With energy bills soaring and food prices also rising, millions of UK households are currently wondering how they will cope with the worsening cost of living crisis. Inflation is now expected to exceed 10% this year, putting a strain on budgets.
The recent rise in inflation has left wage growth lagging, with most people’s wages now falling in real terms. All of this has prompted millions of people to look for ways to save money and limit their spending wherever possible.
Financial advice service Online Money Advisor has provided some money saving tips to help those who are currently struggling from pay stub to pay stub. Here’s what they recommend if you’re having trouble keeping control of your finances.
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make a budget
Careful budgeting is the cornerstone of effective money management, according to Online Money Advisor. Keeping a close eye on your spending can help you better understand your financial habits and give you a clearer picture of where your money is going.
There are free budgeting apps you can use to track your spending – and figure out where you could be saving and saving money.
Reduce your expenses
Of course, cutting back on spending isn’t always easy if your finances are already strained to begin with. Still, cutting back on non-essential expenses wherever possible can mean you won’t find yourself running out of money mid-month, with payday still weeks away.
Online Money Advisor also suggests that if you get a raise, it might be a good idea to use that extra money to save or help pay off any debts you might have.
Boost your income
If you can find ways to increase your income, it could make a big difference to your finances. This can take the form of overtime at work, a side hustle, or even the potential renting of a guest room to a tenant.
Again, this provides you with extra cash that you can put in a savings account, use to pay off debt, or just keep aside whenever you need it.
Save for an emergency
Saving for a rainy day can be a big help when unexpected expenses arise. You could end up with a surprise bill or your situation could change – and if you have some savings on hand, it can help you avoid going into debt to cover the extra costs.
Online Money Advisor recommends setting aside small monthly amounts to begin with, before increasing them over time. Setting up an automatic monthly transfer to a savings account can also help you resist the temptation to dip into your savings.
Make debt repayment a priority
If you have debts to pay off, Online Money Advisor suggests prioritizing them to save money in the long run due to accrued interest. Reducing that debt burden gradually frees up more money, allowing you to break that pay-slip-to-payslip cycle.
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