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Interview: What Does the Cost of Living Crisis Mean for Your Personal Finances?

With the cost of living crisis showing no signs of abating the need to ensure that your finances are working as effectively as possible has never been more important.

In this interview with Ed Downpatrick, Fintuity’s Head of Strategy, we will explore the drivers behind the increasing cost of living and what this means for your portfolio.

  1. The cost of living crisis is impacting us all, how would you say this has impacted our customers more specifically?

Inflation is affecting real-money portfolio values, increasing stock price volatility, as well as weakening consumer spending power, not solely restricted to energy bills, petrol, and food. These will inevitably have affected our customers. The prices of all goods have had to rise in response to the expense of producing, transporting, and serving them at both the raw material and human levels.

  1. What effect has this economic crunch had on our ability to plan our finances efficiently? What advice would you give to those worried about the growing cost of living crisis?

Household budget uncertainty – the unpredictable cost of energy for our homes and petrol for our cars and rising food prices thanks to the distribution, labour, and commodity price pressures felt by the energy and agricultural industries, mean the cost of goods we cannot do without has nowhere to go but up. The world’s wholesale demand for energy has increased since with the economic resurgence that has followed the dwindling of covid, also thanks to significantly colder than average winters across the world 2020/21, whilst energy supply has tightened and the green energy agenda has seen a push to renewable sources of energy that are as yet unable to fulfil the shortfall. Pressure on agriculture has not been helped by covid and Brexit-induced labour shortages as well as by the drop-off in food production, notably wheat and vegetable oil, in Russia and Ukraine, two of the world’s largest suppliers. As a nation we are heavily dependent on food imports (46% of total) and global supply chain costs have increased significantly, the price of shipping a container from Asia to the UK, to take one example, going from £3k to £15k. The disruption to industry, and consequent loss of revenues to the exchequer, as well as the cost of the furlough scheme brought on by covid leave our economy ill-prepared to deal with this crisis. Investment returns are going to be squeezed, albeit with some ‘safe-haven’ asset classes faring better, as companies deal with the pressures induced by the unprecedentedly high cost of doing business. For investors, even if certain assets perform well, they are unlikely to make significant, inflation-beating returns.

Whilst certain costs like rent and mortgages are immoveable, insurance is not, so look for cheaper insurance policies for e.g., home and car before renewing with the same provider. Save where possible, however impossible that may seem, e.g., by purging unnecessary direct debits and standing orders, using an energy monitor at home to work out with appliances use more than others, hanging wash instead of tumble drying, pre-packing a lunch rather than buying one, taking advantage of supermarket discounts and rewards, using a budgeting app that allows you to track spending whilst on the move, and checking for income-, child-healthcare, local-authority-related benefits which have all been government-supplemented since April 2022 – Turn2Us.orghttps://www.gov.uk/30-hours-free-childcare, and The Household Support Fund. You can also apply for a council tax rebate (if you are a band A-D payer). Discuss your circumstances with an adviser who can assess your holistic wealth position and advise on investments, pensions, protection, and beyond.

  1. How can an IFA help those in need at this time?

IFA’s have the ability to gauge an individual’s or family’s overall financial health and marry otherwise specialist areas of personal finance and take a truly thorough, considerate approach to an individual’s or family’s needs. A provider such as Fintuity offers a complimentary initial consultation with a range of cost effective services thereafter.

  1. With no sign of the crisis abating, do you have any final thoughts?

Despite the seemingly unique context to this particular crisis, previously comparable cycles have shown that it will have an end. This end, however, will take something of a geo-political re-set and certain emergency measures whose full effects are not yet being felt. In theory, a brighter future is within our grasp, all innovation-related trends tend in that direction, but we will have to endure a while longer.

Introducing Fintuity – The Premier Digital IFA in the UK!

Fintuity is like a traditional IFA, only we are one of the only online adviser which means we can offer a more cost-effective, time-sensitive and flexible service! We offer the full range of IFA services via our digital platform, at below industry rates and at your convenience. Please do not hesitate to get in touch to see how we can assist you.

For all enquiries please visit www.fintuity.com or contact Fintuity’s Communications Manager, Nic Cobb at nic.cobb@fintuity.com.

Please Note: All information, references and dates included in this article were accurate at the time of publishing.

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