Rising Cost of Living Crisis – 5 Money Saving Tips

The rising cost of living crisis is a hot topic right now. It feels like there is no end to increasing household bills, inflation, interest rates, rising food prices and the struggle to save money. But there are some money-saving steps you can take to combat the rising cost of living.

In this post, I share my top tips to help you cut costs and boost your bank balance today.

cost of living crisis - couple talking while about the rising cost of living

Cost of Living Crisis – Money Saving Steps You Can Take Today

Rising cost of living crisis – why is it happening?

Before I get into how you can save money, you might be wondering why the cost of living is rising. The short answer is global inflation. Global inflation is the rate at which prices rise and it is at its highest since 2008. Looking a little deeper, here are some reasons why we’re seeing prices increase:

  • Oil prices dropped at the start of the pandemic, but demand has increased since, that along with a cold Europe winter has seen gas reserves depleted; the effect = increased household energy prices.
  • People quitting or changing jobs during the pandemic has led to many companies now struggling to recruit staff such as drivers and food processors.
  • Extreme weather has contributed to inflation. Oil infrastructure has been damaged, drought has led to poor harvesting, and winter storms have caused factories to close.
  • Brexit trading rules are presumed to have reduced imports and supply chains from the EU to the UK.
  • Public spending and borrowing increased during the pandemic, this has led many governments to increase taxes.

A cost of living index is used to track how much the costs of basic expenses rise over a period. You can see how the UK compares to other countries using Numbeo’s Index by City.

Check a benefits calculator

Check a benefits calculator to see if you’re eligible for extra support during the cost of living crisis. You’ll need to know how much savings you have, your household income and outgoings when applying.

The UK benefit system can be difficult to navigate, so below is a list of the main benefits you may be entitled to to help with the cost of living in the UK:

  • Carer’s Allowance: £81.90 per week if caring for someone more than 35 hours a week.
  • Child Benefit: £25.60 per week for your eldest child, £16.95 for additional children.
  • Free childcare: up to 1,140 hours of free childcare in England, with different schemes in place in Scotland, Wales and Northern Ireland.
  • Personal Independence Payment: £108 at the enhanced rate and £72.65 at the standard rate for those with a long-term physical or mental health condition or disability.
  • Employment and Support Allowance: £71.70- £90.50 per week if you have a disability or health condition that affects how much you can work.
  • Universal Credit: £311.68–£393.45 per month depending on your age and status. This payment is supposed to help with the cost of living in the UK for those on a low income or out of work.
  • Jobseeker’s Allowance: £71.70–£90.50 for those out of work to help with the cost of living in the UK.

You can use a benefits calculator to check what benefits you could get.

Review your bills

Start by writing down all your regular bills, and work through each one to see if there’s any way you can reduce them. Here are some simple steps you can take to reduce those rising cost of living bills today.

  • Mobile phone contract – find the best deal & haggle with your current provider to match it.
  • Broadband – most offer good introductory rates, take a look to see if you could get a better deal elsewhere.
  • Would it benefit you to switch to a water meter?
  • Are you eligible for any council tax discounts? E.g. single person? Apply via your local council website.
  • Do you have subscriptions you don’t use? I don’t watch much TV so cancelled my TV licence and only have Netflix.
  • Gas and electricity bill – it’s often cheaper to pay your energy bill by direct debit. There are some small steps you can take to try and reduce your energy costs (e.g. turn off the radiators in rooms you aren’t using).
  • Receipts and expenses – make sure to keep track of all your receipts. It can be challenging, especially if you have many. Using a receipt scanner and organizer app can be a great way to keep everything in one place and make the review process easier.

Some energy suppliers also have various discounts (e.g. warm home discount and energy bill support scheme), if you’re struggling t pay your bills it’s always worth contacting them to see what help they can offer. Me and my family do this spending review once a year to see where we can cut back.

Cut back on non-essentials

While reviewing your bills take a look at where your money goes each month. Assess any areas of non-essential spending such as buying clothes/takeaways/visits to the pub. Try to reduce your spending on these areas.

Before you buy something that falls into the ‘non-essential’ category follow these steps:

To help you cut back on the things you don’t need to spend your money on, take time to review your spending over the past few months and learn to be more mindful when spending money. Want to practise mindful spending? Break down your non-essential spending into purchases you regret and purchases you don’t regret. Now look for your spending triggers and make a plan to avoid spending money on things you regret. 

Earn extra income

Could it be time to review your current role at work, should you negotiate a pay rise? Could you apply for a higher-paying role? Increasing your income will help you navigate the cost of living crisis, making it easier to cover increased costs, future-proof your money, and give you more purchasing power.

A higher-paying job

Take a look to see if you could apply for a higher-paying role elsewhere or within your current company. Depending on your work situation you could also ask for a pay rise. Asking for a pay raise can be a challenging and nerve-wracking task, but it’s an important step in advocating for your worth and helping you to navigate increasing costs.

Side hustles

While they might not be for everyone, side hustles have completely changed my finances. Anyone can do online surveys and market research calls, I’ve also done freelance and season temp work (events). You can significantly boost your income by taking on a new side hustle that utilises your skills or interests.

Bank switching bonuses

You can claim a one-off payment when you switch to a new bank. While this isn’t going to solve your cash flow problems, it could give you a little extra money to keep in your emergency fund. Banks are currently offering between £100-£200 for you to switch to them.

Free money offers

There are lots of free money offers that you can take advantage of to top up your bank balance. Most offer some kind of referral programme for you to earn more money too.

Alternative living arrangements 

Alternate living arrangements might not be for everyone but if you have a spare room or know someone with a spare room you could be saving a lot of money.

If you have a spare room you could take in a lodger – this will help massively when covering your bills.

Equally, if the cost of your accommodation is too much you could move in with family/friends. I lived with my parents to save money before buying my own home (if that option is available to you it’s a smart money move and contributing to bills can help your family too).

Build an emergency fund (when possible)

Look for opportunities to build an emergency fund. An emergency fund is a pot of money to help you cover the cost of an emergency such as an unexpected bill, or temporary reduced/loss of income.

I recently claimed £150 by switching banks and put this straight into my emergency fund. If you have any amount of disposable income the smartest thing you can do is build up a financial buffer to help you when the cost of living increases.

Don’t be embarrassed to use a food bank

People from all walks of life experience hardship, and it’s nothing to feel ashamed about. If you’re struggling to make ends meet and finding it difficult to feed your household you should look for support from your nearest food bank.

Find your local Trussell Trust food bank, their contact details and opening times.

Martin Lewis answers cost of living questions

The current cost of living crisis is stressful for everyone – talk to your support network about how you’re doing. If you’re in debt please reach out to a (free-to-use) debt charity such as StepChange. I’m trying to find new ways to save more and earn more money to boost my finances, what have you done recently to save/earn money?