Understanding inflation

Budgeting

This video outlines how rising prices affect your day-to-day spending and how keeping an eye on your costs can help you manage your budget confidently.

Understanding inflation is key to making your money work. Inflation is a measure of how prices rise. This can have a big impact on your budget, as costs for things you regularly buy may change, though it is unlikely that your wages will increase at the same rate.

The Bank of England aims to keep inflation at around 2%. Let’s say the overall rate of inflation rose to 3.5%. That would mean in theory, your monthly outgoings might go from £600 to £621. That might sound manageable, but that is the average figure based on a wide range of goods and services, some of which might have higher or lower rates individually.

Inflation will affect people based on what they typically spend their money on. You might take a closer look at where inflation is felt in your day to day life. Take food shopping as an example. 

Food inflation reached as high as 20% in 2025. That could be a whole £20 extra per week on your food shop alone if your family’s food shop was around £100. And if you drive a lot, rising fuel prices may affect your budget. 

Many regular service personnel can claim Home to Duty support, which helps with commuting costs, but this doesn’t always cover every journey. Fuel costs may still affect partners commuting to work, school runs, or trips to see extended family and friends. So it’s still useful to understand how fuel and travel costs affect your household spending overall. 

Over time, increased costs for different areas of your life add up. Without careful review and adjustment of your budget, you might end up using an overdraft or credit to cover basic living costs. This can quickly spiral and is best avoided if at all possible.

Inflation affects us all, but it doesn’t hit everyone in the same way. It depends on what you spend your money on. 

Keeping track of how rising prices affect your own budget can help you stay in control and avoid relying on credit for everyday costs. Of course, even with careful planning, there are times when money still feels tight. 

In another video, we’ll look at managing those lean periods and how to prepare for them.

All Armed Forces Modules

Budgeting

Module 1

5 videos

22 minutes

In this module, you’ll learn how to build a budget that helps you stay in control of rising costs, plan ahead and manage your money with confidence.

Earnings

Module 2

7 videos

30 minutes

In this module, you’ll learn how to understand your pay, spot any issues early and explore the different ways you can increase your income.

Pensions

Module 3

10 videos

61 minutes

In this module, you’ll understand how pensions work, including the Armed Forces Pension Scheme, so you can plan confidently for later life.

Managing debt

Module 4

7 videos

34 minutes

In this module, you’ll learn how borrowing works, what to consider before taking on debt and how to manage repayments.

Credit options

Module 5

6 videos

37 minutes

In this module, you’ll learn how credit works, what affects your credit score and how to make borrowing choices that support your financial goals.

Mortgages

Module 6

9 videos

47 minutes

In this module, you’ll learn how home buying works, the factors that shape affordability and how different mortgage options can affect your choices.

Investing

Module 7

8 videos

40 minutes

In this module, you’ll learn how investing helps your money grow over time, how it differs from saving and how to make informed investment decisions.