In our last newswire, we covered some of the steps that you could take to keep a closer eye on your money.
If you have followed them, hopefully by now you have a better appreciation of how current inflationary pressures are affecting your finances, but what steps can you take to reduce the cost of living?
Unfortunately, there is no single solution to ease the cost-of-living crisis, but here are some steps that everyone can take to reduce the impact of this ongoing period of economic difficulty.
Revaluate your mortgage – If you have a mortgage then it is likely to be one of your biggest monthly outgoings. In recent months mortgage rates have shot up as the Bank of England’s base rate has increased. Those on non-fixed mortgage rates will have seen the amount they pay each month rise quite drastically as a result.
However, since the markets have calmed down in recent days, lenders have begun dropping their fixed-rate mortgage rates, with further falls anticipated into the new year.
If you have been experiencing higher mortgage costs as a result of recent events, then it might be worth seeking independent advice to see what options are available to you and which approach is best for your future.
Can you get cashback? – If you spend a lot on credit or debit cards, as many of us do, you might be able to make use of the cashback function offered by many High Street banks.
While this will not entirely solve the problems created by rising inflation, it will mean that you can recuperate some of the cost from your spending.
Some bank accounts offer cashback on the bills you pay, while others will cover any spending, including cashback of up to 15 per cent of your purchase at certain retailers!
Do not forget your future – With the cost-of-living crisis affecting a wide range of expenses, it might be tempting to cut back on your savings and pensions. However, by reducing the amount you pay, you will lose out in the long run as your savings will not benefit as much from the effect of compound interest. This works best when you have more in your account for interest to build on.
If you decide to stop paying into a private pension or your savings, then you may find that you have to work for longer or suffer an inferior standard of living in retirement. In many ways, it may make sense to live more frugally now while you are working, rather than tolerate a lower quality of life in retirement when you have more time to enjoy your hobbies and passions.
Next steps
It is easy to do nothing and hope for the best when things seem out of your control. But failing to act now could have long-term consequences on your wealth and prosperity.