Will the increase in the National Living Wage be sufficient amid rising inflation?

The National Living Wage will increase to £9.50 in April 2022. But is it enough amid rising inflation? How can you remain financially resilient?

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.

Close-up of British bank notes

Image source: Getty Images

One of the good things to come out of the Autumn Budget is the increase in the National Living Wage from £8.91 to £9.50 an hour. But is it sufficient amid rising inflation? What can you do to ensure you remain financially resilient?

[top_pitch]

How much will National Living Wage rates rise?

Starting in April 2022, the National Living Wage rates will rise for all age groups:

  • 23 and over: £9.50
  • 21 to 22: £9.18
  • 18 to 20: £6.83
  • 16 to 17: £4.81
  • Apprentice rate (for apprentices under the age of 19 in the first year of apprenticeship): £4.81

What does the National Living Wage increase mean for your finances?

The increase will add an extra £1,000+ per year to the pockets of Brits on the National Living Wage. This amount can be used to ease the cost of living pressures and make rent more affordable.

However, there’s a worry that this extra £1,000+ per year might not be sufficient. Inflation is on the rise, and it appears it’s not going down any time soon. In fact, when announcing the Autumn Budget, Chancellor Rishi Sunak commented, “Inflation in September was 3.1% and is likely to rise further, with the OBR expecting CPI to average 4% over next year.”

This might push the cost of living through the roof, meaning the increase in the National Living Wage may only ease some of the pressure without making any significant positive impact.

And let’s not forget the recent benefit cuts and soaring energy bills that haven’t made it any easier for vulnerable households.

[middle_pitch]

What can you do to stay financially resilient?

Despite the chancellor’s warning of a rising cost of living, he offered hope by explaining how the government would act.

He said, “I have written to the Governor of the Bank of England today to reaffirm their remit to achieve low and stable inflation. And people should be reassured: they have a strong track record in doing so. I understand people are concerned about global inflation – but they have a government here at home ready and willing to act.”

Regardless, here are three ways you can remain financially resilient amid the current level of uncertainty and soaring living costs.

1. Assess your incomings and outgoings

Understanding your incomings and outgoings is important, and it’s an ideal starting point. It helps you identify where you can cut back on spending to save or invest. You could also seek help from a financial adviser to find out how you can quickly but comfortably pay off any existing debts.

2. Check whether you’re eligible for government benefits

The government recently announced two support funds to help support vulnerable households, including those in rent arrears: the new £500 million Household Support Fund and a £65 million support package.

It’s a good idea to find out whether you’re eligible. This could help clear rent arrears and cover living costs, allowing you to save or invest – two key elements in building a financial safety net.

These are not the only government benefits available. You can find the complete list of government benefits on the gov.uk website.

3. Start a side hustle to supplement your income

If you’re struggling to make ends meet, it’s could be a good idea to start a side hustle. You could put your skills and creativity to good use to bring in some extra money. Getting started is typically inexpensive and you should be able to do get everything sorted your spare time.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

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 »