2022 and 2023 are set to be very tough years financially for most people. There has been a huge increase in the cost of living with inflation running at 11% in the UK as well as being on the brink of a recession. The chances are, individually or as a business you are going to feel the pinch in the next year or so, so we’ve put together some useful tips on how to manage your finances effectively and make cuts wherever they may be required.
Monitor Your Bank Statements
Obviously, your bank statement is the main indicator of where your money is being spent. Many banks as part of their mobile banking app now categorise purchases for you and you can read handy reports at the end of the month showing what you have spent your money on. These can be really useful and sometimes point out what you might not notice at the time. For example, one month you might have spent £150 on food and £100 in pubs, bars or restaurants. The next month you might notice you’d spent £120 on food and £400 in hospitality venues, this shows you’re eating out more and it’s costing a lot more money so can help you be more aware of what you’re spending. Subscription services are also a good one to monitor, most people will have up to 5 different subscriptions which can cost around £100 per month, but do you use all of them? Could you live without a couple of them? Probably!
Try and save whatever you can
The one benefit of the current situation is that while interest rates are high, it’s great for saving! The downside is that your mortgage repayments go up if you are on a variable rate but the upside is if you can save any money at all then you’re getting much better returns on savings than at any point in the last 20 or 30 years so consider putting away anything you can. The main reason for this though is it’s obviously a safety net in case something unforeseen happens.
Don’t let debt spiral out of control
The single biggest thing you can do is make sure you always seek advice and act quickly if you are struggling. Many people get into debt for various reasons, you could lose your job unexpectedly and all of a sudden find yourself having to repay your mortgage, pay for bills and have no income so debt can quickly rack up. Even if you find another job its unlikely you’ll be able to pay the debt off for a while that accumulated so always ensure you don’t just ignore and get help. There are great government backed programs like IVA’s that can help you stop paying interest, write some debt off and set up an affordable payment plan. If you apply for an IVA there’s a good chance you’ll be back on track within a few years. If you’re worried about your company then Company Voluntary Arrangements (CVA’s) are also available.