Awful April: why freelancers need to earn and save more this March
HL analysis shows how much price rises this April could impact your finances. Here’s how much you’ll need to save or earn to help make ends meet
“April is going to be every bit as awful as you’d expect this year, with the usual range of price rises squeezing our budgets even harder,” says Sarah Coles, head of personal finance at Hargreaves Lansdown.
“This doesn’t just mean money will be tighter in the coming weeks, it also has a knock-on impact on your savings,” says Coles.
Price rises: how much will you have to pay?
- Energy bills – possible extra cost £111
The price cap will rise 6.4% in April, for an average household that’s a hike of £111 to £1,849
- Council tax – possible extra cost £109
Councils have the freedom to raise tax by 3% – plus another 2% for social care – without holding a referendum. It means band D council tax could rise from an average of £2,171 to as much as £2,280 – £109 more at the start of April.
- Water bills – possible extra cost £123
Water bills are set to rise an average of £123 to £603 on 1 April – that’s up 26%.
- Broadband and mobile – possible extra cost £50.40
Mid-contract hikes are on the way for the customers of a number of broadband and mobile companies. If you got a new contract more recently, you might have signed up to a fixed price increase, but if you have an older contract, you may still face inflation-linked hikes covering a percentage of your cost.
Not all contracts have these, but most of those that do link to inflation in December or January, plus around 4 percentage points, according o Coles. They then hike the price in March or April. It means you could be facing a rise of between 6.4% and 7.5%.
Cost calculations are based on broadband costing £25 a month, a mobile contract costing £35, and a 7% price hike, adding £4.20 a month, or £50.40 a year.
- Car tax – possible extra cost £195
The standard rate will rise £5 to £195, but there are bigger changes than usual, with the introduction of tax on newer electric cars – at £10 in the first year and then £195 each year after that. Electric cars worth over £40,000 will also face the expensive car surcharge. The first-year charge will also rise significantly: new petrol and diesel cars that previously faced a first-year charge of £220 will rise to £440.
- TV Licence – extra cost £5
The standard colour TV licence will cost £174.50 – up £5.
How much does the average household spend in the UK?
Right now, on average, households spend £2,062 on the essentials each month. Among top earners, this rises to £3,366 and among the lowest earners, it falls to £707. Coles suggests you should have enough cash to cover 3-6 months’ worth of essential expenses as emergency savings while you’re working and 1-3 years’ worth in retirement.
“It means that a rise in the cost of essentials will automatically increase the amount of savings you need to hold,” says Coles.
Average emergency pots today might need to be between £6,186 and £12,372 among working people and between £24,744 and £74,232 among retirees. After the price rise, working people need to add between £148 and £297 to their emergency savings, and retired people need to add between £593 and £1,780, according to figures from the HL Savings & Resilience Barometer.
Coles is sympathetic to those who can’t think of where they will get extra cash or savings from:
You’d be forgiven for thinking that at a time when so many of your costs are increasing, the last thing you need is to be putting more money away for the future – especially as all this comes on top of frozen tax thresholds pushing tax bills up. However, the sooner you can get cracking on building your savings pot, the better, because you never know when an emergency is going to strike.
HL Savings & Resilience Barometer shows that 35% of people are already falling short. For them, the price rises in April run the risk of leaving them even more vulnerable.
Unlike salaried workers, freelancers can pitch for new work, which enables them to produce extra cash. But even those that can bag a new assignment, Coles says it is worth considering where you can cut costs, and whether you can free up any cash from your budget to set aside for emergencies.
“If there’s a pay rise on the horizon, you can commit to saving as much of the extra cash as you can afford,” she says.
Best place for your emergency fund?
“The best place for your emergency fund is an easy access savings account or cash ISA. It’s worth checking out online banks and cash savings platforms, where you can usually find higher rates. If you find your savings accumulating beyond what you genuinely need, you might want to consider investing,” sales Coles.
She encourages you not to feel like you have to be “perfect overnight.”
“Just do whatever you can afford, as soon as you can afford to do so, and build your savings in any way you can.”
How much more do you need to save?
| Period of essentials to cover | Amount of savings you need today | Amount of savings you need after the price rise | Extra savings needed |
| 3 months | £6,186 | £6,334 | £148 |
| 6 months | £12,372 | £12,669 | £297 |
| 1 year | £24,744 | £25,337 | £593 |
| 3 years | £74,232 | £76,012 | £1,780 |
Source: HL Savings & Resilience Barometer
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