As bills continue to rise, we are certainly tightening our belts and I’m sure we’re not the only ones. With the energy price cap increasing, inflation reporting to increase to 20% next year and food prices rising, it’s tempting to bin the budget but don’t! Here are a few false economies to avoid.
I believe Autumn 2023 will be the start of a financial crisis for many people. As costs of energy and food rising, you may be tempted to cut back on a few outgoings, but read this blog carefully and discover false economies to avoid.
Pay your bills
There are a few people on social media who are encouraging others not pay your bills. Stopping paying your bills isn’t a good idea. This could damage your credit rating for many years and it could lead to mounting debts: your bills will just keep increasing and it may lead to debt collector knocking on your door. If you are truly not able to pay your bills, then contact the company and ask for help, ask for a payment plan. Currently, many firms are in ‘listening mode’ and they want to be seen to be helping. If you are really struggling then read another of my blogs ‘How to Get Out of Debt’ HERE.
Only pay for energy you use
Direct debit payments are structured in a way that you overpay in the warmer months to cover the more expensive colder months. Your energy provider calculates what they think your energy bill will be for the year and divide it by twelve (twelve months in a year). Therefore, in the summer you will be overpaying. This is to make up for the fact that a you are going to use more energy in the Winter. Cutting back to only pay for what you use now will lead to more problems once the weather starts turning cold. In theory, your energy company is trying to help you out by spreading the cost.
Don’t bin your budget!
It’s really tempting to forget the budget and live without it. Longterm, this is not a good idea. Now is a great time to get a grasp on your finances, check what’s coming in and going out. Check those subscriptions and cancel what you don’t need. Get a grasp of your finances and work with what you have.
Don’t stop paying into your pension
I can completely understand why stopping your pension would look like a good idea right now, but don’t. If you cut back on your pension you may never start it again. If you stop your pension you are missing out on free money: the contributions that your employer makes and the 25% tax relief. You will also miss out the compound interest! If you need to cut back on your pension, then perhaps reduce it slightly to help you out, but please don’t stop it completely.
What you can do to cut back
In times of hardship, here are a few things that you can do to save money:
Cut back or stop eating out completely – and this includes take aways
Review your subscriptions and check that you’re not paying for things that you don’t use.
Check that your home is energy efficient, for more details click HERE
Create a monthly budget and review it often. Be intentional with your hard-earned cash: a budget is telling your money where to go rather than wondering where it went!
In summary, do be careful that you make the right decisions with your cash. If you have any further ideas or suggestions, please do leave a comment below.
Thanks and God bless,