Answers are out there to ease pressure of the credit crunch
Simple measures could help put you on a better financial footing
Published:
Credit crunch, falling house prices, high electricity, gas, fuel and food costs – the financial health of the nation is looking pretty bleak.
If your finances are feeling the pinch, there are several measures you can put in place to reduce spending, get the best deals and boost your savings.
Indeed, these are tips worth bearing in mind at any time in the economic cycle.
The first step is to take stock of your finances and write down your household income and outgoings.
That way you’ll know how much spare cash you actually have and it will allow you to identify the areas where you can make savings.
While there are some costs you cannot help but incur – heating and food, for example – you can still reduce them by ensuring you are on the best tariff for your electricity and gas and pay by direct debit to avoid late-payment penalties.
A particularly environmentally friendly saving can be made by turning off electrical items that are not in use and making sure your heating is kept at a reasonable level.
With food, you can save money by switching to cheaper, own-brand food and picking up two-for-one deals. Always ensure you use all the food you buy rather than throwing it out, and consider taking a packed lunch to work rather than eating out every day. Making a list before you hit the supermarket may help you stick to your budget and buy the essentials rather than special treats.
With fuel costs being high, using public transport where possible could save you a fortune. Those of you already using public transport should look into the cheapest ways to do so – perhaps a railcard, season ticket or flexible pass is available for your regular journeys.
If you have any surplus money, why not open a savings account and put an affordable amount of money in it every month?
Look for a competitive interest rate and watch the money pile up. Keeping money to one side for a rainy day is a good plan, as unforeseen outgoings (such as replacing a flat tyre or calling out an emergency plumber) can make the biggest dents in your wallet.
Relying too heavily on your credit card is a major cause of financial problems. Saving up for holidays and luxuries instead of using the plastic guarantees that you actually have the money to pay for them and avoids the substantial interest charges you may have to pay.
It is advisable to prioritise paying off your credit cards, even if it means dipping into savings, as the interest mounting on your bill will likely be higher than that on your savings account.
Even very small things can make a big difference – rounding up all your small change and banking it will boost your bank balance more than you might think.
Credit crunch aside, nobody wants to be in debt or paying more than necessary.
Save up, shop around, don’t buy what you don’t need and avoid constantly reaching for the plastic and you’ll be in great shape to weather the financial storm.
Donald McNaught is a director of Invocas Business and Recovery, which operates consumer debt service arm Newtomorrow.
