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It’s incredible to think that nearly half of all UK adults say that they’re in urgent need of help when it comes to managing their finances.
Some 44% of Brits say that they lack the core money management skills to budget their dwindling finances, which have been impacted significantly by energy price hikes and rampant inflation, according to Ofgem.
So, it’s more important than ever that you’re able to take control of your finances in the current climate. But what steps can you take to achieve this objective?
Why is Controlling Your Finances Such a Challenge?
At their core, concepts such as budgeting are relatively simple. They require you to forensically examine your finances in relation to your monthly (or weekly) incomings and outgoings, determining precisely how much disposable income you have during this time period.
However, there remains a significant challenge in that people aren’t encouraged to learn such behaviours when they’re young. Despite efforts from the government, personal finance still isn’t taught at school, while we’ve already touched on the fact that many UK adults lacks the necessary skills to teach their own children.
At the same time, people in the modern age are facing several mounting and unprecedented challenges.
Firstly, the cost of living continues to rise at a disproportionate rate to earnings, which have largely stagnated in real terms since the great recession in 2009. This problem is particularly prevalent now, with inflation having peaked at a 40-year high of 9% in April.
The same principle applies to house prices. Since 1970, the cost of housing has soared at a disproportionate rate to earnings in the UK, while property prices outstripped wage growth by a staggering 90% in England and Wales last year.
How to Take Control of Your Financial Goals
The good news is that there are several steps you can take to take greater control of your finances in the short-term. These include:
- #1. Get Budgeting: We’ve already touched on the process of budgeting, which can be highly insightful so long as you create detailed financial records and deal accurately in pence rather than pounds. While this process is made harder by a strained economic climate, it can alleviate your financial stress over time, while helping you to minimise debt by creating a viable spending plan.
- #2. Seek Out Financial Planning Advice: Sometimes, you have to speculate to accumulate, so you may want to consider paying for expert financial planning advice. This can help to create more significant gains and savings over time, as you look to maximise your income and distribute this across more rewarding savings or investment vehicles.
- #3. Create Savings and an Emergency Fund: Once you understand how much disposable income you have each month, you can begin to use this more effectively. For example, you may choose to pay down more on your outstanding debt or look to contribute a fixed percentage to savings. Over time, the goal should be to build viable savings and an emergency fund, which can alleviate your stress considerably over time.
