"Beware of little expenses; a small leak will sink a great ship."
- Benjamin Franklin
The Money Advice Service has found that more than half of UK adults are struggling with their finances. This is up from 35% when the research was last carried out in 2006, and the report shows that in real terms income per hour has fallen by 6% during that period.1
Unfortunately working people are feeling the strain at both ends. In real terms incomes have fallen, but the cost of everyday items are rising. A recent report in the Guardian shows that while the Bank of England predicts inflation will reach 1.9% by the end of 2021, many economists expect it will rise above the 2% government target before then. Cost of essential items such as clothing and petrol are all going up.2
There is an assumption that poverty is what happens to people who can’t work but that couldn’t be further from the truth. According to the Child Poverty Action Group, "75% of children growing up in poverty live in a household where at least one person works".3
Successive governments have led us to believe that work is the best route out of poverty. However, a study by Cardiff University reports that employment alone isn’t a guaranteed route out of poverty – in fact, according to their analysis "one quarter of people living in workless households continue to live in poverty even if they gain a worker".4
Many of us were not taught how to manage our finances, and the system doesn’t help. 65% of teachers believe the level of financial education provided in this country is ineffective, and that not enough is being done to secure the financial future of the UK’s children.5
Here is the first of the 6 Steps to help you understand your finances, control unnecessary expenditure, save money and take control of your household spending.
Step 1: Create a budget
"You don't have to see the whole staircase, just take the first step."
- Martin Luther King, Jr.
The first step is to create a budget. Many of us hate spreadsheets, and probably think it’s complicated but we’ve simplified things for you with our budgeting planner.
Download or if you’re more of a ‘paper and pen’ person like us, grab a calculator and follow our simple guidelines.
Spreadsheet planner
Printable PDF
Additional resources
New government scheme to help with problem debt
In addition to our resources on managing your finances, we wanted to alert you to a new scheme. At the start of May 2021, the UK government launched a scheme called Breathing Space, designed to offer short term relief for those struggling with problem debt.
It gives those facing serious financial difficulties 60 days to get their finances back on track by providing legal protection from creditors. This can be access via the debt support charities such as Step Change or directly by logging into your Government Gateway portal.
Coming up in Step 2…
how save to over £4,000 a year!
Sources:
1 Guardian Newspaper: UK Cost-of-living crises grows as dearer imports push inflation to 2.9%, 12th September 2017
2 Guardian Newspaper: UK Inflation driven up by rising cost of petrol and clothes, 21st April 2021
3 Child Poverty Action Group: Child Poverty Facts & Figures, March 2021
4 Cardiff University: Latest Analysis of In-Work Poverty, 9th March 2018
5 Credit Angel: Is the UK financially illiterate? 22nd May 2018
