How Do You Navigate the Rising Cost of Living? with Timi Merriman-Johnson
How Do You Navigate the Rising Cost of Living? with Timi Merriman-Johnson
💸 Inflation is at a 40-year high, the cost of everything is rapidly rising, and households are increasingly worried about the current economic and political environment. So how do we best navigate the cost of living crisis?
On today’s episode, I speak to Timi Merriman-Johnson - an award-winning financial content creator, podcaster, author and founder of Mr MoneyJar, a UK-based financial education company. We discuss the Autumn statement, what to do to boost your income, review your budget and outgoings - but also how to feel good about money. Timi opens up about his own experience working with a therapist and the importance of self-love and self-acceptance.
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“Would we rather the sun was shining all the time? Yes, but when the sun isn’t shining, you take measures and you take steps to protect yourself so that you can get through that period safely and smartly. I think that’s the same for recessions.”
What’s going on with the UK economy?
On taxes, we saw the highest earners have their threshold level reduced from £150,000 to £125,000, a complete opposite from what Liz Truss announced just a few months ago, where they wanted to abolish that tax band altogether. So, if you earn £150,000, you'll probably expect to pay an extra £100 in tax from next April.
We saw the freezing of all other personal tax thresholds, which means as people's earnings march upwards, as people earn more, they'll fall into those higher tax bands, which means that those people will pay more in tax.
We also saw some measures taken to protect the most vulnerable in society. So benefits, the national living wage and the state pension were all raised by, broadly, the rate of inflation. So by about 10% energy price cap guarantee, it will be kept in place from April.
The mini budget sent the markets spiraling, and the Autumn Statement was as much a national address as it was a global one.
Opening up about finance
Try to include the topic of finance into everyday conversations - it makes it more normalised.
You can use boxes of chocolates to explain funds - eg. lots of different companies in the fund, like boxes of celebrations.
When it comes to financial education, there isn't an understanding gap, there's just an information gap. People get the stuff, people understand the concepts, they just need it presented to them in a way which is accessible.
It’s important that we can all feel good about money and be able to solve for money in our lives. It affects every area of life, no matter what age you are. And if you can just get a grip of money -you don't need to know everything - you just need to know enough.
Navigating cost of living
Side hustles need to align with your skills - you can use whatever you know to either do extra tutoring, content creation, or whatever brings you the most money.
Try cutting 20% of your time off of full time work and use that 20% of your time to build your side hustle. If you can go down to four days a week and instead of having the pressure of trying to replace your full time income with a side hustle, see if you can replace just 20% of your income with your side hustle and if you can build it from there.
When it comes to food, to reduce food costs, you can downgrade from branded products to buying own brand products. Keep a lookout for discounts and sales like the yellow sticker items.
When it comes to energy, the Energy Saving Trust website is a very useful resource to have - it helps you understand more about the most energy consuming appliances in the home.
A lot of people don't realise that the most expensive items in their home are their dishwasher, tumble dryer and washing machine. Compared to things like charging your phone or leaving the lights on, those three items are actually quite expensive because they heat up and they stay on for a long time.
When it comes to lighting, replacing light bulbs with LEDs can take a chunk off your electricity costs over the long term.
Saving a little bit of money in each instance will add up to a lot over the long term.
Review your budget and forgive yourself
Stay on the pulse and review your budget every week - have a plan and always reassess, and tweak as you go.
Categorize your expenses with budgeting apps, and it will help you see the areas where you overspend.
Try to continue investing and paying into your pensions - even small sums, ridiculously small sums, saved early on will compound into hundreds and thousands of pounds later on in your career.
Unconditional self acceptance and self love are all imperative to help you keep going. We live in a system where you can feel like a small cog in a massive machine and you can feel like you don't have any worth. This is very convenient for the people that want to sell stuff to us because if you're not happy, if you don't accept yourself, then you'll look to external things.
Being happy, content, and aware will ultimately free you from the feeling of ‘needing’ to buy things that you probably don’t actually need.
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