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21 Jun 2024

Top tips to support employees to mitigate the impact of rising housing costs

With rising mortgage payments on the horizon for many, here’s some top tips to help employees bring rising costs under control 

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Over the next year 1.5 million homeowners are expected to face sharp increases in their monthly mortgage payments when their fixed rate deal comes to an end, with prices rising by approximately £1,800 a year on average.

Here are some top tips to help employees cut costs and manage their finances as mortgage prices increase.

Create a budget 

The first step to cutting costs is to create a budget. Employees should work out what their monthly income is and check their bank statements to clarify what outgoings they have. Outgoings can be divided into fixed costs which have to be paid, such as a mortgage, council tax, energy and water, and those which could be cut back, such as supermarket shopping, monthly contracts for TV, subscriptions and other spending. 

Some banks have apps which enable this to be done automatically, this will highlight where money is going and where savings could be made.

Track finances

After creating a budget it is important to keep track of spending. Ditching takeaways, taking lunch to work and learning to budget can make a huge difference. For example, the average household in the UK spends £1,220 on eating food out (e.g. takeaways and restaurants) each year. There are many free budgeting apps available which will help to track spending on groceries, eating out, entertainment etc.

Shop wisely 

Planning shopping in advance allows time to search for the best deals and reduce expenditure on non-essential items. Also, by switching brands it might be possible to significantly reduce the price of the regular shop. Someone who usually spends £60 a week, could save £20 by changing supermarkets, a saving of £1040 a year, and more for a couple or family. 

When it comes to big purchases, such as if a washing machine breaks, discount vouchers are often available through voucher and discount websites and many workplaces offer employee discount schemes. When shopping for a particular product, Idealo finds the best price online for a particular product and CamelCamelCamel allows you to track the price of Amazon products. Consider installing browser extensions like Honey that search for discount codes during online check-out.

Save on household bills

It is possible to make significant savings on a range of household bills from car and home insurance to phone, broadband, TV and mobile contracts. Price comparison websites can help to make it easy to compare the different deals available. Changing to a SIM only deal on your mobile once you’re out of contract could save £321 a year. Plus, changing broadband providers could save £179 a year.

Avoid auto-renewals 

Many insurance policies automatically renew each year so many people may be paying more than they need to if they don’t shop around. It’s a good idea to find out when any contracts are due to end and put it in the diary a month earlier so that there is plenty of time to shop around. For example, using a price comparison site could save up to £550 on car insurance, so £1,100 for a two-car household.

Manage debt

It’s important to understand the difference between good debt and bad debt. For example, a mortgage is a form of good debt which should be reviewed occasionally to ensure you have a good deal. However, at the opposite end of the spectrum, debt with high interest payments such as payday loans and credit cards can get out of control if they are not repaid quickly. 

For those struggling with debt, a good option could be to consolidate any debts into a 0% or low interest balance transfer card, as more money will go towards paying the debt off and enable it to be cleared over a shorter time. Those who are struggling to make a payment should speak to their provider before they miss a payment, as help may be available.

Beware of energy costs 

Make sure you do all you can to be energy efficient. Small changes such as turning off lights when they aren’t needed, washing clothes at 30 degrees instead of higher temperatures, making sure the dishwasher is only used when full, and cutting down on the number of times the kettle is boiled can add up to really make a difference. Just switching all appliances off standby mode can save £45 a year.

Maximise workplace benefits

Employers who offer discount schemes with major retailers on groceries, dining and electrical goods etc should ensure they promote the potential savings these benefits can provide. Not only this, employers should consider introducing financial education and guidance to help people with a full range of money matters.

Jonathan Watts Lay, Director, WEALTH at work, a leading financial wellbeing and retirement specialist, comments; “Many people may be worried about when their fixed term mortgage rate ends, and their monthly repayments increase. This can be a stressful time, especially for those who may already be worried about their finances. However, there are steps people can take to effectively manage their finances. Creating a detailed budget, cutting back on unnecessary spending, and shopping around are small changes that can make a big difference.

“Overpaying on a mortgage before it’s renewed at a higher rate could be a good idea. This is especially true for those who are going to struggle to pay a new higher monthly rate, as they may be able to secure a better deal by paying more off in advance. People should also be aware that when overpaying on a mortgage, this money could always be accessed again when they come to negotiate their mortgage deal.

“Those who may be struggling to pay their mortgage should contact their lender as soon as possible as they may be able to offer ways to help. Citizens Advice can also offer impartial guidance. Many employers also offer financial education and guidance services in the workplace to help their staff with financial difficulties they may be facing, as well as ways to better manage their finances now and for the future,” he added.

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