The term “unprecedented times” has been used a lot over the past few years, hasn’t it? Whether it’s the global pandemic, the soaring cost of fuel and energy crisis or the more recent war in Ukraine none of us would be shamed for saying when it comes to our finances we panic.
This is where we need to prioritise our finances and budget.
Unless you are a multimillionaire, money management is always about priorities.
It’s thinking about what’s important to you and this will be different for everyone. The issue now is that a lot of people have always lived to the max, have no savings and suddenly there is a triple whammy – daily goods and services have jumped up in price, energy costs have risen and there is also the chance that those on fixed rate mortgages their deals will be coming to an end and replaced with higher interest rates.
So, if you are concerned about managing existing bills or looking for ways to increase income here are some tips from our wealth management director Amanda Cowie:
“Firstly, I’d say – take control. Take some time out to consider your budget and what your priorities are (don’t bury your head in the sand and keep spending – this is a recipe for anxiety and sleepless nights). Once that’s done, you can decide if any of these tips will work for you:
- Increase Income – this is often difficult to do but it can make a big difference to balancing your budget. If you haven’t got scope for a pay rise/promotion/you don’t have spare time for other work then look at selling stuff in your home you don’t need to raise extra cash. Platforms such as Facebook Marketplace, ebay and Gumtree are popular for selling your unwanted items and easy to use. You can also sell unwanted clothes on new sites such as Vinted and Preloved. Dig out the gold chains you haven’t worn for decades and cash them in at a pawnbrokers or have a good old fashioned car boot sale.
- If the above is not an option, reduce expenditure – obvious but difficult to do. Cut costs – do it cheaper. That might be switching from Sainsburys to Aldi, David Lloyd to Pure Gym. A popular way of reducing your expenditure used to be shopping around energy companies but, as Martin Lewis has just admitted, this is not an option currently. Cut back – do it less. This could be takeaways or going out to eat – if the thought of looking forward to a holiday in the sun is a priority then sacrificing something else may not be an issue. Cut out – don’t do it. That gym membership that is not being used – take up walking or running. Look at the number of subscriptions to different streaming services – this can creep up on us all and do we really have that much time to watch TV?
If you are a member of a workplace pension scheme it would be very tempting to opt out for a period to release some ready cash for things like holidays. However, this means that you would be missing out on the valuable contribution from your employer and investment growth on contributions, which will inevitably impact on your future plans.
Here is a handy budget planner from the Money Advice Service (it’s a really good website and has some good tips)
https://www.moneyhelper.org.uk/en/everyday-money/budgeting/budget-planner
Please reach out if you’d like more advice with your long term financial planning:
Amanda Cowie, Director and Chartered Financial Planner, RL Wealth.