What can we do about the cost of living crisis?25 February, 2022
At Pollok Credit Union, we have a duty to educate and communicate with our members and our community, and that means not shying away from the tough discussions. For many, the cost of living crisis caused by recent and forecasted inflation surges will mean making some tough financial decisions. We’re sure you will be used to hearing the terms ‘cost of living crisis’ and ‘inflation’, but just what does it mean for families and individuals in the West of Scotland, and why should you stay up-to-date on what’s happening?
Essentially, inflation means that the spending power of consumers has fallen relative to the cost of goods and services like gas, electricity, food, clothing etc. And whilst a slow, steady rate of inflation is completely normal, the rate of inflation is set to hit a staggering 7% by spring. To give you a better picture of what that will really look like, ‘electricity and gas bills for a typical household will go up by £693 a year in April, a 54% increase (BBC)’. Like us (we’re no different here at PCU), you may have already winced after finding out the sharp rise in your latest bills, and this trend is set to continue and rise into the springtime.
The hike in prices has raced ahead of the rate of pay, in turn leaving many with difficult choices to make when it comes to heating their homes and paying for their shopping. It’s not just fuel and energy prices either, the cost of TV and broadband, rail fares and mortgage interest rates are set to rise too. In addition to these price increases, companies, employees and the self-employed will pay 1.25p in the pound more on their national insurance.
So what’s been done to tackle inflation?
Often, in order to fight inflation, the Bank of England responds by raising interest rates so that people are borrowing more and spending less, thus easing the demand for inflated goods and services. The Bank of England have said themselves:
“The rate of inflation went up quickly in 2021. We expect it to reach over 7% by spring 2022 and then start to come down after that.
That’s because most of the causes of the current high rate of inflation won’t last. It’s unlikely that the prices of energy and imported goods will continue to rise as rapidly as they have done recently. And this means that inflation will decline.
And we expect it to be much closer to our 2% target in two years’ time.
But even though the rate of inflation will slow down, the prices of some things may stay at a high level compared with the past.”
What is the government doing to help us with the cost of living?
In the UK, the national minimum wage will rise to £9.50/hour in April, a rise of 6.6%. This will help those in minimum wage keep up with the rising prices of consumer goods and will go some way to helping those with families and high gas and electricity bills keep up with energy costs. But although the rise in minimum wage will help bring lower income individuals closer to the rate of inflation for goods and services, inflation is still outpacing wage growth. Ultimately, this will mean that lower income households will have less money to spend and will be forced to make some difficult decisions in order to save money and cut expenses.
There is some more good news though: in Scotland, those in council tax bands A to D will receive a £150 rebate on their council tax. While this may not seem like a huge amount to those whose gas, electricity and food prices are soaring, it will ease the pressure on many families and individuals, which includes those who do not find themselves in fuel poverty but have seen their spending power significantly reduced.
So what can I do to help myself?
It’s not all down to external factors and what businesses and governments decide to do; here are some tips to save yourself some money and cut your living expenses.
Time to get negotiating.
While it’s not guaranteed to work, a very good way to save money is to see if you can renegotiate some of your contracts, such as your broadband and phone contracts.
If you’re strong enough to handle the terrible hold music and difficulty reaching a customer adviser, you can ask for a re-evaluation of the cost of your contract. A great way to do this is to say that you’re not getting your money’s worth for the service you are receiving and if there’s any way of paying less for what you get. If you find that isn’t working, you can let the company you’re with know that you are going to find someone else, as often broadband suppliers will offer new customers discounts. However, be sure to know what prices are on offer elsewhere to quote to your current supplier.
If in the end they’re not budging, you might have to consider going elsewhere or just biting the bullet, but it’s definitely worth a try!
Save the planet, save your pockets.
What’s better than saving yourself some money than when you’re helping the environment in the process?
Check out our Facebook and Instagram for various tips and tricks to help save the planet and your bank account. In one of our posts, we show you how to make your own quick and easy multi-purpose cleaner that reduces plastic waste and reliance on toxic chemicals.
Take a spending vacation.
We’re not suggesting that you’ll be able to buy yourself a house if you just stop paying for your Netflix, but you might want to dedicate one weekend here or there to some free activities: a ‘skint weekend’, if you will. Whether it’s with your family, friends or your partner, mark out some time on your calendar to spend a full weekend where you don’t have to spend a ton of money on food, drink, transport etc.
Why not choose a scenic spot to go camping or hillwalking, have a lazy day with a movie marathon (without ramping up a huge takeaway order) or go gallivanting around the city in places you’ve never seen before.
If you’re struggling, check out Threehills Community Supermarket.
If you’re struggling to pay for your groceries, Threehills is a fantastic new community supermarket based in Nitshill which provides locals with access to affordable groceries. Threehills is currently running a larder in Museum Business Park. You can find out more about them at threehillsglasgow.org.
Talk to us.
Last but not least, talk to us. If you’re finding that you’re struggling to pay your bills or that things are getting a bit too tight just now, please let us know and we will see how we can assist you. Pollok Credit Union is dedicated to the financial empowerment of its members and that is why we want to help your money work for you. We’re a close community here at PCU, and we want you to know that we are here to help when you need us.
The bottom line.
Even though it’s always good to look for the positives, a harsh reality faces our community and that means tough decisions will need to be made and frank discussions had. The cost of living crisis is set to significantly affect much of Glasgow, but our resilient community at Pollok Credit Union can be great source of strength and support to see us on to a bright future.