Joel Davies
Posted By Joel Davies
21/09/2022

The rising cost of living is one of the most pressing issues facing many families today. The price of food, energy, fuel and other necessities has risen significantly in recent months. This has made it difficult to make ends meet and has put a strain on many household budgets. 

Planning for the rising cost of living can be a challenge, especially if your income isn’t keeping up with inflation. As many people feel the squeeze as the cost of essential items continues to increase, there are a few important things to consider to maintain your financial wellbeing.

1. REVIEW SPENDING

Going through your spending with a fine tooth comb can help identify areas where you may be able to cut back, and save money in the long run. Keep an eye on your budget and make adjustments as necessary to ensure that you are aware of your outgoing costs and can adapt your spending accordingly.

If you haven’t made a budget, start one using a basic spreadsheet template or use one of the many mobile-app based options available.  Be honest, detailed and keep it under review.  Being able to see exactly where your money’s going will help you to pin down where you can make savings and sacrifices. Ask yourself: What’s coming in and going out? Can I buy this item for less ? And (often the hardest of all): Do I really need that?

2. EMERGENCY SAVINGS

When it comes to financial security, one of the most important things you can do is to keep emergency savings aside for those unknowns. Having a backup fund you can tap into in times of need can help you weather a storm.

One method is to create a dedicated savings account that you only use for this purpose. This way, you can easily access the funds when you need them but they remain out of reach for everyday spending. Aim to build up enough to cover between three to six months’ expenses, or as much as you can afford. The most optimal approach is to factor your savings into your budget as an outgoing. By doing so, it’ll help you see your savings as a must, rather than a maybe. And if you can, set up an automated payment from your normal bank account straight into your savings account – that way you don’t even need to think about it.

3. PENSIONS AND INVESTMENTS

As many people across the country are feeling the squeeze, it’s more important than ever to make sure your finances are in good shape. One way to do this is by making sure you don’t touch your pension or investments.

While it may be tempting to dip into these savings to help make ends meet in the short term, it’s important to think about the long-term detrimental impact this could have on your retirement plans. Drawing down on your pension or selling investments could leave you worse off in the long run, so it’s important to consider all options before making any decisions. Consolidating your old pensions into one could help you cut down on management fees and give you a better picture of how your finances are looking. But before transferring your pensions it is essential to obtain professional financial advice.

DON’T FORGET YOUR LONG-TERM FINANCIAL SECURITY

It’s important to think about the long term when it comes to your finances. Making short-term decisions often driven by momentary emotional responses could jeopardise your long-term financial security. To discuss your situation, plans or for further information, please contact us.

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