This April, UK taxpayers are likely to feel the squeeze as council tax, income tax and National Insurance rates are all due to rise. British households should expect to pay 54% more for their energy this year, while losing an extra £255 of their yearly income to National Insurance, while those on fixed incomes will now have to cover a 1.25 tax rate hike. Alongside the national tax increases, a maximum five percent local council tax rise will see varying rates soar even further across the country, along with soaring energy and food costs.
While the increase in fixed expenses is unavoidable, our co-founder, Kevin Mountford, has revealed his top tips to make your money go a little further in 2022.
“With everyone being faced with higher tax rates, households are going to see their income drop. The good news though is that there are plenty of strategies to help you live well on a smaller income.”
Lower your expenditure
While it might be the most obvious way to reign in your finances, lowering your expenditure goes beyond simply spending less on life’s little luxuries. Kevin says: “Expenditure falls into two main categories: fixed expenses, and variable expenses.”
Fixed expenses refer to things like gas and electricity costs, council tax, and your TV licence, while variable expenses cover spending on things such as food, petrol, and socialising.
He added: “Despite the name, it’s still possible to reduce your fixed expenses – you just need to think creatively.”
Shop around for a better deal
If your mortgage is due for renewal, search around to switch to a better rate, whether that’s with the same company or a different provider, says Kevin.
Speak to a mortgage broker or look around on price comparison websites to make an informed decision before re-jigging your finances.
Seek out Government support
While council tax is a fixed expense, Kevin strongly recommends looking into support schemes for help with your payments. According to Gov.uk, you could be eligible for a council tax reduction if you are on a low income or pay benefits. Your payments could be reduced by up to 100 percent – so it’s definitely worth looking into.
Plan your meals
Planning goes a long way when it comes to food shopping, minimising over-buying and reducing household waste. Kevin’s top tips for food shopping include:
- Be more plant-based – good quality meat is usually expensive
- Make use of loyalty cards and monetary rewards or incentives
- Don’t dismiss budget or own-label items
Review your subscriptions
Go in with family members to spread the cost of gym memberships and streaming services – do you really need Prime, Netflix, and Sky?
Kevin said: “If you only watch on-demand programmes (and not live, or iPlayer programmes), get in touch with TV Licensing as you may not need to pay for a TV licence.”
Increase your income
There are a number of ways to boost your income without picking up a second job. You just have to be proactive.
Check your tax code and tax relief entitlements
It is thought that millions of UK workers could be paying the wrong amount of tax, and you could be one of them. Study your payslip carefully and check your tax code against the guide at Gov.uk to see if you are eligible for an income tax rebate. Kevin also recommended checking your eligibility for a uniform tax refund if you wear a uniform to work.
Cash in on unwanted items
Make the most of apps such as Vinted to cash in on your unwanted items and ask around in shops to see if they have any cash-for-clothes schemes running.
Kevin said: “H&M currently gives shoppers gift vouchers if they return any old clothes (from any retailer), which would be a great way to save for summer clothes shopping!”
Manage your money
Good money management is the key to sticking to a budget, but what should you be doing to keep up with your outgoings?
Track your spending
Get into online banking and monitor activity so you know exactly what your income and outgoings are. Set a budget to outline the physical restraints of your income and review it regularly to suit your financial needs each month.
Stay clear of costly payday loans and try to keep credit cards and overdraft spending to an absolute minimum. Debts can easily snowball and you will face high-interest rates or charges if you don’t pay them off quickly.
Set achievable goals
Whether you want to lower your food bill by £20 a month or start saving 10% of your monthly salary, setting achievable goals is the best way to remain accountable for your finances.
Kevin said: “It’s also really important to not go too hard on yourself. Every household is feeling the crunch at this time and it’s natural to feel overwhelmed by the current financial situation.
“Try talking to someone you trust and being open about your financial situation. Relaying your financial goals may just help you stick to them!”