The following is a guest post
It’s a relatively new phrase, but one that is increasingly popular amongst newspaper editors and politicians: the Squeezed Middle.
But who are the Squeezed Middle and how do you avoid becoming one of them?
The squeezed middle is a phrase normally used to describe those middle earners in society whose wages do not continue to rise with the cost of living and in essence become squeezed between stagnating wages and rising inflation. However, not all experts agree there is such a thing. Nick Boles, Director of think tank Policy Exchange, believes there is only a squeezed bottom which represent 20% of society, whilst the 60% who make up the middle are just continuing along as normal.
However, with food prices up by 28.7% since August 2007, fuel prices by 45.5% and travel costs by nearly 25%, it hard not to believe a significant proportion of us are squeezed, especially as weekly wages over the same period have not increased by more than 10%.
So are you feeling squeezed?
Well if you are there are some basic steps you could take to improve your finances and disposable income:
1) Review your finances: time for a clear out. Imagine you were made unemployed tomorrow, what would you cut? Most of us could make cuts: direct debits, standing orders – but the reality is most never will until forced to. So force yourself: cut those unnecessary payments and shop around for better deals.
2) Pay down those debts: it will never be easy, but you know you have to. Continuing to refinance is not a long term solution and even switching to interest free deals is only effective if you reduce those balances. 3) Claim back your PPI: average claims are now paying out over £2,000 per policy and a recent report by the Financial Times found that the £9 billion had already been claimed back by British bank customers. It also found these claims are doing more to boost the economy than Government initiatives. 2012 is being predicted as a bumper year and banks are expected to settle most claims and pay out in excess of £6 billion. So if you haven’t claimed, what are you waiting for?
4) Get Healthy: it’s often said Britons were at their most healthy during World War II with rationing. If we were all honest the majority of us could do with a bit of rationing today. Learning to cook using basic ingredients, such as fruit and veg, is not only healthier but can help save a few pounds as you shed them. And if you smoke, stop. A 20 a day habit will cost you more than £2,500 per year – that could be half of your rail season ticket and for the average middle earner that would be the equivalent of more than a 10% pay rise.
5) Love Nights In: the Joseph Rowntree Foundation recently carried out its Minimum Income Standards survey. It found that a Briton’s expectations as to what was necessary for a minimum standard of living had not significantly changed since before the credit crunch. It appears we are not yet ready to cut our cloth accordingly. Those surveyed, however, accepted savings could be made by staying in more and going out less, so love staying in and you may just keep out the red.