How to cope with the rising cost of living

Posted 11/10/2022
How to cope with the rising cost of living

For many in the UK, the past couple of years have been a struggle financially. With energy bills and fuel prices increasing, and general shopping more expensive, life has been a challenge for many families and businesses. At Kirkwood Wilson Accountants, we’re keen to provide guidance for people struggling financially in the current climate. Continue reading to discover how to cope with the rising cost of living.

1. Understand the Retail Landscape

  • Retail sales in August 2022 fell by 1.6% due to rising costs affecting households.
  • Sales across sectors – from food to fuel – witnessed a decline.
  • Alcohol and tobacco sales, however, increased by 6.3%.

2. Identify & Prioritise Your Financial Commitments

  • Make a comprehensive list of all payments and dues.
  • Prioritise debts with the most severe consequences first:
    • Mortgage or rent
    • Council tax/rates
    • Gas or electricity bills

3. Utilise Budget Tools

  • Consider tools like the MoneyHelper online budget planner.
  • Understand your monthly income and expenditure to manage commitments.

4. Seek Free Debt Advice

  • If overwhelmed, use free government Debt Advice tools 
  • Professional debt advisers can guide on managing and prioritising debts.

5. Communicate With Your Creditors

  • If you anticipate payment difficulties, discuss them with respective organisations.
  • Potential support options from lenders:
    • Temporarily reduced payments
    • Adjusted mortgage or loan terms
    • Temporary payment suspension
    • Guidance to free debt advice

6. Protect Your Credit Profile

  • Dialogue with lenders won’t negatively affect your credit file.
  • Agreed payment arrangements with lenders will reflect on your credit file.
  • If treated unfairly by a lender, you can lodge a complaint or approach the Financial Ombudsman Service.

7. Seek Expert Financial Support

  • Contact Kirkwood Wilson Accountants for specialised advice on handling the rising cost of living.
  • Benefit from our expertise in accounting, tax, and more.

Discover more on Retail sales fall

Figures show that in August 2022, retail sales fell sharply as the rising cost of living put pressure on households. According to the Office for National Statistics (ONS), sales fell by 1.6%, which is much larger than economists predicted, continuing a fall since the summer of 2021.

Retail sales in all the main sectors – food, non-food, online and fuel – fell over the month and supermarkets’ sales volumes fell by 0.9% in August. However, alcohol and tobacco sales rose by 6.3%. August’s sales figures signalled the largest month-on-month drop since December 2021.

How to deal with financial pressures

If you’re struggling with your finances, there are some steps you can take to learn how to cope with the rising cost of living.

First, make a list of the organisations that you need to make a payment to. Note down how much you pay and if you are behind on any payments. This includes essential household bills such as electricity and gas, as well as loans and any other debts or repayments you have. If you find this too difficult, a debt adviser can help you for free. 

The MoneyHelper Debt Advice Locator tool can help you find out where to access free debt advice near you.

It’s important that you prioritise your debts. Some debts will be more urgent than others because the consequences of not paying them can be more serious. These may include:

  • Mortgage or rent 
  • Council tax/rates 
  • Gas or electricity bills

This will help you understand how much money you have to pay your commitments as you go forward. You may also want to use a budget tool or one provided by a debt adviser who can help you.

Are you worried about future payments?

If you’re worried about not being able to make payments, it’s important to contact the organisations you make payments to and let them know. They may be able to talk to you about options for changing how or when you pay.

If you’re finding it difficult to pay your mortgage, credit card or personal loan, your lender should provide you with support tailored to your individual circumstances. This support is available if you’re struggling for the first time or if you’ve already had help.

Your options could include:

  • Making reduced payments for a temporary period
  • Changing your mortgage or loan term to make your payments more affordable
  • Making no payments for a temporary period
  • Being directed to sources of free debt advice

It’s extremely important that you contact your lender as soon as possible if you’re finding it difficult to make payments.

Simply talking to your lender will not affect your credit file, and they can provide support for you. If you agree on an arrangement with them, that will be reflected on your file, but this would also be the case with any missed payments so treat it as a positive mark on your credit.

If your lender is not treating you fairly, you have the right to complain directly to them. If you aren’t satisfied with their response, you can contact the Financial Ombudsman Service who can investigate and advise on the next steps.

Financial support from Kirkwood Wilson Accountants

If you’d still like some more business advice and information on how to cope with the rising cost of living, you can seek support from Kirkwood Wilson Accountants. For support with accounting, tax and more, don’t hesitate to contact us.

Posted 11/10/2022