The cost-of-living crisis has been a big challenge for individuals and businesses, and as we move through 2025, financial pressures are still prevalent. Rising inflation, increased energy bills, and soaring interest rates continue to put a strain on households and companies across the UK. While some economic recovery is underway, many are still struggling to make ends meet.
If you’re concerned about managing your finances in the face of these ongoing challenges, this blog will outline practical steps to avoid financial distress and where to seek professional help if needed.
Why is the Cost of Living Still a Problem in 2025?
Despite government interventions and economic adjustments, there are a lot of things that continue to make the cost of living a prominent thing for everyone:
✅ High Inflation: While inflation has slowed compared to previous years, the cost of essential goods and services remains much higher than pre-pandemic levels. Our everyday expenses, such as groceries, fuel, and housing, are still rising.
✅ Interest Rate Pressures: The Bank of England’s efforts to curb inflation have kept interest rates at unusually high levels. As a result, homeowners, people who have loans, and those with credit card debt are finding it harder to keep up with repayments.
✅ Energy Bills and Housing Costs: Energy costs continue to go up and down, and with housing shortages driving up rent, many households are finding it increasingly difficult to afford even their essential bills.
✅ Rising Business Costs: Businesses also face increased costs due to wage inflation, supply chain issues, and higher tax burdens. Many businesses big and small then have to pass these costs onto customers, adding to the financial strain of everyone.
How to Protect Yourself from Financial Distress
If you’re struggling with the cost of living crisis – like many of us are- taking action early can help ease the financial pressure. Here are some steps to consider:
1. Take Control of Your Budgets
- Review your income and your outgoings to identify areas where you can cut back.
- Prioritise essential spending and reduce discretionary purchases.
- You can easily find budgeting apps or spreadsheets to track your financial health online, which are really useful for many people.
2. Manage Debt Effectively
- If you are struggling with loan repayments, speak to lenders about restructuring your debt; they can help.
- Consolidate high-interest debts to lower your monthly repayments.
- Avoid taking out new debt unless it is absolutely necessary.
3. Seek Support for Rising Bills
- Check if you qualify for government support schemes or energy bill assistance.
- Compare utility providers to ensure you are on the best possible tariff.
- Speak to your landlord or mortgage provider if you’re struggling with housing costs.
4. Plan for the Future
- Set aside an emergency fund, even if you can only save a small amount each month.
- Some people look at additional streams of income, such as freelance work or a side hustle.
- Stay up to date about financial support options available to you and keep informed of what is happening currently with the economy.
When to Seek Professional Advice
If you find yourself unable to pay bills, accumulating debt, or facing legal action from creditors, seeking professional advice early is crucial. At Connect Insolvency, we provide expert guidance to individuals and businesses struggling with financial distress.
We can help you explore options such as:
- Debt restructuring plans
- Negotiations with creditors
- Insolvency solutions like IVAs (Individual Voluntary Arrangements)
The cost of living crisis in 2025 continues to pose financial challenges, but you can regain control of your finances by taking proactive steps. If you or your business are struggling with debt, don’t wait until the situation worsens—reach out to Connect Insolvency today for confidential, no-obligation advice.