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Recession-proof your finances

8 Aug 2022

10 practical steps to ensure your money is working hard for you

In these uncertain times, it’s more important than ever to make sure your finances are in order. The Bank of England believes that a painful squeeze on our living standards, driven, primarily, by soaring energy prices, is set to intensify and will push the UK economy into recession later this year.[1]

Making your finances recession-proof is all about taking practical steps to ensure your money is working hard for you. It is vital to be completely honest with yourself about your financial situation.

By conducting a thorough audit of your finances and gaining a comprehensive understanding of all your incomes and outgoings, this will show you exactly where your cash is going and, most importantly, help you identify problematic spending behaviour.

Here are 10 tips to help you recession-proof your finances:

1. Make a budget and stick to it. This will help you keep track of your spending and ensure that you’re not overspending.
2. Save, save, save! Try to put away as much money as you can into savings account so that you have a cushion in case of tough times.
3. Invest in yourself. Take the time to learn new skills or improve upon existing ones. This will make you more valuable in the job market if you need to make a job or career change.
4. Remove any unnecessary payments. Look at your bank account and remove any pain-free direct debits. Consider if you’re currently paying for things you don’t really need, for example subscriptions.
5. Time to switch. Look at energy tariffs, home insurance, car insurance, broadband, TV package, mobile tariff – now might be a good time to switch.
6. Stay disciplined with your debt. Make sure you’re making all of your payments on time and in full. This will help you avoid costly late fees and keep your credit in good shape.
7. Pay off high interest. Prioritise any high-interest debt, such as credit card debt, freeing up more money in your budget to cover other expenses if your income decreases.
8. Have an emergency fund. This is a must in case you lose your job or have any unexpected expenses. Try to save up at least between 3 to 6 months’ worth of living expenses so that you’re expenditure is covered.
9. Diversify your Income. Don’t put all your eggs in one basket. Having multiple streams of income can really help. If one income source starts to dwindle – or gets eliminated completely – this will provide other sources to fall back on.
10. Diversify your investments. In addition to diversifying your income, it’s also important to diversify your investments. Review your investment portfolio and make sure your investments are spread across different industries and even different types of asset classes.

Source data:
[1] https://www.bankofengland.co.uk/monetary-policy-report/2022/may-2022

Footnote: Our belief is that all finacial advice should be tailored to your particular needs and situation. The content of the articles featured in here are for your general information and use only; they are not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Please get in touch to meet with us for a full consultation.

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