There is a lot of talk at the moment about how UK households are getting in debt to levels similar to those in 2008! The charity step change estimates that 2.9 million people are experiencing “severe financial debt”.
What concerns me more is that last month the Monetary Policy Committee came close to voting on an interest rate rise to curb inflation. How many people then would be struggling? As a wealth manager by day, I am not best placed to advise the heavily in debt, but there are a few simple things that everyone should be working towards to make sure that they are not one of the unlucky ones. Here are a few tips to keep you in the black:
Budget, Budget, Budget
if you have a real grip on your income and outgoings then this will reduce the number of surprises that you are faced with. Annual one offs also need to be factored into your savings on a monthly basis e.g. car tax, holidays, Christmas and birthdays. I encourage all of my clients to set money aside monthly in a separate account for these annual expenditures. We have a budget template, on Miss Lolly if you need one.
Focus on Your Safety Net
It is really important that if things go wrong, that you have appropriate savings. I recommend that you have between 3-12 months of outgoings at all time. If you have a large mortgage and a family to support then you will be at the higher end of the scale. This money needs to be kept in cash in an easily accessible account.
Who Has Got Your Back?
An illness of death in the family can devastate a family’s finances. Make sure that all debt plus 20 times your annual fixed outgoings are covered with life cover. You will be surprised how cheap this can be – especially if you are a non-smoker. I would also recommend that you have some critical illness cover and if your employer doesn’t already offer it, an income protection policy is important too.
Lots of Love
Miss Lolly xxprevious post: Where Should You Keep Your Secret Stash