You don’t have to look far to see the latest headlines warning of the state of the UK economy. Recent news has warned that, due to the cost-of-living crisis and soaring inflation, the country could be heading into a recession.
Whilst there’s not much any one individual can do about the looming downturn, there are ways to ensure you’re in the best possible financial position to whether any economic storm.
Make some cutbacks
Perhaps the most obvious, identifying where you can reign in your spending will help ensure you don’t go over-budget each month, especially with the recent price hikes across energy bills and fuel. Keeping track of your incomings and outgoings will give you an accurate picture of what you’re spending on unnecessary items, allowing you to make cutbacks.
Consider a side job
If you have a skill or hobby that could make you a bit of extra cash, why not start a side job? Some ideas include blog writing, gardening, tutoring or trade jobs. Skills such as painting and decorating don’t need too much investment. You’ll just need the basic tools and equipment to get started such as paintbrushes, rollers, trays, dust sheets, tape, sandpaper and good quality scrapers from places such as RS. Use inexpensive methods of advertising such as word of mouth, social media and local shops.
Pay off high-interest debt
If you have any outstanding debt, make sure you prioritise paying back any high-interest loans as this type of credit will cost you more in the long-term. This might mean making some even stricter cutbacks for a while, or forgoing any luxury holidays, but it will be worth it in the long run.
If you have significant amounts of debt, it could be worth getting help from a financial advisor or speaking to a professional to create a plan to pay it back. Refrain from taking on more debt, even if rates are low, and think carefully before choosing to consolidate multiple loans as this can often work out more expensive.
Avoid large purchases
A pending recession is probably not the right time to be thinking about buying a brand new car or other large item, especially if it means increasing your monthly outgoings or loans. There’s no reason why you can’t make plans to do so in the future, but it’s worth holding onto your cash in a volatile economy.
Build up your savings
Once you’ve cleared any debts, it’s a good idea to start building up a pot of savings as a buffer. This might be easier said than done in the current climate but, even if you’re only able to set aside a small amount each month, you’ll still be able to gradually increase your savings. Savings are useful for situations such as emergency repairs or unexpected bills so having a reserve is a good option for those financially tight time periods.