Don’t be fooled by the sudden drop in the cost of living as inflation drops 3%, according to the Bank of England.
Although any decrease in inflation is welcome, prices are still rising at the rate of 3% a year and an average household still needs to find an extra £1,035 a year to stand still and maintain their current standard of living.
Financial firm MGM Advantage has crunched the numbers and reckons every adult will have to make cuts or earn an extra £436 a year just to keep to current spending levels.
"Inflation continues to have a big impact on our financial health,” said MGM Advantage’s Aston Goodey. “To illustrate this, goods and services costing £100 back in 1991 would have cost £176 in 2012, just 20 years later. Inflation has an even bigger impact on our retirement nation, who spend more of their income on food and fuel, and where we continue to see price rises above average.
“The ‘baby boomers' are now looking at ways of managing the corrosive effects of inflation, and this has created strong demand for retirement income solutions that can provide some protection against the rising cost of living.”
The firm’s research shows that nearly a fifth (19%) of working-age people are unaware of the negative impact of inflation on their finances.
For people in debt, inflation makes matters worse.
Not only do most borrowers have a monthly shortfall, but they have to find more money each month to pay the same bills.
Even a pay rise in line with inflation does not offer much help - it’s not really a pay rise because the cash just covers the increase in prices and does not give any more money to spend.
Dealing with debt comes down to taking control of the household budget and making some tough spending decisions.
Discussing bills with lenders to reschedule monthly payments through a financial management plan can help.
Other formal insolvency options include IVA s (individual voluntary arrangements) and bankruptcy.
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Notes to editors:
- Money Debt and Credit is one of the UK's fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we've gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, IVA s, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVA s, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
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