The rising cost of food, energy, fuel, and other essential items over the course of the year has made it difficult for many families in the UK to maintain financial stability. How is it possible to plan for the future and deal with the cost of living crisis as inflation rises but your income doesn’t follow suit? Here are a few things to consider to help you combat the cost of living crisis.
This does not constitute advice and advice should be sought in all instances before acting on it.
Review your spending
The first step to sorting out your finances is to ensure you have a good idea of how your money is currently being spent. Review your spending and if you don’t currently have a budget, start one now. Being able to track your income and outgoings will help you identify areas where you’re overspending and eliminate or cut down on unnecessary expenses.
Don’t forget about emergency savings
Having a rainy day fund, or an emergency savings account, is essential when it comes to financial security. This is, of course, separate from wealth protection policies which are designed for longer, or more serious illnesses or injuries, but often a dedicated account that’s easily accessible (but not so easy you’re tempted to dip into for everyday spending) with a certain amount of money designed to help you weather a storm. Ideally, your savings should be able to cover you for three to six months at a minimum. Help build this pot by prioritising savings and setting up an automated payment each time you get paid so you don’t even need to think about it.
Don’t forget about long-term goals
Even if you might feel the squeeze on your budget, it’s crucial that you stay on top of your finances and balance your needs in the short-term with your goals in the long run. It may be tempting, but steering clear of your pension and investments is the smartest decision to make. Drawing down on your pension or selling your investments might be a small help now, but could potentially make a huge impact in the future.
While it’s important to think about both short and long-term goals when it comes to your finances, you need to ensure that you’re prioritising the future and not making any rash decisions that could jeopardise your long-term financial security.
Before making any bold moves, it is imperative to obtain professional financial advice. For more information or to discuss your financial plan, get in touch with the experts at Dental & Medical Financial Services today.