Strategies for Surviving and Thriving
The cost of living crisis: what it is and what you can do about it
The cost of living crisis is a term used to describe a situation in which the cost of essential goods and services rises faster than people's incomes. Kina like what we're all experiencing right now. This can make it difficult for people to afford to meet their basic needs, such as food, housing, and energy. And guess what, none of these basic costs can be completely eliminated. Compromising the quality of any of these has its own repercussions that could cost much more than a few bucks down the line.
The cost of living crisis is a global problem, but it is particularly severe in some countries, such as the United Kingdom and the United States. Most of the clients we meet with in upstate New York are feeling the burn, but we're not alone. Our out of state clients are feeling the squeeze as well. In the UK, inflation is at a 40-year high, and energy prices are expected to double over the next year. In the US, inflation is at a 40-year high, and gas prices have hit record levels. We're a far cry from the mere $1.80 I was paying only three years ago. 😨
The cost of living crisis is caused by a number of factors, including:
The war in Ukraine, which has disrupted global energy supplies and driven up prices
The COVID-19 pandemic, which has led to supply chain disruptions and labor shortages
Government policies, such as quantitative easing and low interest rates, which have fueled inflation
Restrictive measures imposed on the domestic oil companies. This coming off unprecedented times when we were energy independent. Quite the 180.
The cost of living crisis is having a significant impact on people's lives. Many people are struggling to afford to pay their bills and are having to cut back on essential expenses. This is leading to increased levels of poverty and hardship. At the time of writing this I think we're only starting to expose some of the impacts. My take is things continue to get much, much worse on "main street". Not in every faucet of the economy, but some worse than others. One of those could be commercial real estate. We'll save that topic for another blog, but you get the point.
What can you do about the cost of living crisis?
There are a number of things you can do to cope with the cost of living crisis:
Review your budget and make cuts where possible. This may mean eating out less, canceling unnecessary subscriptions, or finding cheaper alternatives to your usual brands. My review meetings with existing clients already tells me this is happening. It's one of the "controllables" that can have a dramatic impact on cash savings in the immediate term.
Shop around for the best deals on essential goods and services. Compare prices online and in different stores to find the best bargains. This could lead to a slow down in overall spending on retail items in ones discretionary bucket.
Take advantage of government support schemes. There are a number of government schemes available to help people with the cost of living, such as food stamps and energy assistance programs. The current administration leans towards expanding programs to help those in need. Whether this band aid will help improve things over the long term is yet to be known.
Talk to your creditors if you are struggling to make payments. Many creditors are willing to work with customers who are struggling to repay their debts.
The cost of living crisis is a challenging time for many people, but there are things you can do to cope. By reviewing your budget, shopping around for the best deals, and taking advantage of government support schemes, you can reduce the impact of the crisis on your finances.
In addition to the above, here are some other tips for coping with the cost of living crisis:
Cook at home more often. Eating out can be expensive, so cooking at home can save you a lot of money. There are many healthy and affordable recipes available online and in cookbooks.
Reduce your energy consumption. There are a number of ways to reduce your energy consumption, such as turning off lights when you leave a room, unplugging appliances when you're not using them, and weatherizing your home. I use smart thermostats, light switches and other tech gadgets that have an upfront investment with ongoing savings over your lifetime. There are some rebate incentives as well that make it worth checking out.
Share rides or take public transportation. Driving can be expensive, so consider sharing rides with friends or family, or taking public transportation instead.
Borrow or rent items instead of buying them. If you only need an item for a short period of time, consider borrowing it from a friend or family member, or renting it from a store.
The cost of living crisis is a difficult time for many people, but it is important to remember that you are not alone. There are things you can do to cope, and there are people who can help. If you are struggling, please reach out to your family and friends, or contact one of our advisors to help formulate a plan and enhance your overall budgeting.
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