UK families are facing the biggest drop to their incomes in nearly 50 years. According to The Resolution Foundation, the typical household income is set to fall by around £1,000 this year, the steepest decline since the mid-1970s.
With Brits facing more financial pressure than ever, the experts at money.co.uk have put together a guide to help you navigate these choppy financial waters.
James Andrews, Senior Personal Finance Editor at money.co.uk, said: “With prices soaring across the board, the need to cut costs has rarely been higher. The good news is that there are several things you can do to help keep you on track.
“One of the first things you should do is prioritise your bills. For example, rent or mortgage payments are an absolute priority, whereas non-essential bills like gym memberships or subscriptions can more easily be cancelled or deferred to provide you with extra cash in hand.
“And always, make sure that your main bills are paid on time. Late payments often incur fees and negatively affect your credit score. One easy way of ensuring your bills are paid on time is by setting up a direct debit.
“When it comes to slashing household bills, it would normally be a good idea to shop around for a new gas or electricity provider. However, prices are currently at an all time high - so you should be incredibly wary of switching at times like these.
“Away from energy, however, it’s open season on bills. Competition for broadband, phone, TV packages and more is fierce. So check your deal, and if you’re out of contract start comparing offers - you could save hundreds a year.
“Aside from bills, the biggest way to cut costs is to shop smart. Save money on your weekly shop by taking advantage of supermarket loyalty schemes. Nectar and Tesco Clubcard holders use mobile apps to collect points, which can be redeemed for discounts. Tesco has also introduced ‘Clubcard Prices’ seeing holders pay a fair whack less for everything from meal deals to shampoo.
“If you’re shopping online, then you have the benefit of easily comparing prices. Spend some time looking at each supermarket's website to see which has the best prices. You could even do the same shop at multiple stores and then compare the total bills to see how much you could save.
“When costs are tight, it’s easy to get overly reliant on your credit card. But if you don’t clear your debt on time, interest quickly starts to build up - especially if you’re only making the minimum payment each month.
“If you’ve racked up a lot of credit card debt, it could be worth switching to a 0% interest credit card. You can transfer your debt across to the new card and pay it off without acquiring additional interest. But make sure you have a plan to clear that debt before the 0% period runs out though, or you’ll just end up back where you started.
“For more tips and tricks on chopping the price of your weekly shop, use money.co.uk’s handy guide here: https://www.money.co.uk/guides/10-ways-to-cut-the-cost-of-your-weekly-shop.htm.”
James has spent the past 15 years writing and editing personal finance news, specialising in consumer rights, pensions, insurance, property and investments - picking up a series of awards for his journalism along the way.