An ill wind of economic uncertainly will leave no-one unaffected
Advice can be crucially important to people at the mid to lower levels of earnings
AS George Jefferies, a financial planning expert at wealth managers Chiene + Tait Financial Planning has noted, there is no escaping a period of sustained high inflation. However, such times are toughest on those on middle and lower incomes. Those on the lowest levels of income are going to be hardest hit by the surging prices of everyday commodities, as well as by the spike in energy prices.
The Rowntree Foundation, for example, estimates that houses on low incomes will be spending some 18% of their income, after housing costs, on energy bills.
For single adult households on low incomes, this rises to as high as 54%, creating the ‘heat or eat’ trap that is now making headlines.
Lone parents and couples without children will spend around a quarter of their incomes on energy bills, the Foundation warns.
Jefferies points out that Chiene + Tait Financial Planning stand ready to provide advice to clients at all levels of the earnings spectrum.
“Advice can be crucially important to people at the mid to lower levels of earnings. Our initial consultation is free and it can be very beneficial for people to explore their current financial circumstances and issues with a skilled financial planner,” he notes.
There are often savings to be made in areas where people are taking their current spending commitments for granted. Jefferies points out that overpaying for life insurance, for example, is fairly common.
“We frequently find that clients have taken out life insurance policies where the premiums are far higher than necessary. Often, the client will have simply accepted a recommendation from their bank, without any real idea of the other life policy options out there on the market.”
Life insurance and health insurance policies are complex and there is a whole range of different providers and options. “We generally find that we can get clients much more competitive rates than their current policies provide.
“If we can save them £100 a month on their family protection costs, then that is a hundred pounds that they then have available to put towards higher heating and food bills,” he comments.
People need to realise that the price rises that they are currently seeing in food and energy bills, as well as across a host of other items, are only going to get worse in the coming months. “The real increases in food and energy prices are still working their way towards us,” Jefferies warns.
“For example, farmers have already bought their fertiliser for 2022. When they need to go to the market to buy fertiliser to grow next year’s crops, the price of fertiliser is likely to have increased sharply, which will be passed down to the consumer as a further hike in the price of many different food items,” he comments.
Saving for the future is also going to be very difficult for the next few years at least.
For over 30 years, people have come to regard a three to four percent return on their investments as being reasonable.
That level of return in a world hit with a 10% inflation rate is actually a negative return of six to seven per cent – which goes to show how important getting skilled financial planning advice will be going forward.