Personal Finances Squeezed By Rising Cost Of Living

The number of people struggling to pay their bills has more than doubled from one in 20 last summer to one in eight at the end of May. In tough financial times, how can you stay on top of your personal finances?

According to a survey conducted by insolvency group R3, more than a third of Britons believe their personal finances will get worse in the next six months.

Chief culprits are increasing energy and food prices, loans and credit card debt and increased inflation – all of which are adding pressure on household budgets.

The survey found that six million Britons will be unable to pay all their bills on time this month – more than twice as many that faced personal finance problems during the same period last year.

Eight million also expect to dip into their overdraft this month, 5% more than last summer. Of these, two million believe they will exceed their overdraft limit.

Tellingly, the search marketing specialist Greenlight found that five of the ten most searched for terms associated with personal finance in January were for loan-related products.

More recently, the AXA Big Money Index showed a fall in confidence in personal finances over the past year – one in five people surveyed admitted regretting some of their financial decisions before the recession, while 25% said they had dipped into their savings and investments to get by.

Moneyhighstreet says: “Be careful about how you use your bank overdraft. The majority of overdrafts charge interest and you can incur penalty charges for exceeding your prescribed overdraft limit, incurring further debt.

“With personal finances so precarious, a sudden change like being made redundant or an unforeseen expense can trigger insolvency. So it’s important to try and put away a small proportion of your income every month to cushion you when you need it.”