In the wake of a fuel crisis, an increase to the cost of energy in our homes, and as inflation surges to highs not seen in 30 years, it’s understandable that you may feel anxious about your current financial situation.

Fortunately, even in these circumstances, there’s plenty you can do to better manage your bottom line, ensuring financial stability and security for you and your family.

Here are five simple steps you can take to give you greater peace of mind with your money.

1. Update your budget

To begin with, consider looking at and updating your budget. A common mistake that many people make is not updating their budget after they first create it.

In reality, your budget is a living document that should reflect your life and circumstances. As your spending and saving habits change, so should your budget.

As of February 2022, inflation and the cost of living is on the rise. That means your budget needs to indicate that more of your money will go on supporting your lifestyle than it may have previously.

As a starting point, update your budget so you can see the effects of this in real time. This gives you a visual indication of what your financial obligations are and how much you’ll need to meet them.

2. Create a debt repayment plan

Once you’ve created your budget, look at your current level of borrowing and what sort of debts you have.

This should include everything from credit card repayments, to medium-term loans, all the way to mortgage repayments.

With this information in front of you, see whether you can create a debt repayment plan that ensures you pay back what you need to while still remaining within your budget.

It’s important to clear high-interest debt first, as otherwise these can weigh on your finances for many years. Treat this debt as a priority so that it doesn’t keep growing.

Knowing that you can afford to make these payments can be a great source of reassurance for your entire financial situation.

3. Prioritise saving and investing for the future

Next, you may want to consider how you hold your money and whether you could be doing so more effectively.

There are three key areas that you may want to consider here: your savings, investments, and pensions. By giving these areas a thorough inspection, you can be confident that you’re making the most of the money you have.

Savings

Firstly, check whether you have sufficient savings available to you. This includes an emergency budget for when things go wrong, as well as a “fun” budget to enjoy yourself with.

In fact, when inflation is high as it is now, you may even find that you’re holding too much of your money in cash.

The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) rose by 5.5% in the 12 months up to January 2021. Inflation this high could quickly see your money lose value in real terms, particularly if you’re not receiving much in the way of interest.

It can be tricky to balance saving too much and not enough, especially in the current climate. Make sure you take financial advice if you’re struggling with this.

Investments

After your savings, see whether your investments are still fit for purpose. This could include reviewing the returns you’ve achieved, as well as checking that the current amount of risk you’re taking on is still appropriate for you.

Working with a professional can be invaluable here, as they can invest your money on your behalf based on your needs.

Pension contributions

On top of your investments, you may want to look at your current pension contributions and check whether they’re still appropriate to your situation.

If you’re nearing the end of your career, you’re likely at your highest earning potential. That means you have the greatest chance to make the most of employer contributions into your fund. You may also be able to claim higher- or additional-rate tax relief, depending on your earnings.

Of course, it’s important to balance this with your wider financial situation. Ensure that you’re not putting so much into your pot now that you’re compromising on your current lifestyle.

4. Consider your career options

If you’re still working and yet to retire, your money will at least be partially related to your work. So, now could be a good time to think about your career options.

Have a look around at other roles, both from the perspective of whether you could earn more and whether they’d suit your lifestyle better.

You may have been thinking about starting a business and are unsure if that’s the right decision for you and your family right now. Use your budget to see if this will be an affordable, realistic goal.

Alternatively, you may be considering your retirement, or thinking about stopping work in the near future. Perhaps you’re wondering whether you could do this over time, reducing your hours or taking on consultancy work to make your schedule fit your life more conveniently.

Or perhaps you’re simply happy where you are, and you want to continue working in your current role for the time being.

No matter what you ultimately decide to do, have a think about your career options and see whether there are changes you may want to make.

At the very least, you can relax in the knowledge that you’re content and secure in your working situation.

5. Take financial advice

If you still feel uncertain about your situation, you should consider working with a professional financial planner.

A financial planner can help you to consider all the above and even more, showing how your decisions will affect your life moving forwards.

They can also fit these decisions around your life goals, using your ambitions for the future as the basis for a bespoke financial plan.

Speaking to a professional planner can give you reassurance and peace of mind far beyond what you can achieve on your own.

Work with us

If you’d like help securing your financial situation for you and your family, please speak to us at Holborn Financial.

We’ll help you with a personalised financial plan that ensures stability now, while also allowing you to achieve your financial goals in the future.

Email info@holbornfinancial.com or call 020 8946 8186 to find out how we could help you.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.