the following authors.
Catherine Rees
Catherine Rees

The United Kingdom, like many other countries, has faced its share of economic difficulties. Post-COVID and Brexit, we are seeing the cost of furlough and a strained NHS affect the economy and the pockets of the everyday citizen. As a result, the cost of living problem is having a substantial impact on individuals and families. Inflationary pressures, rising housing expenses, and stagnant salaries are just a few of the causes contributing to this nationwide dilemma. In such times, planning for a potential shift in financial circumstances becomes critical. Being as prepared for the unexpected will help you get a handle on the cost of living problem and a view to ensuring your financial well-being.

Boring and cliché as it is, the start of solving every financial problem is to assess your current situation. Examine your income, expenses, debts, savings, and assets. If you are self-employed, consider the possibility that your business may not be consistent throughout the year, likely due to the same cost of living restraints. Understanding your financial situation will assist you in identifying areas that require immediate attention as well as places where you may be able to cut back on spending.

The next step is, of course, to create a detailed budget once you have a clear picture of your finances. List your necessary expenses, such as rent or mortgage payments, utilities, groceries, transportation, and debt repayments. Set aside money for savings and an emergency reserve as well. This may seem like simple, surface-level advice but tracking your expenditures and sticking to a budget will help you regain control of your finances. The basics are the basics for a reason, and fine-tuning these areas will make the next steps so much easier.

SAVING

Do you have a rainy day fund? During times of financial uncertainty, an emergency fund serves as a safety net. Save at least three to six months' worth of living costs in a convenient account is ideal, but not always possible. Truthfully, having any amount of money in reserve for hard times is going to help you pay unexpected bills, avoid relying on credit cards or loans, and lessen financial stress during difficult times. Try and donate whatever you can to this fund, as long as it stays within the budget you have set for yourself and isn’t impacting you life on a monthly basis.

Looking at some of your insurance coverage regularly can be of huge benefit at times. As necessary instrument for protecting your financial future, allowing you to drive and protecting your assets, insurance isn’t really something you can avoid paying for. You can, however, avoid paying through the nose for it. Examine your existing insurance coverage, including health, house, and life insurance. Check that your coverage is adequate to cover potential unexpected expenses and effectively protect your family in the event of an emergency, as well as ensuring you aren’t overspending. Check price comparisons sites and, if you find a better deal, see if you can leave your contract with your existing insurer early.

Consider changing your grocery store.We all have our preferences, and we all grow accustomed to certain brands and stores, but if you can save money on the same (or similar) products elsewhere – why not? Visit some supermarket comparison websites to see if you can make savings on your current, regular shop. You may also find it useful visiting local farmers markets or even joining a community-supported agriculture programme. Often, you can find potentially fresher and tastier produce whilst also making a saving.

NEW STREAMS OF INCOME

Consider seeking alternative sources of income to lessen the burden of the cost of living crisis. ‘Side-hustles’ have almost become a punchline at this point, but turning a pastime into a business may assist in supplementing your main income. Working part-time or freelancing, if you have the spare time, is another way to add a stream of income into your monthly income. Utilise sites that encourage selling second hand clothes and items; Ebay, Facebook Marketplace, Depop are all easily accessible online stores that allow you to monetise items that you may not use anymore, but are still considered valuable. Diversifying your revenue can provide an extra layer of financial security and a potential buffer during difficult times.

If your pockets are feeling the squeeze, but you still have some disposable income to play with, consider making investments. It’s worth pointing out this is a long-game and there is no guarantee you will get back the money you put in - but when gone to plan, the upside can be a massive helping hand. If you already have investments, be sure they are in line with your risk tolerance and long-term financial goals. If you’re looking to make new ones, don’t just throw your money at something without knowing what it is. Sit down with a financial adviser, do your own research or consult somebody that you trust before making any kind of investment.

APPLYING KNOWLEDGE TO YOUR CIRCUMSTANCES

More than anything else, keep up to date on economic and financial news and trends. Understanding the overall economic picture might help you make more informed financial decisions. With the economy almost a daily fixture in the news, take this opportunity to learn a little more about money, your own personal finance and the financial world in general. Seek assistance from financial consultants or community organisations, find YouTube channels or other finance influencers, immerse yourself in the topic so that you can tailor any advice you receive to your own circumstances.

In a world that is trying to sell you a lavish lifestyle, the considerable hurdles created by this crisis mean that everyday people now need to practice stringent financial restraint. Yes, you can weather the storm better by reviewing your existing condition, making a budget, saving for an emergency, and finding other revenue streams. But above all else, staying educated and getting help are critical components of overcoming any and every financial difficulty. Despite the obstacles offered by the cost of living issue, you can adjust to anticipated changes and ensure your financial well-being with careful planning and attention.

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Disclaimer The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct at 27/07/2023