Your recession survival guide
TRICIA PHILLIPS asks experts for tips on riding out the financial downturn
1DRAW 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.
2HAVE 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
3CHOP YOUR BILLS
DON’T simply renew energy, insurance and other bills. Comparing quotes on sites like MoneySuperMarket, Compare the Market and Uswitch could savehundreds.
There’s no reward for loyalty – energy switchers can save up to £300 and drivers to £280.
4CREATE 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.
5TAKE 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.
6CANCEL 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.
7PREPARE 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.
8PENSION 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.”
9DON’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. 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.
12DON’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.