Energy Crisis: Budgeting

Energy prices exploded in 2021 due to rapidly rising wholesale costs (wholesale gas prices have increased by 250% since January 2021) sending the energy industry into meltdown, with a slew of electricity and gas firms collapsing. As predicted, the cost of living crisis continued to intensify in 2022, with the average gas and electricity bills increasing by more than 54%.

Wholesale market prices are always going up and down, but the hikes have also been exacerbated by the war in Ukraine.

Prices are currently so high many families are facing the stark choice of choosing between heating and eating.

If you’re struggling to make ends meet, read on to find tips on how you can help manage the current crisis.

Budgeting

Make and stick to a budget. Making and sticking to a budget is a key steps towards handling and managing debt and working towards a specific saving goal, such as buying a new car or a deposit for a house.
Keep a track of what you are spending. Write down everything you buy and spend money on and add it up at the end of each month. Knowing or accounting for where every pound is being spent is a great first step to starting your savings, getting out of debt or preparing for retirement.
Compare income and expenses. Compare all the money you have coming in against the money going out to get an accurate and detailed understanding of your finances and will show you if you are spending more than you earn. This helps you get the most out of your money. Plus if you see a £800 holiday, but there’s only £400 in your holiday account, you now KNOW you can’t afford it.
Avoid going overdrawn. Budgeting helps you to avoid overdrawn on your bank account by spending money that you don’t have. Overdrafts are an expensive form of debt, so a budget enables you to get a good overall picture of your finances and to see where possible savings can be made to get you out of using or “living” in your overdraft.
Be realistic. After looking at your finances, ask yourself, can you actually afford to buy something that you would like?
Manage your debt. Deal with debt by planning realistic repayments that you can manage and afford. To work out how much you can afford to repay you will need to put together a household budget, which will show how much money is left after all your bills and living expenses have been paid.
Saving money. Using a budget and working out how much money you have coming in and going out each month or over a specific period, will enable you to see how much money you can save.

For more information about personal finances and money, we recommend downloading Managing Money by the The National Autistic Society and visiting Manchester’s very own Martin Lewis’ Money Saving Expert website.