Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
AT the start of the year, we realised just how acutely the cost-of-living crisis was going to impact us all. Unsurprisingly, announcements left many of us worried about what’s ahead and how it’s all going to impact us financially.
On average, we are paying just shy of £700 more a year on heating and lighting our homes. That was more than had been expected and comes after the energy regulator Ofgem carried out its half-yearly energy price cap review. What’s more, energy rates are expected to increase even further come October.
With this comes an unwelcome rise in interest rates. Bad news for borrowers and more bad news for homeowners on discounted or variable rate mortgages, while those who need rates to rise to bring them back up to useful levels for savers and income-hunters, are likely to find that cash savings rates still barely budge.
Although the reasons for and against raising interest rates are currently very finely balanced, the overriding reason behind the rate rise is inflation. If it peaks at over 7% that would make the cost-of-living the highest it has been for 30 years and push it close to four times what the Bank of England - or indeed any of us - wants it to be.
Which leads us to our third worry - how we are going to pay for all these extra costs. Whether you’re on a fixed income or facing a reduction in take-home pay, because of the national insurance hike, the cost-of-living squeeze is being felt by us all.
There is no way of avoiding what’s happening, but there are steps you can take to help yourself.
- Firstly, make sure you use your tax-free allowances.
- Secondly, keep going with a slow and steady savings approach. A regular monthly savings plan keeps you gently on track, without huge sacrifice.
- Thirdly, look to the future. It can be all too easy to let today’s worries throw tomorrow’s plans off track.
Link to onward articles:
- Looking to get your finances back on track? Discover our Four steps to Financial Wellness.
- Hear how Ed Monk isn’t going to take inflation this lying down. Read all about how he’s “fighting the inflation squeeze”.
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