High Inflation and Interest Rate


The effect of adverse event, its impact on Household finances and UKs economy.   The need of using Financial Planning to overcome the Social and Economic Effect.   Careful Budgeting leads to financial benefit, reduce expenditure in order to save and invest.

Magdi has no Child, he lives on his own, working 35 hours a week in commission based-sale. His net-income is £19.412, the equalised scale of £31.823. Gross In-come of £26.000, equivilised scale of £42.623.

Magdi’s girlfriend Sara, a student and has no income or grant moves in with him. Their new equivalised income will be the Net. Income of £19.412 or Gross income £26.000.
Because they are partner living together, the MC clement equivalised scale of   Head 0.61 plus Partner 0.39 equals to 1. Income divided by one is one, No Change. Net income of £19.412. or   Gross income £26.000

The equivalised income of both is higher than Magdi’s half equivalised income, because the equialised scale only consider cost of expenditure. The cost of Consumption reduces by sharing.

Magdi income falls by $9.000, because of recession, but still works 35 hours a week. Gross income of £26.000 minus £9.000 equals to £17.000.The Couple will receive £178.80 Tax Credit.

Sara, does not think it’s a good idea for her to work, despite the extra income, because as Couples without Children   and Equivalised disposable income above low income threshold they will not be eligible for certain benefits.

Magdi’s father, who is disabled moved in with them to be cared for, Magdi, had to cut his working hour to fifteen and his annual income falls again by £9.000, that is £17.000 minus £9.000 equals to £8.000. The couple will not be eligible for Tax credit because Magdi works less than 16 hours a week.

If Magdi takes on more work, doing more than 35 hours a week brings in more income and Magdi can still maintain his Skill without being Rusty.

If Magdi reduces his working hour further, so as to spend more than 35...