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How to deal with rising living costs

If you’re worried about higher living costs, including energy and food prices, find out what you can do and where to get help.

New research shows how household budgets are being squeezed. Two-thirds of adults in Great Britain have cut back their spending on non-essentials, according to the Office for National Statistics.

Here, we look at:

What causes higher living costs?

How to cope with higher living costs

What help can you get with the cost of living?

How is the government helping with the cost of living?

What causes higher living costs?

Living costs remain high because the average price of goods and services has been increasing faster than people’s wages and income. This, combined with expected tax increases and a rise in National Insurance (NI) contributions, is leaving many households on tighter budgets and struggling to make ends meet. 

Inflation (the rate at which the prices of goods and services increase) has been high for several reasons. These include higher global oil and gas prices, coupled with uncertainty over supply chains and staff shortages. When companies face higher operating costs, they often put up their prices, creating a knock-on effect.

Inflation fell back into single figures after being more than 10% for several months. The Bank of England now says it expects to meet its 2% target by early 2025.

How to cope with higher living costs

Here are things you can do to help you financially.

Review your finances

Whatever your situation, creating a budget can make it easier to manage your money. It’ll help you see what money you have regularly coming in and going out and possibly find areas to reduce your spending. 

If you need support reviewing your finances, or you’re finding that rising costs are simply making things unaffordable – we’re here to help

Check what you’re paying for

Go through your bank statements and look at your standing orders and Direct Debits to see what you’re paying for. You may be able to cancel and save on subscription services you no longer use, for example.

Now is also a good time to review existing policies, such as home insurance, utility bills, broadband or phone contracts – to make sure you’re getting the best value for your money. It’s also worth noting down when policies are coming to an end – as you can often negotiate better prices before they auto-renew. 

Pay off debt in a smart way

Paying off debt in a smart way can reduce the amount of interest you pay. For example, if you’re being charged interest on your credit card, a 0% balance transfer credit card could save you money. 

If you have multiple debts, a cost-effective option may be to repay the debt with the highest interest rate first, as it’s charging you the most to borrow the money. Keep in mind – you’ll still need to meet at least the minimum repayments on all debts to avoid charges. 

If juggling multiple debts is too stressful, a debt consolidation loan can be a way to simplify your repayments and help you get back on track. However, it’s important to consider whether you’ll repay more on a monthly basis and over the course of the loan.

Explore: Tips for paying off your credit card

Check what benefits you can claim

Benefits and other government support can help if you’re out of work or on a low income, but you may be eligible for other types of support too. For example, free childcare, or a council tax discount if you live alone.  

Explore: Check if you’re missing out on unclaimed benefits

Focus on energy

Millions of households face higher bills because of an increase in the energy price cap. From washing your clothes at a lower temperature to switching energy suppliers – there are ways you can save money on energy. You can also reduce your energy bill by making your home more energy efficient. For example, by draft-proofing unwanted gaps and insulating pipes, you can reduce heat loss and save money.

Save money on your food bill

Food shopping is one of the biggest weekly household expenses. From setting a budget, to planning your meals and storing your food, there's a range of things you can do to make your money go further at the supermarket.

Save money on fuel

You can check local fuel station prices online before filling up or take advantage of loyalty schemes. There are also ways you can make your car more fuel-efficient, so the fuel you do buy, lasts longer. For example: 

  • keep your tyres inflated – your car will use more fuel if the tyre pressure is lower or higher than the recommended amount
  • lighten the load – if you can, avoid driving around with a full tank of fuel and a heavy boot
  • accelerate gradually – the harder you press on the accelerator, the more fuel you’ll use
  • change up a gear sooner – to avoid having to accelerate as much

What help can you get with the cost of living?

You may have tried everything and cut back on non-essential spending. But what if it’s not enough? 

If you’re unable to afford the cost of living, here are some ways you can get help:

Help if you’re behind on debt repayments

When debt becomes overwhelming, it can be hard to know where to start. But remember – you can get support. Make a clear list of all your debts and the amount owed on each. The aim is to pay the priority debts first – the ones with the biggest consequences if you don’t pay, such as your mortgage or a court-ordered payment. 

Speak to the companies you owe. They can help you create a repayment plan that’s manageable and will prevent you from missing any future payments.

If you’re an HSBC customer and you’ve missed – or are worried about missing – a loan or credit card payment, or you're concerned about your overdraft, we’re here to help.

Help with your bills

If you’re struggling to pay your bills, or are worried about future payments, it’s best to get help straight away – don’t ignore them. Speak to the companies you owe to let them know. They may be able to offer other options for how or when you pay.

Help with your mortgage

If you’re worried you won't be able to make future mortgage payments, or are already in arrears, your mortgage lender should be able to help. 

If you’re an HSBC customer, we’re here to provide mortgage payment support. Whatever your situation, we can help you put a plan in place. 

Help with rent

If you’re struggling to pay your rent, it’s important to let your landlord or letting agency know as soon as possible. If your rent isn’t paid, the money owed is called 'rent arrears'. These are priority debts, which mean you should sort them out first, before tackling other debts – to avoid the risk of eviction.

Create a budget and work out how much you can afford to pay. Contact your landlord or letting agency – let them know you’re taking steps to deal with the situation and offer to pay what you can at this stage. StepChange has free sample letters to help you do this. It’s important you stick with the new payment plan if agreed. If they refuse your offer, or don’t reply – it’s important you make the payments anyway. 

If you’re worried about rent arrears or eviction, Shelter or Housing Rights (if you live in Northern Ireland) can help you understand your rights and what to do next.  

Help with food

If you’re struggling to pay for food, your local food bank can help, as well as provide other household items like toiletries or cleaning products.

To be eligible, you’ll need a referral first, which you can get through the food bank directly or one of the following: 

  • a GP, health visitor or social worker
  • police or probation worker
  • children’s centre
  • Jobcentre Plus
  • Citizens Advice

How is the government helping with the cost of living?

The government is offering one-off payments to help with the cost of living.

These include money for those who:

  • have a disability
  • are on means-test benefits
  • receive the winter fuel payment

For more information about government support, including eligibility and how it affects you, visit GOV.UK: Help for Households.

Explore: Could you be missing out on unclaimed benefits?


This article was last updated:

15/09/2023, 08:02