How Does The Cost Of Living Crisis Affect Our Members?

As I hear on the news today that the first cost of living payments will be made on July 14th, I thought about the effect that the cost of living crisis will be having on our members.

The crisis affects everyone

The results of a survey by the Building Societies Association (BSA) published last week says that One in 20 employees would not be able to afford their living costs for a week if they lost their job. One in six would not be able to survive a month without pay and six in 10 described their bills and credit commitments as a ‘burden’.

The research said that introducing a workplace savings scheme for those who are in work, and do feel able to save a little each month, could be one way for employers to help staff improve their longer-term financial well-being.

Many of our members have been saving through payroll deduction for many years now, and have been appreciative of the ability to build up a pot for special occasions, holidays or emergencies. They will tell you that it is such an easy way to save, and helps them build that buffer of savings much needed at the moment.

But what if you are not working?

Price rises hurt the poorest hardest, because things like food and energy bills already make up a bigger proportion of their outgoings. According to the Resolution Foundation, the poorest 10% of households spend twice the share of their family budget on food and energy bills compared to the richest 10% of households. As a result, inflation rates for the poorest families could reach over 10% this year.

Of course for many members who are not employed right now, the ability to save is much harder. And we know that utility bills are the most difficult bills to keep up with. Often, the first instinct would be to borrow money to cover these bills, but many have a very limited choice for affordable credit.

Over 1,800 members are currently saving whilst repaying their loan with the Family Loan and Savings Plan. Many are saving for the first time ever, and actively plan to top up their loan and withdraw savings at key times of the year like Christmas, or just before summer holidays. This ability to save while you borrow is a key feature of credit unions.

We try to help

Last month we developed our Help Centre, aimed at helping our members find the help they need to manage day to day, and improve financial well-being. We always encourage our members to contact us if they are struggling to repay a loan. We want to help if we can and find a solution that suits everyone.

By talking to members and identifying their current challenges, we hope to do what we can to support them during this difficult time.

15 Jun 2022

Author: David Batten, CEO
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