Millions of low-income families have started to receive a £301 cost-of-living payment this week to help with rising food costs and soaring energy bills.
More than 400,000 households in the North East are among the 8m means-tested benefits claimants UK-wide, including those on Universal Credit, who will receive the money between now and 17 May. A further million who claim Tax Credits will get their money between May 2-9. The £301 payment is the first of three which make up the £900 DWP support package announced by Chancellor Jeremy Hunt during November’s Autumn Statement
Further almost identical payments will come in the autumn and next spring, although the exact dates are yet to be announced. The cost of living payments were originally introduced to help struggling families cope with spiralling gas and electricity bills, but as we head into warmer months and food prices rise at their fastest rate for 45 years, many families may end up spending the extra money putting meals on the table.
Read more: Here's why your bills are going up even though energy prices are staying the same
A typical household's energy bill remains at £2,500 a year, although this is expected to drop later in the year, but the cost of a visit to the supermarket has kept inflation high, with research showing that poorer families are bearing the brunt of rising prices.
There are no limitations on how the cost of living money is spent and families can use it as they see fit. However, for larger families with more mouths to feed, the £301 payment will struggle to make a dent in their outgoings. With months to go before the next of the three payments, the founder of money-management app HyperJar, has come up with some budgeting tips to make the payment stretch further.
Financial expert Mat Megens advises the 70-20-10 method of saving:
- 70% - Needs, including all essential payments, for example housing, transport, food, childcare
- 20% - Wants, including non-essential spending such as treats, gifts, fast food
- 10% - Savings and debt repayment like emergency fund, savings goals, credit cards
"The 70-20-10 rule can really help people get a handle on their spending and budget effectively, giving you a good understanding of where your money is going," said Mr Megens. "The 70-20-10 method splits your money into different categories – 70% for needs, 20% for wants, and 10% for savings. However, it still provides flexibility given that everyone has different financial obligations and goals."
"On a personal level, it's just about making sure we're doing all we can to make our money go as far as possible. There is no magic wand, unfortunately. But we can all drill down into our budgets to understand where our money is going, to save and cut costs where we can.
"Controlling the controllable is something everyone can do to get on the front foot. Nowadays, when paying is so frictionless, it's easy to overspend because there's less of a concrete connection with money. An understanding of what you have and where it needs to go will help make navigating this period less stressful."
Now read:
- DWP blunder causes £301 cost of living payment confusion on when cash will be paid
- Prepay meter customers hit with shock energy bills for hundreds of pounds
- Why cancelling your direct debit to save money when it's warmer may not be a good idea
- DWP benefits could be slashed as energy bill repayments freeze comes to an end
- Confusion as £400 energy bills support for households comes to an end
- Month-by-month guide to when you can expect all of this year's cost of living payments
