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Tame inflation

Inflation is an OMG moment, as it steels money by reducing its buying power. For example, 10% inflation means that something costing £100 will go up by 10% and cost £110. That’s a problem, if take home pay isn't rising as fast. Have you felt the inflation thief?

inflation

The bad news 

A healthy economy needs a low and stable rate of inflation. The Government set a 2% inflation target with the Bank of England. Inflation is 9% and continues to rise, which is harmful to the economy. Inflation makes it difficult for people and businesses to plan how much they can spend, save, or invest.

Tame inflation 

Review your household’s incomings and outgoings, alongside a plan for how much you would ideally be spending. In addition, here are other ideas:

  • Reduce cash in the bank. With the rate of inflation close to 10% and interest rates around 1% the value of money is being eroded.
  • Invest in shares, as they offers inflation-beating returns. Remembers that there is a risk of losing all the money. Funds help spread the risk better than individual shares.
  • Cut regular costs by ensuring that phone contracts, home broadband and insurances are competitive. If not, then shop around at renewal.
  • Be a savvy shopper, by changing supermarket and/or switch from fresh fruit and vegetables to frozen, canned pulses to dried ones etc. Buy own brand or budget ranges.
  • Fix your mortgage as interest rates, as the Bank of England will raise base rates to combat inflation. This stops mortgage payments increasing.
  • Ask for a pay rise and/or be prepared to change jobs. The labour market is running hot and the boss may pay extra to keep you.
  • Don’t put off big purchases, as sooner or later the price goes up. The cost of cars, home improvements and holidays have all risen. 

This is going to be a summer/autumn of discontent as Unions use the high inflation numbers to argue for better pay for their members. If negotiations fail, then strike action will follow. Both households and businesses have been hit by record inflation. As prices are still on the up, strap in for a bumpy ride.

ChildMax continues to ensure your salary and pays your take home salary while you’re on 12 months’ unpaid leave, caring for a sick child. It starts from £49.50 or for easy budgeting an initial payment of £8.25 followed by 11 monthly payments of £3.75.

Visit at www.insurewithmax.com or call the UK call centre 0333 323 0098 for more information.

Sources:

https://www.moneyhelper.org.uk/en/savings/how-to-save/inflation-what-the-saver-needs-to-know

https://www.theguardian.com/money/2021/oct/25/how-to-inflation-proof-your-finances

https://www.bankofengland.co.uk/knowledgebank/what-is-inflation

Date: 20 June 2022 by Max Robinson