THE RECESSION SURVIVAL GUIDE
TRICIA PHILLIPS asks experts for tips on riding out the financial downturn
1 DRAW UP A BUDGET
KNOWING where you stand with your finances is a vital first step. Create a simple budget of what’s coming in and what’s going out, so you can work out if you can cut out or cut back in any areas to make savings and ease financial pressures.
2 HAVE A DEBT-SHRINKING PLAN
GET it cleared as quickly and as cheaply as possible. A £2,500 credit card balance at 19.9%, paying the minimum 2.5% each month, will take over 26 years to clear and cost £3,702 in interest. Set up to pay a fixed amount each month. Pay £83 (2.5% of balance plus £20 extra) and you’ll be debt free in three years and five months – and pay £872 interest. Or consider a 0% balance transfer card with a one-off fee and every penny after goes towards the debt.
Natwest offers 28 months with a 2.75% fee and M&S Bank 28 months with 2.85% fee
3 CHOP YOUR BILLS
DON’T simply renew energy, insurance and other bills. Comparing quotes on sites like Moneysupermarket, Compare the Market and Uswitch could save hundreds.
There’s no reward for loyalty – energy switchers can save up to £300 and drivers to £280.
4 CREATE A SAFETY NET
WHEN you draw up your budget, make sure you include something, however small, each month to put away. A financial safety net of three to six months of your essential bills is a must.
5 TAKE CONTROL OF SPENDING
DON’T go back to pre-lockdown spending habits.
Work out things you’ve missed and those you can live without. A few savings will help with a safety cushion.
6 CANCEL UNEEDED THINGS
GO through subscriptions and memberships and be ruthless on which you need – and use.
Ditch the ones you know are a waste of money or find cheaper alternatives for those you can’t live without.
7 PREPARE YOUR CV
DON’T wait until redundancy strikes – get your CV and social media profiles up-todate and sign up to jobs websites. Be prepared to be flexible. You may need to do something totally different until things improve.
8 PENSION PLANNING
DON’T rush to stop paying in to your pension, this should be a last resort – no one wants to be struggling financially in retirement. If you are in a drawdown plan and your fund dips you may need to rethink how much you withdraw so you don’t deplete your pot too quickly.
Expert Robert Cochran, of Scottish Widows, says: “There are a number of things around pensions that are free. Make sure you’re getting the maximum contribution from your employer. You can get free help from Pension Wise from age 50.”
9 DON’T SHOP WITHOUT DEALS OR VOUCHERS
THERE is virtually always a deal to be had. A bit of research before buying could save you money. Don’t rush when shopping online – leave something in your basket and an offer may pop up to encourage you to buy.
10 USE YOUR REWARDS
DIG out those reward cards in your wallet. See what points you have and put them to good use, rather than wasting them.
11 MAKE SURE YOU CLAIM EVERYTHING
THE benefits and tax credits system is complex, so make sure you claim everything you can. Charities can help you through the minefield.
Try the benefits calculator at Turn2us.org.uk or call 0808 802 2000. Age UK has one at ageuk.org.uk or call 0800 678 1602.
Citizens Advice and Stepchange Debt. Charity can also help you through it.
12 DON’T BURN YOUR BUDGET
WE all want a holiday after being cooped up for months, but don’t be tempted to overspend – you may need that cash for something essential later.
If you put down a deposit on a break and are now worried about the cost, see if you can cancel without losing cash.
13 DON’T RUSH INTO A PAYMENT HOLIDAY
PAYMENT holidays on mortgages, loans and credit cards will be available for a while yet, but don’t see them as a get-out-of-jail-free option. At some point you’ll have to make up for missed payments in extra interest. Find out if you can move to a cheaper product, make reduced payments, or get interest frozen.
14 TALK TO THE FAMILY
GETTING them all involved, sharing and working together will help ease the pressure and stress on you. Explain the need to tighten belts and get their ideas to have a good time on a budget.
15 BE A SAVVY SHOPPER
PLANNING meals, writing a list and sticking to it can chop £20 a week off your grocery bill – over £1,000 a year. Don’t be tempted by impulse multi-buys. Knowing what you want will mean less time in the supermarket.
16 TRIM YOUR MORTGAGE
MAKE sure you’re on the cheapest deal – around 10.8 million people are on their lender’s standard variable rate, which can be double the cost of the best deals. Know when your current deal ends and lock in a new deal.
17 DON’T PANIC ON INVESTMENTS
BETWEEN January and the bottom of the market in March, the stock market fell a third. Since then, prices have recovered 25%. Investing is a long-term business, and there will always be ups and downs throughout.
18 FLOG THE CLUTTER
HAVE a clear out and make a few quid on ebay
19 TURN PENNIES INTO POUNDS
BY rounding up purchases – lots of banks and apps help you do this automatically, rounding up transactions and transferring the difference into a savings account.
20 DITCH THE OVERDRAFT
THE freeze on interest on overdrafts is coming to an end and many banks are hiking rates up to almost 40%. Don’t get stung. Try and clear it or find a cheaper way to borrow, like a personal loan or 0% credit card.