Universal credit cut: prepare your finances

The cut to the Universal Credit uplift is set for 6 October and many families need alternatives. Here are some ways to prepare yourself financially.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Thoughtful anxious asian business woman looking away thinking solving problem

Image source: Getty Images

The deadline to end the £20 Universal Credit uplift is set for 6 October. It will affect the pockets of nearly six million people, and as many as 800,000 families could fall into poverty as a result of the cut.

While it may not have been the news many wanted, the government is optimistic about a rebound in the economy. This could open up opportunities, but until that happens, it’s up to households to make preparations.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

There are three basic ways to ready yourself for the Universal Credit cut.

[top_pitch]

1. Increase your income

Thanks to increasing economic activity as Brits shift into their new normal, record numbers of jobs are available. According to the ONS, unemployment rates are down to 4.7%. But it may not seem like enough for those who still find themselves in the unemployment bracket.

Finding another source of income is an important step to take in order to shoulder the Universal Credit cut and is the only real permanent solution. However, formal employment isn’t the only way to make up the £20 per week. Other options include:

  • Becoming a driver: Uber and Lyft are simple options to join if you happen to have the right car. It doesn’t take long to make a few extra pounds and before you know it, that £20 deficit won’t feature anymore. However, you need to meet some criteria in terms of the car you drive.
  • Working on the internet: Type in the word ‘freelancer’ and you’ll find a number of search options that will highlight some of the most popular and lucrative work choices. These side jobs range from writers and photographers to transcribers and website testers. The pay for such roles may start off pretty low, but it can rise to around £10 to £20 per hour. This, of course, depends on turnaround time and your knack for following instructions.
  • Picking up a second shift: This might have been difficult before, but as industries open back up, businesses might be more open to the occasional extra shift.
  • Cooking for other families: If you have the facilities to do this and your meals are well-liked by family and friends, cook a meal or two a week for other families. Budget-friendly yet tasty meals go a long way, and if it saves parents from stopping for yet another store-bought meal or takeaway, you know you’ve got a winner. It might take a bit of time to build a decent customer base, but at the very least it should make up the shortfall in a few weeks. Social media is a good way of advertising. 

2. Decrease your expenses ahead of the Universal Credit cut

If Covid taught us anything, it’s our ability to cut down on expenses. Cutting down on expenses might not be possible in every household. It’s important to look at money drains that might just cost you more than they should. For instance, many of us know we spend more on streaming subscriptions and takeaways than we need to.

While this is one way to carry the load that the Universal Credit cut brings, it’s only a short-term solution until you’re able to increase your income again. This is because households can only cut expenses so many times.

[middle_pitch]

3. Look for other sources of support

Some households simply can’t increase their income or cut their expenses any further to cover the Universal Credit cut. It’s simply not feasible for those who face serious medical problems or have to take care of sick or elderly relatives.

It’s important to check all the benefits available to those who need financial support. Seek advice from local and national groups to find out whether there are any special grants available. Some useful websites include:

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »