The UK is now officially in a recession, and for many people this is a point of concern and they are worried about what is going to happen moving forward. We’re here with a few tips to help see you through the recession, whether you are wanting to cut your living costs down, cope with debt you already have and everything in between.
Make A List Of Financial Priorities
The first thing you should do when it comes to navigating financial difficulty in the recession is to make a list of your financial priorities. It can often be difficult to deal with financial issues when you don’t know what you 100% need to be spending your money on, and things that you can definitely cut back on.
So, your top level financial priorities should be paying off debt if you are in it (for example you might need to pay your company voluntary arrangement back or perhaps you have taken out a loan with the bank), keeping a roof over your head, paying electric and gas bills to stay warm, transport to and from work, buying food and staying in good health. Make sure that you absolutely have enough money for all of these things, and cut back whenever possible. For example, could you swap to a cheaper mode of transport, could you join a cheaper gym or could you reduce the cost of your food shop.
Then from here, you can decide what your other priorities are. Before you start spending money on unneeded clothes, holidays or going out, make sure that you absolutely can afford the essentials and your financial stress will ease significantly.
Try To Build An Emergency Fund
If you have some disposable income, then you should definitely gradually build an emergency fund. Even if you can only afford to put £10 a month away, having any amount saved is going to make a difference when something crops up financially that you weren’t expecting. For example, perhaps your electric bill goes up significantly one month that you weren’t expecting, your emergency fund can help to contribute towards that. Or, maybe your child needs new school trousers. The aim should be to have a good chunk of money to one side so that if anything did happen and say you lost your job, you have some money to cover your essentials whilst you get back on track.
Be Honest With Yourself About Your Finances
One of the worst things you can do if you feel stressed about finances throughout the recession is to pull the wool over your eyes and try to forget about it, telling yourself everything will be alright. Instead, you need to be very honest with yourself about your financial situation. Sit down and figure out exactly how much debt you are in, if you are, from all different sources. Once you know this, you need to figure out how you are going to pay it back. This is where our first point comes in, where you will account for your essential outgoings and then save as much as possible in all other areas to start paying off your debt. If your debt becomes unmanageable and you owe money to two or more creditors, then you should seek IVA advice where you can consolidate your debts.
Once you know what you owe and how you’re going to pay it back, you need to make sure that you stick to it and then moving forward, make a strict budget for each month so you know exactly what you’re spending and you know where you have overspent and what you might need to cut back on the following month. Have a section for all your essential outgoings, what you usually spend and then how much you have actually spent. Then, have a section for non-essential ones and keep a very close eye on this too, making sure that you are still saving as much money as possible.
We understand just how much stress money can bring, but you need to remember that there is always a way out of financial issues, so don’t be afraid to ask for help. There are so many schemes out there to support you, whether you are struggling to buy food or if you need to find an easier way to pay back debt. Identify where the issues are and separate them into smaller sections and gradually start working through them. This might be daunting, but you will significantly reap the benefits in the future when you are realistic about your spending.