We're all feeling the pinch at the moment. Around about now millions of people up and down the UK are still struggling their way through the backlog of Christmas debt and overspending, and trying to gain some kind of grip of their finances before the summer.
It was revealed a few months ago that millions of people got themselves in debt over the festive period and are still struggling to find the funds to pay the credit off. It has always been the case that people will go a little crazy at Christmas time, but it appears the overspending culture is getting worse year on year and many people are finding that this is having disastrous consequences for finances in the new year.
If there was ever a time to reconsider spending so much on one day of the year, however, now may be the time, as a report by a financial giant yesterday revealed that rising inflation is due to hit people's finances harder than has been the case in the last decade.
Rising inflation and the uncertainty over Britain's exit from the EU are both factors that are expected to dent people's finances and could potentially mean that by Christmas 2017 we will all have less money to spend than we did 12 months ago.
Accountancy firm PwC has also stated that spending growth will feather at just over 2.1 per cent and will, they believe, reduce to 1.8 per cent in 2018. This is in stark contrast to a 3.2 per cent growth seen in 2016.
The report also says the struggle this year will be doubled with the uncertainty surrounding Brexit. A direct result of the Brexit nervousness is that employers don't know what an exit from the union will bring for the future of their company. The ensuing anxiety consequently means that there will be very little in the way of wage rises coming from companies this year, which in turn will squeeze people's finances to the very limit. It is anticipated that wages will only rise at a rate of 0.6 per cent at best.
It's all one big spiral of what if's really. If inflation rises we will all be worse off. If Brexit doesn't bring the deals that we are all hoping for, we will be worse off and potentially many job losses will occur, and if wages don't increase we will all be out of pocket as household bills and the cost of living continues to rise at a phenomenal speed. Household spending on essentials such as energy and shopping bills is anticipated to eat into 30 per cent of a household's budget by the end of 2029. This figure stands at 24 per cent currently.
And with inflation unlikely to fall back to under 2 per cent until 2021, people are really going to have to reign in their spending in order to get through the tough times ahead.
Despite inflation sneaking up though, the Bank of England's Monetary Policy Committee voted unanimously to keep interest rates at 0.25 per cent.
The crux of the matter is, whether you want to hear it or not, we are all going to be feeling the squeeze in the next few years. Budgeting will be key so that we don't overspend on unnecessary things and for goodness sake, we all need to reign in the spending at Christmas time.