Higher energy prices, rising food bills and a phased £20 a week cut to Universal Credit will leave families £107 a month worse off from next month.
From October, the £20 weekly uplift to Universal Credit – which equates to £86.66 a month – is due to be withdrawn for 5.9million people.
Furlough and self-employed schemes will also end in October which could trigger job losses or fewer working hours, further reducing income for some households.
Against a backdrop of rising gas prices, energy costs are also likely to increase from this weekend for October for 15m households on the energy price cap.
Those on a default dual fuel tariff, paying by direct debit will see an average annual increase of £139 from £1,138 to £1,277.
Are you worried about falling into debt this winter? Get in touch: email@example.com
This equates to an increase from £95 to £104 a month.
More than 4million prepayment customers will see an even larger annual increase of £153 from £1,156 to £1,309; a rise of nearly £13 a month.
In addition, with rising gas prices, failing energy suppliers and higher usage in winter, all UK households could see a surge in the price of their energy over the next few months.
Last year, the average household spent £277 a month on food expenses, but latest inflation figures of 3% from the Consumer Price Index suggest this could increase to £285 a month this year.
That means families will need an extra £107 a month to cover their essential costs this winter, according to Royal London.
Sarah Pennells, consumer finance specialist, said: “The Covid-19 pandemic is perhaps the biggest life shock our society has experienced.
“As we continue to feel its effects, there’s never been a more urgent need to help those who are financially vulnerable.”
Recent research from charity Turn2Us found that 15.9million UK adults are more financially vulnerable as a result of the Covid-19 pandemic.
“From October, many families are going to be hit by significant changes to their monthly outgoings and many will have less money to pay their bills due to the cut in Universal Credit” Pennells continued.
“For those suffering from a financial shock or worried about making ends meet, there are steps you can take.
“For example, if you’re finding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling.”
Thomas Lawson, chief executive at Turn2us, said: “The coming months will undoubtedly be very hard for individuals and families across the UK.
“The £20 per week cut to Universal Credit was already going to leave many families struggling to keep up with the cost of living.
“This, now combined with a sudden surge in energy prices, could spell disaster and plunge thousands more people into financial insecurity or even poverty; especially those of us whose financial resilience has been worn away by the pandemic.
“Our own research tells us that over half (52%) of people on Universal Credit will struggle to pay their bills when the cut comes into effect, with a further one in four people (25%) unable to afford their rent or mortgage payments.
“This means a very bleak winter for the most financially insecure among us and urgent action is certainly needed from the government to safeguard people against financial crisis.
“We also urge everyone to check what support they are eligible for and contact their utility suppliers if they know they are going to struggle to pay upcoming bills.”
How can I keep on top of my spending?
1. Write a monthly budget
If your income has reduced, you will have to consider your spending and one of the best ways to do this is by working out a monthly budget.
Start by working out how much money you will need to cover your monthly essentials such as your rent or mortgage, utility bills, Council Tax and any other debts, such as credit cards and/or personal loans.
Once you’ve done this, you should have a clearer picture of how much money you have to spend on areas such as your weekly shop
2. Check your benefits entitlement
It can be complicated to work out what state benefits you are entitled to. Turn2Us have a Benefits Calculator to check your entitlement to means-tested benefits.
The results page will tell you which means-tested benefits and tax credits you may be entitled to and how much you may receive.
We have a benefit calculator to help you with this, here.
3. Shop around and switch your household bills
You can save money by shopping around and looking for better deals for broadband, and car and home insurance. If you’re on the energy price cap, you may already bet getting the best deal as you’re protected, but it’s worth doing a quick comparison.
Normally, you would be able to save money on energy bills by switching from the standard variable tariff to a better deal. However, volatile energy pricing means that this may be the cheapest option at the moment. It’s worth double checking with your provider that you are on the best tariff available to you.
Broadband tends to be more expensive for those who are ‘out of contract’, 20million customers according to Ofcom are ‘out of contract’ and therefore likely to be over-paying.
4. Check your eligibility for help with Council Tax
If you don’t think you will be able to afford to pay your Council Tax because you’re now on a lower income or claiming benefits, you might be eligible for a council tax reduction.
What you get will depend on where you live, your circumstances, your household income and whether you have children or other dependants living with you.
5. Review your subscriptions
If you are having to get by on a reduced income, your focus should be on covering essential costs such as your mortgage or rent, utility and food bills and cutting back on non-essential spending.
It’s worth having a quick look through your bank transactions and credit card statements over the last few months to remind you of any regular payments that come out. You may be surprised at some of the things you are still paying for, but don’t need or use any more.
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