People are going through one of the toughest times financially in the last 20 years. The financial crisis in 2008 was tough but was mainly caused by mismanagement from banks, this time it is across the board. The war in Ukraine has driven food, drink, energy and oil costs sky high in Europe and particularly the UK, the government has a large amount of debt as this is coming off the back of the COVID pandemic with lockdowns that cost hundreds of billions meaning that people are getting hit from all sides. Inflation is at 11%, interest rates have shot up to 4% and wages aren’t increasing by anywhere near the same rate meaning that in real terms people are getting poorer. So the good news is that you aren’t alone, hundreds of thousands of people will be in real financial difficulty by the end of 2023 but the important thing is to take the help and advice available to keep your head above water.
Make Serious Cuts To Your Budget
Life is for living and we all want to be able to go out, have a good time, go on holidays, go to restaurants, for nights out and various other things but the fact of the matter is, a roof over your head, food and heat is far more important. It won’t be permanent for the next 12-18 months people may have to forgo certain luxuries like holidays in order to keep their finances on track. If you’re really struggling then you may have to go further, cut out nights out, alcohol, Sky Sports and various other things that can rack up quite a high amount each month. You’d be surprised how much money can be saved when you really put your mind to it.
Plan For A Rainy Day
Even if you aren’t in a bad situation at the moment, plan for the worst, that would be the best thing to do with how things currently are. The likelihood is we’ll be in a recession by 2023 which means people can lose their jobs at any time. So if you have a spare £100 each month, don’t spend it, save it! The one benefit of what is happening at present is that interest rates are high, that is bad for people with mortgages (especially on a variable rate, or a fixed one that is coming to an end soon) but great for savers. You can get an easy access savings account paying 2.5%-3% interest at the moment which is around 3 to 4 times higher than it was at the start of 2022. Best case scenario if everything goes according to plan you’ll have a nice little nest egg and you can go on a great holiday when we get through this rough patch.
Don’t Let Your Debts Spiral
If you’re already at the point where you’re getting further in to debt each month, don’t let it get to the point of bankruptcy, there are plenty of helpful government schemes available like IVA’s. If you apply for an IVA you can write off a large portion of your debt, stop interest building and get an affordable payment plan. The alternative for a company is called a CVA which is a company voluntary arrangement.