The events of the past year have highlighted the unpredictability of life, and that its twists and turns can play havoc with your financial situation.
Here, we look at how you can manage future financial pitfalls, whatever your personal circumstances.
Set a household budget
Draw up a list of your regular bills by scanning your bank statements and use this as a basis to set a household budget.
You could create a simple spreadsheet, splitting your outgoings into ‘essential’, such as your mortgage and utilities, and ‘non-essential’, including entertainment and holidays, while giving yourself monthly spend and save targets.
Deal with debts
You’re likely to be paying far more in interest on your debts than you could be earning on your savings, particularly with interest rates at record lows.
Tackle debts with the highest interest rate first, such as credit cards and store cards.
You could move the debt onto a 0 per cent balance transfer credit card, although it’s important to check whether there are fees involved.
Build on your savings habit
Consider what you can afford to save each month and stick to this by setting up a direct debit into a savings account.
You might want to try some tactics to avoid unnecessary spending. For example, give yourself 24 hours before buying a new item and unsubscribe from store emails to reduce temptation.
Start – or continue – investing
If you’ve no immediate need for your spare cash, and enough set aside for emergencies, investing for the long-term could be wise.
Stock markets go down as well as up, but history shows that, over the long term, shares tend to perform more strongly than cash.
It doesn’t typically pay to hold off on an investment decision if you’ve got spare money and time on your side.
Check your protection
Protecting your family from financial difficulties isn’t just about having savings and investments.
It’s also about ensuring your loved ones are provided for should you suffer a long-term illness or die. A financial adviser can help you decide on the right protection and level of cover for your circumstances.
The value of investments can fall and you may get back less than you invested.
Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy.
