A few weeks ago, ‘the cost of living crisis’ was grabbing all the headlines. An increase in the energy price-cap means energy prices are soaring. Food prices are increasing, with the Office for National Statistics reporting that half of people are cutting back on non-essentials. Council tax bills have increased, with the average Band D property rising by 3.5%, and a report by Rightmove found that average rental costs had increased by 10.8% over the last year (with the average rent outside of London now over £1,000 per month). Increases in interest rates mean that mortgage repayments are set to rise for many homeowners too, and other debt is also becoming more expensive. If all that wasn’t bad enough, many people are also seeing their income squeezed following an increase in the National Insurance rate.
Much of the news coverage was, quite rightly, about the impact the rising cost of living was having on the poorest in society, many of whom were already living on a ‘financial knife edge’. However, the rising cost of living and squeeze on income, is likely to be more wide-reaching than many people consider.
Take someone who earns £40-50,000 a year, for example. These “middle earners” should be able to live “comfortably”, and certainly without the day-to-day peril faced by the poorest in society. However, the Organisation for Economic Co-operation and Development estimated that around 75% of middle earning households struggle financially each month. Research in 2020 by the Money and Pension Service also found that more than half of adults in the UK regularly felt stressed or anxious about money. These statistics make for grim reading and it’s a fair assumption that the cost of living crisis will make them much worse going forward.
As is the nature of news though, other things gradually begin to occupy the headlines, so that the cost of living crisis is no longer front page news. However, just because something no longer gets ‘prime time’ billing on the ten o’clock news, doesn’t mean it has gone away. In fact, the cost of living crisis is likely to get worse before it gets better, as energy prices face another hike in the Autumn, with experts believing that this year will see the sharpest drop in living standards across the UK since records began.
However, it isn’t just living standards that are likely to be impacted. With a proven link between financial wellbeing and physical and mental health, the cost of living crisis is likely to have a far reaching and profound impact on the health and wellbeing of many people, along with the businesses they work for.
For instance, money troubles are frequently listed as the most common reason for divorce or separation, and a recent study found that divorce and relationship breakdown impacted around 79% of UK employees’ ability to do their job properly. If you also consider that financial stress is recognised as the biggest cause of absence in the workplace, the cost of living crisis could result in businesses with workforces that are less happy, less productive, less engaged, and, ultimately, less present.
That is why Better with Money has developed a webinar called “Managing the Cost Of Living Increase”. Put together in an interesting and accessible way, Better with Money provides employees with the tools and knowledge they need to better navigate this challenging time. Covering a range of practical areas including budgeting, how to reduce outgoings, prioritising payments, maximising your income, and managing and tackling debt, Better with Money provides tips and advice which are both impartial and easy to understand, as well as information on where to find help if its needed.
At Better with Money we don’t have the answer to solving the cost of living crisis, but we can help you help your people so that they can minimise the impact it will have on them, and you.
If you would like to find out more about the courses Better with Money provides, please contact us.