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How Do You Manage Finances During A Cost-Of-Living Crisis?

How Do You Manage Finances During A Cost-Of-Living Crisis?

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The cost of living is a major issue for individuals. According to the Times, “around 8 million people struggle with meeting financial obligations.” It has increased by one-third since last year(FCA). Unfortunately, you cannot decipher the crisis. It just happens, even when you are unarmed. Moreover, one cannot wait for inflation to slow down. Control finances to avoid the mess.

Millions of low-income households receive cost-of-living payments from the government, which can be worth up to 1350. However, this is not sufficient for your lifestyle needs and goals. Thus, the blog discusses the best ways to manage your finances during a cost-of-living crisis.

What is the current stage of personal finance in the country?

According to a Statista report, “42% of individuals are worried about their financial future.” Meanwhile, 40% of individuals have donated to charitable organisations in the past 12 months. Only 38% of individuals are well-informed about their financial status. This says a lot about the country’s current financial state.

Individuals are aware of this, but they struggle to save money. It is the reason they have less than €100 in savings. It increases their liabilities and concerns regarding debt payment. They could hardly save for that.  It showcases their inability to prioritise their life requirements and save accordingly.

 Strategies to deal with finances during a crisis

When did you last check your credit report? You might not remember that. Tracking finances might be challenging due to increased costs and an unstable economy. Here are some expert tips that may help you manage the best of both worlds- your current and dream lifestyle.

1) Work out your spending

The first thing to analyse is all your routine or monthly expenses. You may have receipts and bills for pending dues. Check how much you usually spend monthly. Calculate aspects like Rent, utility bills, credit card payments, groceries, school fees, car services, etc.

Now, split your costs into wants and needs. Check how much you need to spend or should pay on requirements.  The best way to do this is by splitting your expenses into wants and needs.

Needs Wants
Rent Dining out
Food Purchasing clothes
Energy supplies- electricity and water Watching movies

 

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Thus, the table may help you identify the wants and needs. Accordingly, you can create your list. Focus on planning financially for the needs first. It is the most important aspect of the crisis. Identify how much you spend on needs per month. Make sure to save that much amount regardless of the financial situation.  You can even find some government assistance to meet rental or food requirements.  However, it requires one to meet certain eligibility criteria.

Thus, everyone may not get it. So, what would you do if you were in critical need of cash? Don’t worry. You have better options waiting. Check the best personal loans in the Ireland marketplace. You can use it to counter any cash emergencies, shortfalls or small-term goals. You don’t need to depend on or wait for the government scheme’s approval. Yes, such approvals get late. So, if you need money quickly or on the same day, the loan may help.

Yes, using a personal loan in a time of crisis doesn’t harm your finances much. Instead, it protects you from using credit cards. The latter one proves harmful to your credit. Moreover, it stabilises and disciplines your financial profile.  It is the reason for its popularity among individuals.

  • Identify ways to cut the bills

Within the crisis market scenario, getting a high-paying job is challenging. Thus, it implies downsizing on certain expenses that you incur. You may not control what comes in. However, you can surely regulate the expenses. Check if you could save on some aspects. The above exercise of wants and needs may help. Check if you could reduce some of the needs as well.  For example, identify how much you pay for electricity bills and broadband and mobile services.

Identify the possibilities to reduce the liabilities. You can either downsize to a smaller apartment or switch the service provider. Next, research the best and most affordable mobile recharge. Yes, reducing liabilities towards such small expenses counts.

Moreover, identify the rates of the Council tax if living in Northern Ireland. However, one generally pays LPT (Land Property Tax) in Ireland. You must pay that even if you don’t live there. It is generally costly there.  Check the best ways to reduce it as well.

According to citizensinformation. Ie forum. Here are some council tax valuation bands for the year 2022-2025. Here is the house valuation and tax you must pay.

Valuation Band LPT (Land Property Tax)
0-2,00,000 90
2,00,000-350,000 225
350,001- 437,500 315

 

Thus, the higher the property valuation, the more you pay. Prepare for such expenses beforehand. Non-repayment or delay may invite action from the authority.

3) Identify your pension contributions

Yes, one must analyse the contributions in the pension account during a crisis. Inflation or the low-growing economy may affect your return on investment. Moreover, if dealing with debt, stop your contributions. Settling the dues should be the priority.  Discuss it with your employer if having a workplace pension.

Identify whether you can stop the payments for a while. The person may agree if you have been an old employee with decent profile. Alternatively, if you have an Individual Pension account, you don’t need to ask anyone. You can stop the contributions voluntarily.  However, before stopping contributions, know the following:

  • Contributions from the employer to the pension are affected
  • You receive tax relief from the money that should be gone to the government
  • This may affect the benefits that you may receive in case of unemployment
  • It may put your dependent’s future at risk

Thus, check the pros and cons of stopping your pension payments. If you stand on the disadvantaged side, don’t worry. You can continue small payments if not a lump sum. Identify how much could you contribute given the circumstances.

Yes, it may affect other liabilities if living from paycheck to paycheck.  If confused, contact the best LoanstoPocket experts. It may help you get the best advice regarding the aspect. They may help you spot a midway between managing contributions and dealing with emergency expenses.

4) Consider a budget planner for better budgeting

You may want the best financial arrangement to beat the crisis heat. However, ensuring that requires good knowledge, experimentation and experience. It is okay to be innocent about managing finances. Moreover, it is challenging to learn within strict timelines and working schedules. The surprise is- you don’t have to.  Yes, you can ditch creating a budget yourself and save according.

So, how can you do so?

You can instead use a budget planner from a verified portal. It may help you understand your liabilities, expenses and strategies. Organisations like Moneyhelper.co.uk. May help you with that. Check its budget planner and know your financial state. By filling in the information, you may get to know it. The best part is that you can check it out without paying a dime.

Bottom line

Thus, these are ways to counter essential needs and manage finances better. The economic crisis requires one to get serious about finances. One must update expenses and spend consciously. You don’t know the next moment under financial uncertainties. Thus, it’s better to prepare and invest thoughtfully.

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