The cost of living crisis is all around us, with many suffering more than they’d like to admit. Here, Sue Dean, welfare officer at industry charity The Furniture Makers’ Company, offers some advice on how to cope, and how institutions like hers can help …
Everyone’s talking about it – the cost of living crisis. Mr Micawber, the fictional character from Charles Dickens’ David Copperfield, probably best summed up the effect of low income with his principle – annual income exceeding expenditure equals ‘happiness’ and household outgoings higher than income equals ‘misery’.
That’s what many are experiencing today. Misery. Even with the most prudent household budgeting, this crisis is going to challenge many. At The Furniture Makers’ Company, this is what I am hearing, both from grant applicants and HR professionals in the furnishing industry.
Many describe this time as a perfect storm. Filling a family car is now exceeding £100, energy bills are at a record high, food, transport and supplies for industry all going up. The Office for Budget Responsibilities is forecasting the highest inflation in 40 years at +9% (forecast to go to +10% soon). Public service unions have been asking for wage rises in line with inflation, with the governor of the Bank of England requesting employees show ‘restraint’ when negotiating pay.
For those living on welfare benefits, the picture is even bleaker, as benefit uprating won’t keep up with inflation. There are even predictions that we could be facing a summer of discontent, with rail strikes but also public service industrial disruption in the mix too.
The reality is that the cost of living crisis is fuelling a sense of desperation. The temptation for many – especially low-income households – is to extend overdrafts and borrow.
If the economic arguments were not enough, we have a public health crisis clearly emerging. One in six are now making visits to food banks, 22% of children are now eligible for free school meals, and 14.5 million are living in poverty in the UK. There’s a recognised correlation between poverty and poor mental/emotional and physical health.
If all this is making you feel despondent, you’re not alone. One of the biggest public health concerns we have is our mental health. Struggling day in, day out to keep to a tight budget is soul destroying. It’s no wonder people on limited income face increased levels of anxiety and depression. Lower-income households are more exposed to the crisis than most – spending a higher proportion of their total income on energy and food, with less savings to fall back on. Even if you think this won’t affect you, reports suggest typical incomes will fall by £1000 over the coming year.
So that takes me back to Mr Micawber’s principle …
If you are feeling overwhelmed, here are some tips to help you though this crisis. Firstly, help is available, in the form of measures from central Government – energy bills rebate, 5p cut of fuel duty, National Insurance threshold being raised, Council Tax rebates, and so on.
My experience as welfare officer highlights to me the urgent need for people to build financial resilience into their household budgeting. The Money Charity (www.themoneycharity.org.uk) has tools and advice to build financial resilience.
Uncomfortable choices are already being made. When faced with poverty, people are ‘taking from Peter to pay Paul’. This works in the immediate, but what is needed is clear planning. Set aside some time and sit down with a couple of months’ bank statements. Where does your income go, and are there any patterns/behaviours that are draining your money pot? What changes can you make now to ensure you can weather this storm?
Look into whether you/your family are claiming the right welfare benefits. Findings from Turn2us show there are £15b unclaimed welfare benefits annually. Turn2us and Citizens Advice have a benefits checker to see if you could apply.
And don’t forget your occupational charities, like The Furniture Makers’ Company. Requests for grants surged during the pandemic. This was in part due to the reduction in the perceived stigma associated with reaching out to a charity at a time when ‘we are all in this together’. Today’s crisis has similar connotations.
The Furniture Makers’ Company has been supporting the welfare of people working in the furnishing industry since 1903. We can provide various grants, depending on the person’s situation, to help alleviate financial hardship. If you’ve worked in the industry for two years or more and need advice or grants, then please get in touch.
We will come out of the crisis eventually, but it is going to take some time. Use this time to plan how you will manage your finances – you may be surprised by what you learn about yourself, and may even enjoy the challenge of reducing outgoings so they fall below income.
It is possible, with planning and care, to pass through this ‘misery’ into a more comfortable place. Who knows? It could even set you on an enlightened path of financial resilience for the future.