Monday, July 07, 2008

The Credit Crunch

'The Credit Crunch' seems to be the phrase on everyone's lips at the moment. Everyone in the UK is noticing fuel price increases and food price increases. I do wonder whether we are all more aware of it because there is so much on the news about it at the moment and whether we would not even look at prices if we had not been made aware of the price increases.

I must admit that before I started my budget shopping, I had no idea how much I was paying for a loaf of bread or bottle of milk. I just bought it form the most convenient place and wouldn't think twice about popping a few extras in the basket too. I was shopping almost daily at my local Waitrose and often buying treats and comics for the children and treats for me too. Since becoming aware of just how much I spend on groceries each month has had an amazing effect on my shopping trends.

It is also interesting how many people seem to be talking about prices and especially with regard to fuel and food. My Mother was telling me that the price of butter is predicted to be £7.50 a packet in 10 years time and that was worrying for her as she will be living off a government pension which is unlikely to increase significantly in value.

This got me thinking about two things. How very important it is to have a decent retirement income which will not only be able to keep you living in comfort but that is likely to increase with inflation. Also to make sure that you do not get too used to living a luxurious lifestyle if you think you will not be able to afford it in the future - this sort of spending habit is very hard to break and it is better to remain frugal rather than get too used to spending and then have to stuggle and suffer in retirement.

4 comments:

jay said...

An excellent and thoughtful post.
The coming credit crunch should make us think about our financial health for the future

Rachel said...

Thank you!

Mike Perry said...

I agree 100% about having a retirement pot. So many people are ignoring this and state pensions could well diminish.

Not so sure about being too frugal though, everything in balance. Life / money is to be enjoyed.

It's really that old thing about: Income £1, expenditure 95p = happiness. Income £1, expenditure £1.05 - worries.

Mike.

Rachel said...

I agree that being frugal isn't always fun but I think there are ways that most of us can save without making a massive lifestyle change - such as perhaps just shopping in a cheaper place for the same goods.