How To Plan Financially For A Tough 2023
A combination of factors has lead to many of the world’s leading economies going through quite a tumultuous time and as always, the general public are the ones who get penalised for some bad decision making by governments. The COVID lockdowns started much of this, they put economies in to vast amounts of debt through the need to rollout furlough schemes and support packages to much of their population and then it has since been compounded by the war in Ukraine which has sent energy, food and drink prices sky high.
Impact of borrowing & inflation
The impact of this increased government borrowing and major shortages in the supply chain has lead to inflation reaching 11% in the UK at present with interest rates having increased to 4%. This means that many people who were previously comfortable in their life will be thrown in to a position of not being able to afford their lifestyle. Mortgage repayments have increased by hundreds of pounds per month, energy bills have increased by thousands of pounds per year and general purchases such as food are up anywhere from 10-20%. Many people now find themselves in a position where previously they might have had £3,000 a year in expendable income and they are now actually having to borrow £2,000 a year to live a similar lifestyle which leads to problems with debt.
Analyse your expenditure & cut back
There are many things you can cut back on that over the course of a year make a big impact. One of the most common things in recent months has been subscriptions. Most people will have a Netflix and Amazon subscription at least, others will also have Sky, Virgin, Disney+, BT Sport or DAZN. Whilst individually most of these (other than Sky and Virgin) are around £10-£15 a month, it all adds up when combined together, you could find you are actually spending around £80 per month quite easily. Choose the one you watch the most, scrap the others and there’s a saving of almost £900 per year instantly for you. There are many apps that should what you spend most of your money each month on now so download one and start saving!
Don’t bury your head in the sand with your finances
It is a very common trait and something thousands of people do, when they start getting in to trouble and borrowing more money they don’t see a way out but there are plenty of options for you if you don’t let it go too far. The best is an IVA. If you apply for an IVA then you can wrote off a lot of debt, stop interest building and it doesn’t affect your long term borrowing potential. On the other hand, if it isn’t personal debt that is a problem and more your company you also have a similar option with a CVA, or Company Voluntary Arrangement, this is a similar thing but more to help your company get out of debt by writing off portions of it and agreeing a payment schedule to back it back.