The costs of lockdown have piled financial pressure on low-income families
There are few benefits from lockdown, but one that is often publicized is that many Brits are managing to save some money from the shut-down of non-essentials: lower transport costs, less eating out, cheaper childcare costs and no holidays abroad.
While this may be the reality for some, it couldn’t be further from the truth for others, if not most British families. In this blog, we’ll explore why personal spending has increased in lockdown, provide a few tips on how to combat this, as well as identifying support available as lockdown 3.0 continues.
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Extra costs for food, energy & equipment for remote learning have piled financial pressure on lower income families.
A new report on the finances of low-income families during the pandemic says they are twice as likely to have increased their spending. Additional spending has been linked too extra costs for food, energy and remote learning equipment.
The Study – titled “Pandemic Pressures” – was completed as a collaboration between the Resolution Foundation and the Nuffield Foundation-funded Covid Realities research project at the University of York.
Dr Ruth Patrick, a social policy lecturer at the University of York, says talk of saving money during the pandemic is “worlds away” from the experiences of many low-income parents and carers:
“Parents have found their spending increases, as some of the usual strategies they use to get by on a low income – shopping around for the best deal, going to families and friends for a meal when the when the cupboards are empty – have become suddenly impossible,” she said.
The report does indicate that the pandemic has brought with it a huge reduction in overall spending, with entertainment and social activities restricted by lockdown. Yet, it is higher-income households who have been the main beneficiaries of this “enforced saving”, as they spend 40% more of their income on recreation and leisure than the poorest fifth of households.
In contrast to this overall picture of savings, the report finds that the pandemic has in many instances, made it more expensive to live on a low income with children. More than one in three (36%) low-income households with children have increased their spending during the pandemic so far, compared with about one in six (18%) who have reduced it.
Why are low-income households spending more?
The report highlights three main reasons for these extra financial pressures:
- Parents with children at home 24/7 have seen higher food and energy bills, while the need to keep them entertained during lockdown has brought additional costs.
- The cost of home schooling such as acquiring laptops, paying for internet access and obtaining additional study materials.
- Families’ food costs have risen due to fewer in-store promotions, while shielding has meant using more expensive home delivery options or using more expensive shops closer to home.
What can you do to reduce your spending over lockdown?
We’ve put together 5 handy tips to help you save money during this winter lockdown. While initially it might not seem like you are saving a lot, each saving tip will eventually add up.
- Set yourself a budget –A budget lets you balance your outgoings versus your income. This will give you a good idea of how much money you can afford to put aside each month & even find areas where you could cut back.
- Cancel any irrelevant payments or subscriptions – look at all the subscriptions you pay for. It’s easy to sign up for a free trial and then forget you’ve signed up at all. So, make sure you’re only paying for the ones you use.
- Switch energy suppliers – We’re all spending a lot of time in the house – coupled with the fact it’s winter – so our energy bills might be higher than normal. Check if you could get a better deal with another energy supplier. It might just seem like you’re only saving a few £s, but put that into your savings account each month and it will soon add up.
- Fake your Friday night dinner – Ditch the takeaways in favour of a “fakeaway”. It will likely be cheaper than ordering from your favourite restaurant and it’s a fun way to spend some quality time with your family, partner or housemate. Did we mention it could be healthier too?
- Resist the urge to splurge – We all have a lot more time on our hands, and it can be hard to avoid online shopping as a pick me up. If you are looking to spend online, do your research to find the cheapest option. Companies still trading will be looking for business and may be offering discount codes.
Additional support available
From furlough to sick pay, our Creditfix Coronavirus Hub outlines all the support measures available to help you manage your finances during lockdown.
If you need advice on making your money go further, Creditfix are here to offer a helping hand. We are the UK’s biggest provider of formal debt solutions and have been supporting people with money worries throughout the pandemic.
If you’d like to know more about the help available during the pandemic, or just need someone to talk to about your finances, talk to one of our friendly advisers today on 0808 253 5687.