The cost-of-living crisis has been a difficult time for many in the UK, and has again illustrated how easy it is for the average Brit to slip into financial hardship. You yourself might have noticed your coffers drying up in recent months, and may even be worried about paying your next bill. Recovery from such hardship is possible, though, and the steps are simple.
The State of the Nation
First, it is important to understand that financial crisis is not a unique or wholly individual crisis to weather. Indeed, a majority of us in the UK are directly and tangibly struggling with the affordability of modern living at present, with the recent revelation that nearly 13 million UK adults are struggling to pay their bills – and that the number of people experiencing such financial hardship has increased by two-thirds since 2017. The light at the end of the tunnel, nationally speaking, is somewhat distant, but this doesn’t mean you can’t take the reins on a personal level.
#1 – Define Your Situation
It is understandable that you might be looking sidelong at your present financial situation; addressing the specifics of a stressful situation is unpleasant, to say the least. But looking head-on at your situation is the only way you can build a workable plan for getting out of it. This means taking stock of everything, from your monthly expenditure to the breadth and depth of your debts.
Unavoidably, the best way to do all this is through creating a spreadsheet. With a little bit of Excel or Google Sheets know-how, you can build some tables that reflect your monthly income and outgoings, and that track the debts you currently have. This information is crucial for working out how to create more wiggle-room for solving your financial problem.
#2 – Address Debt Sources
If you have any active sources of debt, for which you are liable to repay plus interest each month, then these should be your priority. Existing debts make financial planning harder, and wick away any potential your expendable income could have.
Your approach should be to minimise your debt before approaching longer-term ideas about stability. Bad credit debt consolidation loans are useful tools here, as you can bring all your debts into one place – satisfying your current lenders and ensuring future repayments are simple. You can also do this regardless your credit score.
#3 – Make Savings
Whether you are addressing your debt or thinking about longer-term security, you will need to batten the hatches on your spending. There are many ways you can do this, from budgeting for more frugal weekly shops to re-negotiating better utilities deals or subscriptions. Whatever angle you choose to take with this, your medium-term goal should be to put money aside for an emergency fund. Emergency funds help absorb the shock of unexpected costs, and can be vital for preventing you spiralling back into financial hardship.