Pretty much all of us will have felt the financial squeeze of late, amid soaring energy prices and a rate of inflation that peaked at 7% in April.
Incredibly, the Bank of England has predicted that this could increase to a staggering 11% by October, at which point a further hike in the energy price cap.
Ultimately, households can do little to stop these macroeconomic trends. However, you can take steps to combat the rising cost-of-living, and we’ve outlined some of these in detail below:
#1. Consider Pawning Items and Short-Term Loans
Of course, we’re not all affected equally by the cost-of-living crisis, but for those of you really feeling the pinch, you may want to consider pawning items of value to help create a short-term stream of income.
This process is relatively simple. In fact, you’ll effectively use an item or items of value as collateral to secure a loan from the pawnbroker in question.
The pawnbroker than retains the items to cover their costs, while you may have the chance to buy back the goods once your financial position improves.
Ideally, you should identify a pawnbroker that lends against the value of items rather than factoring in your credit score, as this will enable you to achieve a much better deal and superior value for money.
#2. Learn How to Manage your Finances
During a cost-of-living crisis, you should also strive to manage your finances effectively and budget accurately. Budgeting is particularly important, as it allows you to review your outgoings and determine precisely how much disposable income you have each month.
When reviewing your outgoings in relation to your income, you may identify spurious or unwanted subscription payments. These can be immediately eliminated from your spending and reduce your outgoings accordingly.
Most online and mobile banking apps now also break down your spending into different categories. This includes essential and non-essential spending, making it much easier to reduce your outgoings without compromising your overall quality of life.
This process takes time and knowledge to complete, but it can translate into significant savings that make a huge difference to your finances.
#3. Use Price Comparison Sites
Reducing the cost of your bills is also an important step during any cost-of-living crisis, although this is much harder to do given the fact that businesses and lenders are also struggling with rising costs.
However, by maintaining open lines of communication with creditors and negotiating your monthly bills (or temporarily halting interest payments), you can reduce your outgoings without adversely impacting your credit score.
On a similar note, we’d also recommend using price comparison sites to reduce costs when switching account or service providers.
This enables you to identify the best and most competitive deals on the market, which can either be accepted or used as leverage to negotiate an even better arrangement with your current supplier.
