Though it has been reported this week that UK inflation has fallen to its lowest level in over a year, when you drill down into the figures, the picture isn’t exactly a pretty one. Firstly, the decline wasn’t ”as big as anticipated”, with inflation still sitting at 8.7% in the year to April. Secondly, food prices remain resolutely, reprehensibly high.
Yep, UK households are still in the midst of the biggest squeeze on income in a generation. With real term wages also stagnating, the second half of 2023 looks set to see further belt-tightening and penny-counting.
If you’re looking for ways to best approach rising inflation, here are 5 tips for handling the big squeeze.
Keep A Detailed Spreadsheet Of Your Finances
First things first. Though it might sound like a job you’d hire an accountant for, we’re in the business of saving money here, so instead, it’s time to fire up the ol’ Excel.
Keeping a detailed spreadsheet of your finances, with every incoming and outgoing identified, will allow you to take a bird’s eye view of your spending, helping you to analyse where you can make smart savings, savvy replacements, or cut the expense out entirely.
Making a budget can be as simple as gathering all of your bank statements and creating a two-column excel spreadsheet (incomings and outgoings), or something altogether more extensive; check out Which Money’s guide to the best personal finance software here for a rundown of platforms that might suit you.
Don’t forget to include any loans that you may have taken out and the interest you pay on them, as well as monthly credit card payments, overdraft fees, and any other hidden costs that you may risk missing in your monthly spending review.
Keep An Eye On & Reduce Energy Consumption
With energy bills skyrocketing, now is also a good time to reduce your usage in a way that will keep things kind on your wallet and help to reduce your environmental impact.
But how to do that? Well, firstly, some good news; with winter finally coming to a close, you likely won’t need the heating on quite so much, and by using a smart thermostat, you can optimise your heating usage at home. Using one will ensure that rooms aren’t heated when unoccupied, and that you’re not firing up the central heating unnecessarily.
You should also consider lowering the average temperature on your thermostat, just by half a degree or so. In fact, according to Green Home Guide, for every degree that you turn down your thermostat, you could save between 1% and 3% on your energy bill.
Consider taking a look at your appliances, too, as some are surprisingly inefficient in terms of their energy usage. In such cases, it might be worth replacing them with newer models. In the spirit of energy efficiency, rather than witter on and waste your time, we’ll redirect you to this guide on some key electricity sucking home appliances.
Thrifty Meal Planning & Conscientious Shopping
Whilst there’s no harm in the odd dalliance with Deliveroo, beginning a fully-blown, extra-marital affair with the takeaway companies is an expensive habit to form.
If you’re looking to cut down on the cost of your food shop, then there are several ways you can still enjoy delicious, wholesome meals, but save a little money doing so. It all starts in your own kitchen.
Getting busy in the kitchen is one sure-fire way to save money. Bulk buying fresh or even frozen vegetables and meat – cheaper, of course, than single items – allows you to cook larger batches of whatever takes your fancy, saving money on lunch and dinner further down the week. Meal plans are a great way to get everything documented and organised, meaning you’ll save time as well as money.
Speaking of great organisation in the kitchen, the British food writer and activist Jack Monroe recently shared their ‘stocktake’ method of store-cupboard, fridge and freezer analysis, which helps keep their weekly shop under £20. Check it out here.
On a similar theme, there are other ways to shop smarter, too. Branded products, for instance, although almost identical in content, are often considerably more expensive, so bear that in mind when doing your (much recommended) weekly shop.
If you’re keen to be super scrupulous (you are; that’s why you’re here), then you should check out the supermarket price comparison website Trolley. Here, you can search for products or brands and find the lowest price in your area. Useful!
This applies to other items, too, such as supplements and first aid kit items. By comparing prices of similar products offered by a whole host of different retailers, you can ensure you’re getting the best value for your money. Check the average cost per pill of various items, compare the high street prices of Lemsip and Nurofen, and analyse where the best deals are to be found on multivitamins. It’s all there, and it’s all ready to be compared at the click of a button.
Read: 5 tips for healthy, thrifty family meal prepping
Seek Discounts & Deals
Another key strategy for reducing household bills is to make the most of discounts and offers. Many UK supermarkets offer loyalty schemes, which provide customers with points that can be redeemed for discounts on future purchases. By signing up for these schemes and using them consistently, shoppers can accumulate substantial savings over time.
Additionally, many stores offer regular promotions on certain items, such as ‘buy one get one free’ deals or discounted prices for bulk purchases. By keeping an eye out for these offers and stocking up on non-perishable items when they are available, households can save a considerable amount on their household bills.
Build An Emergency Fund
Though the idea of putting money aside during times of higher prices might feel particularly tough, it’s certainly sensible to consider keeping back a small amount from your pay packet each month, in order to build up an emergency fund in case of a sudden necessity.
Many people swear by a simplified, monthly 10% savings rate as a general ballpark figure to aim for. You can set up a monthly direct debit from your primary bank account into a savings app, or take advantage of one of the many savings apps currently out there which can automate this process further for you. A few of the best include Cleo, Plum, Moneybox and Emma.
The Bottom Line
Though tough times are ahead, it pays (in more ways than one) to be prepared. By adopting sustainable saving habits, you’ll stand yourself in the best stead for dealing with the future ups, downs and unpredictability of the market.
*Anything written by IDEAL Magazine is not intended to constitute financial advice. Always consult with an independent financial advisor or expert before making an investment or any personal finance decisions.*