It is undeniable: the events of the past two years have not been kind to the wallets of UK families. The pandemic has put a strain on everyone’s budget and caused millions of people to tap into their life savings to deal with redundancies, time off work, and medical emergencies.
While the economic crisis triggered by Covid-19 is slowly blowing over, new financial challenges are coming up. In April, nearly 22 million people in the UK will be affected by a sharp energy bills price increase, which could see their utility expenses rise by nearly £700.
With so much going on, there has never been a better time to take a hard look at your household’s finances, boost your savings, reduce unnecessary expenses, and improve your financial stability.
But where to start? Here are 10 easy tips that every household can adopt – yes, including hard-working dads!
Create a Family Budgeting Plan – Today!
In the UK not all families spend time creating a household budget. Some of them are put off by how time- and effort-consuming the whole process might seem at first. Others might believe that they don’t need one because they have plenty of money left at the end of the month.
However, no matter whether your income can comfortably support your lifestyle or not, having a budget in place is the most powerful tip you have to gain control over your finances. When crafting a budget, you can pinpoint unnecessary expenses, cut down on expenditures, and boost your savings. And, contrary to what most people think, you don’t need to spend hours or days filling in spreadsheets and reviewing receipts!
For example, you could consider using that simple but efficient strategy called the 50\30\20 rule. This budgeting strategy encourages households to subdivide their after-tax income into three categories: 50% for essential expenses, 30% for non-essential expenses, and 20% for savings and investments.
Start Saving for Rainy Days
There is no doubt about it: the best time to start saving for rainy days was yesterday. However, the best time for it is today! Having a robust emergency fund in place is essential to overcome whatever life throws at you, whether it is a financial setback or a medical emergency.
According to experts, you should aim to have three months’ worth of expenses (or three months’ worth of salary) in your savings account. This allows you to pay for unexpected costs without having to deal with severe financial setbacks.
While such harsh rainy days might never come around, having a solid emergency fund in place can help you deal with the majority of unexpected events with serenity.
Invest and Make Your Money Work Harder for You
Undoubtedly, having enough savings to cope with an emergency is essential. However, nearly 19 million people in the UK worry about their long-term financial stability and retirement life quality. That is why it is essential to start planning for it now!
And, while keeping money in your bank can help you accumulate interests, investing can help you grow your savings exponentially over time.
Today, there are plenty of alternatives for retail investors to start planning their investment strategy. However, if you are not an expert, it is important to partner with an experienced broker or fund manager who can help you minimise your investment risk and maximise your returns.
After all, no investment comes at no risk, and you should make sure you are not in danger of compromising your entire financial situation!
Pay Down Your Household’s Debt
In the UK, the average personal debt is over £63,500. And, having this kind of debt can be a significant hurdle that can get in the way of many families’ financial stability. That is why it is essential to start paying your debt down today.
While you might not be able to repay your loans entirely today, there are plenty of strategies that you can leverage to take advantage of today’s low-interest-rate environment. For example, you might consider refinancing your mortgage or consolidating your loans.
Since each person’s financial situation is unique, make sure to partner with an experienced financial advisor who can help you find the best strategy for your needs.
Master Your Credit Card Usage
There are nearly 40 million active credit cards in the UK and, while they can be a powerful tool for most users, they can also be a double-edged sword. If you are unsure how to use your credit card to your advantage, consider speaking to a financial advisor. However, there are some simple tips that you could consider introducing.
For example, you should consider keeping an eye on your utilisation ratio and avoid spending more than 30% of your credit card limit. Additionally, it is essential to make more than the minimum repayments each month to avoid just paying back the interests accumulated on the loan.
Take Advantage of Today’s Gig Economy
Undoubtedly, establishing several passive income streams is essential for any household. However, thanks to today’s gig economy, there are options to make some extra money out of your assets.
For example, if you own a rental property or holiday house, you might consider listing it on Airbnb. This allows you to keep the property for your own needs or rent it out at your convenience. Alternatively, you might consider offering your services as an Uber driver.
Turn Your Passion Into a Side Hustle
If you have a passion or hobby that you wish to develop further, you could create a robust side hustle out of it. For example, if you are an expert in a certain field, you might consider offering your services on platforms such as Upwork. Or, you could sell your own creations on platforms like Etsy or Amazon.
When starting on a side hustle, the chances are that you might not be able to entirely replace your salary from day one. However, over time, you can build a significant income stream that can positively influence your finances.
Take a Chance – But Only With Money You Are Comfortable Losing
Sometimes, in life, taking a chance can pay off. If you have some money that you are comfortable losing and you are working with a professional, you might consider taking a little risk. There are multiple ways to do so in all safety. For example, you might consider using crypto trading platforms, signing up for bwin uk, or investing in a young startup or business idea.
If you are looking to take this risk, make sure any losses that might come from it won’t affect your financial situation. And, make sure to take risks responsibly and considerately!
Consider Investing in Your Self-Development
Whether you wish to access a promotion within your current workplace or you are looking to level up your career, you should consider investing in yourself and your self-development. We all tend to consider learning as something we do at school or during our youth.
But the truth is that the only way to advance in life and achieve financial stability is through continuous learning and development. While going back to university might not be the right choice for your needs, make sure you invest in development courses, online training programs, or certifications. They will pay you back in no time!
Get Your Family Involved
If you are looking to improve your entire household’s finances, you will never be able to do so without getting your entire family on board with your project. So, once you have set clear goals for what you wish to achieve in 2022, make sure to speak to your partner or other half to ensure that they are happy to work with you. And, don’t forget to teach your little ones about finances!
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