13th December 2017
Although this may be blindingly obvious to the majority of us, now more than ever is sticking to a budget entirely necessary. This allows you figure out how to live well below your means, ultimately resulting in the ability to build up healthy cash reserves, should the worst happen. Begin by planning out what your absolutely necessary outgoings each month are, including mortgage or rent payments, maintenance costs, energy bills, fuel and insurance costs. Once you have calculated how much you need each month, add 10% and then proceed to try and save the remainder of your monthly salary where possible. In a best-case scenario, you will end up with a healthy collection of savings which could be put towards home renovations, vacations or other luxuries. In a worst-case scenario, you’ll have peace of mind knowing that your essentials are taken care of. If your current outgoings appear to be significantly higher than expected, it could be worth considering cutting out one of two nonessential spends each month.
As mentioned, sticking to a budget will help you build a healthy buffer of cash, in case the worst should occur. If you are able to contribute a portion of your monthly incomings to a bank account, ideally one with a good interest rate, you will quickly build a reserve of backup funds. If your job or source of income is at the low end of the risk spectrum, in case of a financial crisis, a buffer will allow you to afford any unforeseen costs, which is particularly useful in the colder months. With the likelihood of burst pipes and damage to property and vehicles occurring in the winter, considerably higher, your reserve could stop you eating into your monthly budget for these emergency expenditures.
Although it may sound cliche, comparing tariffs on bills can save a household hundreds each year. If you are able to set aside some time each month, you can review all of your bills and usage, and get a better understanding of where savings can be made. The same can also be done with monthly maintenance outgoings such as food bills, which can result in significant savings.
If you have to borrow money, then try to get the lowest fixed rate of interest possible, or even better, find providers offering no interest, even for a limited amount of time. Furthermore, if you currently have a mortgage, now could be the time to fix it for two, three or five years. By fixing your mortgage for this period of time, you are less likely to put your home at risk should a financial crisis occur. Furthermore, if you can overpay on your mortgage, where possible, this can help provide more security in an uncertain economy. By reducing your overall debt on your property, you can gain more equity in your home.
Make sure that you remain proactive with your savings and investments, closely monitoring changes, particularly through economic uncertainty. By ensuring that these are not damaged by adverse market conditions, you will be better able to protect yourself from losing money. Those with long-term savings should be aiming to protect these from inflation chipping away at their money, by making them work harder within the markets.
Financial publications can provide a beneficial insight into the current climate and can ensure that you regularly keep up to date with the markets. Day-to-day monitoring can alert you to any detrimental changes and ensures that you are prepared for whatever the economy throws at you