It’s time to get serious about your money!
Things are getting serious when it comes to our money; inflation is the highest in forty years, interest rates are rising in an attempt to curb inflation meaning our mortgages and debts are costing us more, energy and fuel prices have increased and we can expect a further rise in our electricity bills in October just when we’ll be using our lights and heating more, and we’ve seen a rise in taxation with the introduction of the Health and Social Care national insurance levy, meaning many of us are taking home less money each month, it’s tough out there and we are all feeling the pinch.
Therefore it’s essential you know your numbers, money isn’t as complicated as you might think. Clarity gives you the ability to make better decisions and live the life you want to live, we can’t put life on pause because the economy is out of whack. I often refer to ALIE as every financial planners best friend; assets, liabilities, income and expenditure.
The hardest step is the first one – so where should you begin?
- Start by working out what’s coming in and what’s going out. If you’re struggling financially, or anticipate you will be soon, it’s so easy to bury your head in the sand and ignore the problem. It’s also the worst thing you can do.
- List out all of the money coming in and going out every month (some of the online-only banks can automate this process for you) so you know where you stand. You might even find Direct Debits for things you stopped using long ago!
- Also remember to look through credit card statements, regular payments made by credit card can often be missed out when you review your expenditure, make sure you include these too.
- Next, look at what you owe and what you own. If you’ve got outstanding debts, write them down. Make sure you’re on the lowest interest rate you can get by contacting any credit card providers.
- It’s very likely that we will see more interest rate rises so your borrowing costs will also increase, so you could take this opportunity to review the market and consider a fixed rate for your mortgage.
- Finally, don’t forget to organise what you own, including which companies your pensions are held with.
- Go through each item of expenditure and ask yourself three things: do I need this? Do I want this? Can I get a similar experience for less?
- Unless you plan to rely on savings, you’ve simply got to have more coming in than going out. If you’re taking a financial hit at the moment, that might mean making tough choices and some cuts you don’t want to make. Your TV subscriptions might need downgrading, or that phone upgrade might just have to wait. Also consider reviewing your energy bill and fuel costs. I have looked at fixing my electricity price and using a tariff that offers me a discount in the evening, this is when we’ve agreed to put items such as washing machines and dishwashers on, and we’ve invested into a timer plug that automatically switches on when the discounted rate applies to charge all our electrical devices.
- Remember this period isn’t forever, it’s to get you through uncertainty until the economy is back on an even keel.
- At the same time, think about any ways you can improve your earnings. Thanks to the likes of eBay and Facebook, it’s never been easier to sell unwanted items online, even my 15 year old daughter sells her unwanted clothes on Vinted and Depop, I am sure you can too.
- If you’re on a modest income, have lost your job or have children, it may be worth checking out the website www.entitledto.co.uk to check your eligibility for any benefits. It’s a great resource that may surprise you.
- And you could also consider any online training or upskilling you could do to improve your salary in the future, or returning back to full time education using the Advanced Learner Loan www.gov.uk/advanced-learner-loan
- If you already have a skill you could consider a side hustle selling your skills using sites like www.Fiverr.com or www.upwork.com
Armed with information, you can improve your financial position and make it through the storm, you may decide to carry on your new habits to build the financial future you desire. They say more millionaires are made in a recession, I don’t know if this is true, but if it is, it’s probably because they have started with frugal money skills and kept these habits when the economy recovers.