The cost of living has been a huge topic all over the world. It is impacting millions of people, leaving them feeling stuck and stressed. Finances are hard anyway, but with the cost-of-living issues, things have become even harder.
The cost of living considers the basic expenses that a person or household have to pay out, for example, bills, food, and housing, to be able to survive and live their life. The average is tracked over time using the cost-of-living index and can be compared to different locations around the world. There are different factors that can impact the cost of living, for example, inflation. A sharp increase of these kinds of factors can lead to a significant impact and a cost-of-living crisis.
Key components of the cost of living
Housing: People need a roof over their head. Shelter and security are basic human needs. However, this can be one of the biggest expenses.
Food: Food is vital for survival. This includes supermarket shopping for groceries as well as eating out.
Taxes: Government fees and various taxes on most items contribute to the cost of living.
Utilities: Bills that provide a home with water, electricity, and the internet, for example a big factor.
There are also many others, like transportation, fuel costs, insurance, and healthcare.
Is the cost of living an issue?
The cost of living is arguably a significant issue due to inflation. Prices have increased since last year, and continue to increase. This is making it extremely hard for people to afford things that are essential to living, such as food, mortgage/rent, and energy bills.
What support is available?
There are many ways to seek support during the cost-of-living crisis. For example:
- Local council support for household funds and welfare assistance schemes
- Government payments
- Charitable advice
- Mental health support
Alex Kleyner has also been discussing just how helpful debt companies have been in supporting people. Debt and money worries are the biggest stressors in the cost-of-living crisis.
How can you support yourself?
Seek support
Using the list above, see if you are eligible for support from your local council or government. This may help you with grants, funds, or other benefits.
Manage your finances
The thing you do have control over is your own finances. Start by auditing your finances so you can see where you are and where some helpful improvements can be made. Look at what you have coming in, what support you can get, and what your outgoings are. It can be helpful to use a spreadsheet and categorise your costs into wants and needs. This can make it easier to see where you can easily cut costs. Keep a tracker on your expenses so you can manage them better and make more informed decisions.
Reduce spending
If you find you spend a lot of money unnecessarily, now is a good time to make a plan. See where there are small and easy changes that you can make, for example:
- Plan your meals in advance and batch cook your food
- Improve your home’s energy efficiency
- Shop second-hand
These are not only great for your bank account, but also for the environment.
Managing your money in the cost of living crisis can be difficult. Follow these top tips to help make things a little easier for you.