WITH inflation rising, gas prices soaring, furlough ending and Universal Credit returning to its pre-Covid level, we are heading for a cost of living crisis.
Millions of people across the country are about to be hit by rising prices, with energy and grocery bills set to rocket, too.
Business secretary Kwasi Kwarteng has admitted many families will now face the devastating choice between eating and heating this winter.
So how can you protect yourself as the crisis starts to bite?
Here, we take a look at everything from your bank account to bills to see how you can make sure your finances are in the best shape possible.
GAS and electricity prices are going up. The energy price cap increases to £1,277 at the end of the month, adding an average £139 to household bills.
As wholesale gas prices continue to rise, bills are expected to go up even further next year.
Usually you would opt for a cheap fixed deal but suppliers have been pulling these.
The most expensive fixed deal on offer is now an eye-watering £2,100.
What can I do? Sit tight. If you are on a fixed tariff then you should be protected from rises — but make a note of when your deal ends and look for an alternative before then.
If you are on a standard tariff you’ll need to wait for prices to come down.
If you don’t want to shop around yourself, you can sign up with sites such as Look After My Bills or Switchcraft, which aim to find the best deal for you each year.
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Phone, broadband and insurance bills
THE good news is that these bills are not soaring — though you might still be able to save money by reviewing them.
We spend an average of £105 a year on subscriptions that we don’t use or value, according to TopCashback.
Now is the time to have a look at your bills and see if you can save some money.
What can I do? If you are currently outside the minimum term of your contract with your phone or broadband deal then use a site such as moneysupermarket.com to compare and switch.
With insurance, set a reminder in your diary the month before your renewal and shop around using a price comparison site.
You will get a better deal by planning in advance.
FOOD prices are rising. Inflation hit 3.2 per cent this month, and supply chain issues and HGV driver shortages have led to many shops having problems keeping their shelves stocked. That could mean shoppers face paying more for groceries.
What can I do? Switch to store own-brand products and stop taking up offers for products that you don’t really need.
Make sure you are making the most of loyalty schemes like Tesco’s Clubcard or Sainsbury’s Nectar card.
You could also do your shop at the end of the day when you can get reduced items, some of which can be frozen the same day for future use.
Struggling parents should also check about free school meals and whether they can get food vouchers to help with the cost of shopping.
Banking and savings
INFLATION is not just a problem for a supermarket shop — it also eats into your spending power.
If you have £100 in the bank and inflation is three per cent, the real cash value falls to £97.
And savings accounts are unlikely to help offset this, with the average easy-access one paying 0.65 per cent.
What can I do? Get creative. Some banks offer cash to switch current accounts. Santander pays £130, Nationwide up to £125 and HSBC £110 plus an Uber Eats voucher.
Or try a cashback account. This week, JPMorgan Chase launched one that pays five per cent on round-ups. Here, purchases are rounded up to the nearest £1 and the leftover cash is put in a savings account.
It pays one per cent cashback on purchases.
Santander’s Lite account pays up to three per cent back on bills — but you have to pay a £2 monthly charge.
INTEREST rates being at record lows is good for homeowners or those about to buy a property or remortgage.
Buyers can get a fixed mortgage rate of less than one per cent at the moment.
David Hollingworth, director at mortgage broker London & Country, said: “Mortgage rates are at an all-time low, offering the chance to lock in at a competitive rate, which will protect against rising rates in future.”
What can I do? When choosing a mortgage, factor in product fees and look at the total cost over the period, not just the monthly repayment.
If you are remortgaging, shop around and don’t just assume your current provider offers the best deal.
If you are really struggling to cope with rising costs, speak to your mortgage provider to see if they will agree to a payment break.
PENSIONS might not be top priority if you are struggling, but saving for the future is important.
Millions of people are already facing an income shortfall in retirement as they are not putting enough money away, so you should keep contributing.
All employees over the age of 22 who work in the UK and earn more than £10,000 a year are automatically included in a workplace scheme.
What can I do? If struggling, you can arrange a contribution holiday.
Workers are entitled to leave their pension scheme at any time, and can do this by contacting the provider, but think carefully before doing so.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said: “If you contribute to a work pension, you unlock free money from your employer and the Government, so you shouldn’t be in a rush to quit.”