This Is Why You Shouldn't Take Money Advice From Rich People

When the richest 10% hold close to half of all UK wealth, what hope is there for the rest of us?
Why you shouldn't take money advice from rich people
Planet Flem via Getty Images
Why you shouldn't take money advice from rich people

Let’s be honest – we’ve all had enough of hearing wealthy people’s tips on how we could be saving more money in the coming months.

The energy price cap is set to soar to £3,549 for the average household, and businesses are being forced to close as their bills increase by 500 or 600%, it’s clear action needs to be taken, and soon.

But, between former Tory MP Edwina Currie suggesting people put tin foil behind their radiators to keep the heat in, and the onslaught of articles advising people cut back on the basic necessities (such as food and water), it’s hard not to feel that some people still just don’t get the reality of the cost of living crisis.

In fact, anyone who remains relatively unaffected by inflation, unprecedented energy bills and rising rent is actually pretty ill-equipped to comment on how those who are impacted can cut costs.

Here’s why.

Why advice from rich people is misplaced

When wealthy people offer advice on how to reduce costs, they often overlook the deep structural inequalities which exist in the UK.

The co-executive director of the Equality Trust, Jo Wittams, told HuffPost UK the gap between the richest and the poorest is at its widest in more than a decade right now.

She explained the wealthiest 10% of households hold “43% of all the wealth in the UK” – meaning taking small steps to shave a few pounds off your energy bills is just a drop in the ocean when it comes to tackling the whole issue.

Wittams added: “High and entrenched inequality in the UK sees the richest profit, leaving the poorest struggling, especially when a crisis hits.”

This certainly rings true when you look at the past few months. Forecasters have warned that energy bills are going to carry on skyrocketing for households (and small businesses), but oil and natural gas giants have been making record-breaking profits.

Similarly, newly-elected prime minister Liz Truss has faced intense criticism, as her plan to tackle the crisis involves tax cuts which would see those who already have substantial wealth walk away with even more.

Financial speaker Ellie Austin-Williams, host of Money Unfiltered, also described such advice as “toxic”.

She said: “It implies that the situation is within the listener’s control, and if you just follow the words of the person in question, you can get out of the situation.”

“These tips aren’t intended to be patronising,” she explained.

“But they are often coming from people who can absorb rising energy costs and still maintain a level of normality and dignity. It’s insensitive at the very least to publicise these tips, and in some ways it trivialises what is a very concerning situation for so many households.”

Bola Sol, finance coach, YouTuber and author, also pointed out that such misguided advice could even be unsafe.

Using Currie’s example about putting tin foil on your walls to trap in the heat, Sol said: “It may not make a difference and depending on the household, it may not be safe to put foil behind a radiator. ”

The crisis cannot be fixed by individual choices

During a Twitter clash with Money Saving Expert Martin Lewis, Currie repeatedly told him to stop implying governments “can do everything” – even though they are definitely the ones with the greatest power to fix problems like this one.

In fact, Germany has started a scheme which would subsidise renovations to old buildings and install more energy efficient windows, doors and heaters over the next few years, to cut on energy usage in the future.

Italy is calling for a cap on gas prices at a European level to reduce spikes, while Spain has started to subsidise fossil fuel plants’ power costs which keeping a longer-term focus on building renewable capacity.

Austin-Williams did acknowledge there is always “an element of individual responsibility”, suggesting it is wholly comes down to personal choices “essentially sets people up to fail and feel guilty that they need help on a bigger scale”.

She added: “It’s sadly quite likely to cause a lot of shame and guilt later down the line when the bills do hit and people still can’t pay, despite listening to all of the tips and tricks out there.”

She told HuffPost UK that it is good to be conscious of your energy usage, but we must understand “the lack of control we truly have over bills”.

Energy bills, which are driving the inflation rates, are soaring because of factors far outside of consumers’ control, such as Russia’s invasion of Ukraine, the price of wholesale gas and the UK’s gas storage facilities.

The Equality Trust’s Wittams also said any suggestion the structural problems of the UK’s economy and energy market can be fixed solely by personal choices is “incredibly out of touch”.

Indeed, some people will not be able to afford to turn on their radiators this winter as they face fuel poverty, choosing between eating and heating – again, making Currie’s advice seem out of place.

Inflation-adjusted pay has reached new lows of -4.1% – as recorded by the Office for National Statistics – far outstretching any rates recorded since 2001.

So, no wonder workers across the country are striking rather than just turning down the thermostat.

Annual change in inflation-adjusted pay.
PA GraphicsPress Association Images
Annual change in inflation-adjusted pay.

Sol also told HuffPost UK: “Anyone who doesn’t understand the impact of this cost of living crisis isn’t experiencing the same financial shock the majority of people are facing.

“I don’t want to hear tips about tin foil, I want a PM who will put a price cap on energy bills.”

She did point out that, rather than start using strange DIY hacks, people should call their energy providers, get a payment overview, enquire into what assistance is available to you and see if you can set up a payment plan to spread the cost.

What is needed to actually fix the crisis

There are a range of measures which Liz Truss can turn to in a bid to ease the current crisis.

They include immediate, permanent increase to Universal Credit – as suggested by the Equality Trust – and sustained reforms to level out the tax system.

Right now, poorer households are suffering from a much higher inflation rate than their wealthier counterparts, because they have to spend a high proportion of their income on energy.

Some campaigners have called for energy companies to be nationalised, too, to prevent spiking costs.

As Sol explained: “The pressure is on the government to make change not others. Where on earth are people supposed to find the extra money for soaring energy bills after a pandemic full of redundancies?”