Recession-proof your finances

Wealth Manager Tom Fleming’s top tips for recession-proofing your finances as energy bills soar and mortgage rates rise.

With energy bills soaring and mortgage rates rising, taking control of personal finance is a hot topic. For this week’s Strategic Insights, Wealth Manager Tom Fleming shares his top tips for recession-proofing your life as the cost-of-living crisis takes its toll.

Take ownership

Now, more than ever before, effectively managing your money is crucial. Our relationship with personal finance is changing dramatically, and it’s increasingly clear that we can’t depend on the state for our financial well-being. We are seeing evidence of this across the board – whether it’s the triple lock on state pensions being called into question or public sector pay rises being stuck at 2% while inflation skyrockets to 10%. So taking ownership and managing your income and expenses is key to staying on track. It doesn’t matter if you use a notebook, a spreadsheet or an app – just make sure that you find a method that works for you so you can give yourself the best chance of sticking to your roadmap in these testing times.

Everyday purchases and transactions

There are numerous simple and straightforward ways to save money when you’re shopping. Practically every supermarket has some form of reward scheme or loyalty programme – from Sainsbury’s Nectar card to Tesco’s Clubcard. There are plenty to choose from and you are sure to find at least one that’s worth signing up for. And there are “cashback” programmes which date back to 1986 and are now ubiquitous. It’s easy to register on a cashback website or find an app that has the facility. Then you can earn a portion of your spending back once your purchase has been confirmed.

Talking of shopping, there is nothing wrong with making a good old-fashioned shopping list. They help you focus and prevent you from giving in to temptation by spontaneously buying whatever you like the look of. It’s also a good idea to avoid going to the supermarket when you are hungry – that way you won’t fall prey to extravagant luxuries that are bad for your bank account (and worse for your waistline).

Shopping online brings with it its own separate considerations. Instant gratification is very much the norm in the modern world. And that can make it difficult to take deliberate and informed action. Many websites – including Amazon – give you the option to add items to a “save for later” list. That gives you time to ponder whether or not you really need them after all.

Go through your statements

Spend a few minutes every month going through your bank statements. Make sure you know where all your money is going. Do you have any “stealth” direct debits – such as ones that have furtively kicked in after a free introductory offer (for streaming services or grocery deliveries, for example)? Check that everything else is in order. That way, you’ll be able to get an idea of where your money is going and whether you’re spending money in areas you don’t realise. And if you do not recognise a transaction, check with your bank just in case it is fraudulent.

We can talk you through your home, contents, or life insurance policies and make certain that you are getting the best deal available – that’s all tackled as part of the regular financial health evaluations that you get when you check in with us. We can help you get financially savvy so you can make better, more informed decisions.

Talk about money

Many people feel uncomfortable talking about money, but that is literally our job: we are here to enable you to make good financial decisions – so talk to us. We can help you improve your relationship with your bank balance and make sure that your money is working as hard as it possibly can for you.

After over a decade of interest rates languishing at well beneath 1%, you can finally get a decent savings rate – around 4%, if you are prepared to lock your money away for a year or so. Obviously, that is still a long way off the current inflation rate, but combine that with putting as much as you can into your ISA or your pension, and you will at least start fighting back.

Compare prices online

It’s easy to get into habits – like going to the same shop all the time. But you might be paying more than you should. The Internet is full of price comparison websites and price analysis tools. Use them to filter and compare products based on price, features, reviews and other criteria. That way, you’ll find the best prices and deals available and you can save yourself a fair amount of money.

Embrace the technology

Our disposable income is taking a hit. But putting away money every month remains important – possibly even more so than before. Being able to get into good habits is often contingent on it being easy to do so. Don’t forget that with the IQ Wealth app you can keep all of your financial records together and organised.

Automation can also help you put aside money on a regular basis. Numerous apps enable you to save set amounts of money every month. Chip, for example, is an automated saving app. It analyses your current account and works out how much you can afford to save – and then it does it for you by moving the money to a separate account. If you are unable to put aside a huge amount every week, simply work with what you have: it’s never too early to start saving.

Many other banking apps allow you to round up your spending and then stow away the difference in a savings account. Every time you spend money on your card, the transaction is rounded up to the nearest pound and the difference is placed in a special pot. There are also money management and budgeting apps – such as Snoop – that help you track your spending, cut your bills and control your finances – all things you absolutely must be doing if you want to get on top of increases in the cost of living.

Fight on all fronts

In the end, getting on top of your finances during a cost-of-living crisis is a little like striving for net zero: no single strategy on its own is sufficient. The answer lies in making full use of all the options available to you, leveraging the right schemes and technology, getting into good saving habits… and accessing the right advice.

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