Have you been impacted by the rise in the cost of living? Even if you’re normally completely in control of your finances, it can't be denied that sky-high energy prices, rising inflation and repeated interest rate hikes, can leave even the most financially savvy wondering what to do next.1 So, if you’re looking for ways to manage the current uncertainty – we’ve shared a few tips to help.
What does financial uncertainty mean to you?
Given that financial uncertainty can mean different things to people, a good first step is to understand what it means to you and then find possible solutions to help address your worries. For some, it’s the feeling that they don’t have enough money for essentials or luxuries. For others, it’s not knowing what the future holds for them financially because of personal changes or wider economic fallout that might occur.
Concern about your ability to support yourself and your loved ones, whilst maintaining your standard of living as the cost of living rises, is natural. Even though this feeling is normal – it’s important to try to stay positive and proactive with your finances. Adopting an optimistic mindset could help you feel more confident when managing your money at times of uncertainty.
Emotional and practical steps to stay on top of your finances
Check in on your budget
Knowing where you stand can give you a better indication of what you need to focus on. If you haven’t already got a budget, read our article on finding the best budgeting method for you.
Take stock of your priorities
Think about what your financial priorities are. For example, do you want to focus on paying down debt or building your savings pot? Your answer will heavily depend on your current situation and is why the first tip – checking your budget – can provide you with a clearer indication of what you need to tackle first.
Sometimes the simplest ways to reduce your expenditure can have the most impact. Things like reducing your grocery bill or evaluate the use of your subscriptions can help save and budget. Also, a good tip is to always compare deals when it’s time to renew insurance policies or utilities. However, it doesn’t mean you have to cut back on your needs and wants entirely. By being more mindful with your spending, you can still spend in the areas that bring you joy. It may help you to cut back on wasteful or impulse spending that would detract from improving your financial wellbeing.
Take the cheaper alternative
Your finances are based on your own choices to satisfy a need. What if you can satisfy that need with a cheaper alternative? If you love books, why not go to the public library? Or if your goal is to spend time with your favorite people, you can choose to stay and have a great meal at home rather than visit a restaurant. The same need is satisfied, but with a cheaper, not necessarily compromising option.
Look for additional income opportunities
Monetising your skills through side hustles to boost your income could be a huge help. Just be aware of any tax implications, and make sure to apply some boundaries – you don’t want to suffer from burnout. Check your contract with your employer before taking on extra work to ensure you’re not breaching any regulations that could impact your main job.
Keep a long-term perspective
Short-term interventions can undeniably help in the current climate but it’s important to keep a long-term view in mind as well. Focus on holistic and measured decisions that can help you achieve better financial wellbeing in the long-term.
Build a safety net
Having a rainy day (freedom) fund in place could help create some peace of mind during times of financial uncertainty – as it may be able to cover any unexpected expenses. Consider having three months of your household expenses (rent/mortgage, food, bills) as a buffer in an easy-access savings account.2 You could also consider income protection and life insurance to help protect you from a sudden financial shock.
Write down your plan
Some people may find that uncertainty can be reduced by planning ahead and setting goals. It can be as simple as aiming for a particular goal in one, three or five years’ time, or even upskilling so you can branch out in your career or start a new venture. By referring back to these goals, it can help you keep on track and give you something positive to aim for.
Prioritise wellbeing during difficult times
Dealing with financial uncertainty can be tough and it’s important to concentrate on your emotional wellbeing alongside your financial needs. Talking about how you’re feeling can sometimes be all it takes to reduce the burden. Remember, this situation won’t last forever. Try not to be too hard on yourself either – everyone’s feeling the strain right now. With the right mindset and some practical intervention, you may find yourself recovering from the current uncertainty sooner than you think.
Get additional support
You don’t have to deal with uncertainty alone – you could get the support of a financial adviser to create a more targeted plan. You can find an adviser through MoneyHelper and there may be a charge for this advice. Our financial wellbeing hub has a wealth of resources to help you feel more in control of your finances. Don’t be afraid to seek emotional support either. If you’re struggling, you can access mental health support through the NHS and free, impartial guidance is available through MoneyHelper.