Karen Homans, Christians Against Poverty’s Area Manager in Wales, shares some of her tips on how to make your money go further.
According to National Energy Action, 280,000 households across Wales will be in fuel poverty from next week.
Coupled with cuts to key government financial support and a steep rise in food prices, this has meant households across Wales are feeling the full financial force of the last two years.
Many have turned to debt to ease their financial burdens, resorting to taking out loans just to keep food on the table.
According to the Bevan Foundation, since May 2021, 25 per cent of Welsh households have borrowed money to cope with living costs, with 12 per cent of households one month behind paying a bill. CAP’s client report also highlight that CAP clients in Wales receive the lowest incomes when compared to the rest of the UK.
If you once had savings that could be used as a buffer against increasing prices and threats on your income, now there is a good chance that those savings are dwindling. We all need to be looking at how we spend our money in an effort to make it go further.
Christians Against Poverty have been working to support people on that road for over 25 years teaching people how to budget and supporting people out of debt.
There are two very simple principles to make your money go further: maximising your income and reducing your outgoings.
There is no magic wand, it requires hard work, determination and focus.
We are being told that across Wales more people than ever are taking second jobs to increase household income. If you are able to work this could be an answer. If you are reliant on benefits as an income, check that you are claiming all that you are entitled to. Visit https://www.gov.uk/browse/benefits or https://www.entitledto.co.uk. https://www.turn2us.org.uk which also offers a benefits calculator to work out what you could be able to claim.
Reduce your outgoings
When you have maximised what your income could be, start to look at your outgoings. Start with looking at your last 3 months’ bank statements. Add up what you spend on ‘essentials’, such as food, utility costs, rent/mortgage, and look at areas where you could save money. For non-essential items, ask yourself, “do I need that expensive television package or telephone contract”, “could I get something cheaper?” And don’t forget that you could also see a large money saving by remortgaging to a cheaper deal, or move to a smaller/more affordable property.
In the late 1980s interest rates stood at over 17%, things were tight for everyone so learning to live on a budget was a valuable lesson that everyone had to learn. In those days I had two young children and our mortgage was calculated on borrowing five times my husband’s salary. When I went food shopping I used to look at my shopping trolley and ask myself, “is that value for money food?” “Am I buying cheese, meat, eggs, bread, milk and fresh fruit and vegetables?” If it was piled high with non-essential food items such as crisps, biscuits, cakes, and bottles of pop, I would put them back on the shelves.
As we emerge from the Covid-19 pandemic, I am still doing my food shop online and I find it much easier to budget. I put things in my e-basket and make sure that I only spend what I can afford. I look in my kitchen cupboard as I shop, and plan my meals for the week around the ingredients I need to use up, buying just what I need.
Reduce utility costs
Getting new deals on gas and electricity is not easy at the moment. I have been told that fixed rate deals have been taken off the market due to the uncertainty of the energy markets. With less providers available anyway, maybe we need to look at other ways to cut energy costs. Again nothing new – turn the thermostat down, put on a few extra layers in the morning when you get dressed. Use the tumble dryer less, and when the weather turns better use the washing line as much as you can.
As more of us work from home we are probably using more energy on heating our homes. When I am cold from sitting at my desk I go for a short walk. This benefits me in many ways. Walking is great to get a bit of head space, good for mental wellbeing and keeps me fit. But it also means that when I get back to the house it feels warmer as I have been outside.
Water rates are another area where you may be able to save some money. Welsh Water has a discount scheme called their HelpU tariff. It helps low income households by putting a cap on the amount you have to pay for your water. Visit www.dwrcymru.com/en/support-with-bills/helpu-tariff to see if your household qualifies.
Save money on Insurance
Lastly, shop around to save money on your insurance. Most of us pay out for at least one policy. House and content insurance, car insurance, pet insurance, mobile phone insurance. Use a cost comparison site to compare prices and features offered. Many bank accounts have some insurance included.
Check that you are not paying twice for insurance cover. In the event of needing to make a claim you can only claim on one policy, so it’s not worth paying for more. Some bank accounts charge a monthly fee for their current accounts but sometimes it’s worth paying this small fee to save paying insurance premiums elsewhere.
This is not an exhaustive list of ways that you can save money but the bottom line is, we all need to learn to budget. Christians Against Poverty offer a brilliant course called the CAP Money Course; it’s run through churches across Wales and gives access to an online budgeting tool. It helps you look at your personal financial situation and work out how much disposable income you have to make life a bit easier in the current climate.
Visit capuk.org/i-want-help/courses/cap-money-course/introduction to see if there is a church running the course in your area, or give CAP a call if you think you would benefit from help in learning to budget.