There has been a lot of recent talk about rising energy bills, but unfortunately these aren’t the only prices set to increase over the coming months.
We’ve heard that the cost of living is set to increase in several key areas, and knowing about these changes ahead of time can help you to prepare for them, either by reshuffling your budget or finding ways to mitigate the costs. Here are three key things to be aware of for 2022.
From January: changing insurance rules
New regulations have now come into force stating that car and home insurance providers can no longer offer different rates to new and existing customers. The idea is to tackle the so-called ‘loyalty tax’, ensuring that people are no longer penalised for sticking with one provider. Unfortunately, this means that switchers may lose out, as you won’t be offered new customer deals.
This doesn’t mean that you can’t benefit from changing providers – just that the days of rock-bottom deals for serial switchers could be coming to an end. It’s still a good idea to avoid auto-renewing your policy: shop around to make sure that you get the best offer. The best time to switch is around three weeks before your policy ends (23 days for car insurance, 21 days for home insurance).
From April: tax increases
Fast-forward to April, and you can expect to see your national insurance contributions rise by 1.25 percentage points. For employed workers, this money comes directly out of your paycheque, so the increase will affect your take home pay. For the self-employed, it means that you’ll be paying more after submitting your tax return. Either way, it’s a pain – and there’s very little that you can do about it. We would recommend using a salary calculator to work out your take home pay after tax. This will give you a clear indication of how much money you’ll have left each month; very helpful when it comes to budgeting.
For those who hold shares, dividend taxes will also be increasing this April by the same difference.
Throughout the year: mortgage rates expected to rise
Interest rates rose for the first time in three years last December, and they’re expected to increase again over the coming 12 months. This is likely to hit those with mortgages the hardest, as it means that you may end up making higher payments. It’s a good idea to try and get onto a fixed deal before any increases come in – as those who are on tracker mortgages will almost certainly see costs go up. Choosing to remortgage is the best option here, as it gives you the chance to save hundreds by getting fixed interest at an attractive rate.
As all these changes come into effect, the best thing you can do is to take stock of your income and outgoings and make sure that everything adds up. Create a simple budget by listing your fixed outgoings, and allocating your remaining monthly income to different types of spending or saving. Having this information laid out can help you to identify any gaps and feel less of a squeeze when the bills go out.