Credit crunch
Prepare - Don't wait until things become unbearable. It is not too late to start cutting back now. The more solid and debt-free you are at the start, the more chance you will have of surviving the credit crunch virtually unscathed.
Don't wait until things become unbearable - It is not too late to start cutting back now. The more solid and debt-free you are at the start, the more chance you will have of surviving the credit crunch virtually unscathed.
Do a household audit - Compile a complete statement of incomings and outgoings and work out where there is any room for manoeuvre if necessary. For example, you could cancel that satellite TV package or eat one less takeaway a week, if your income takes a hit.
Break the habit - Don't just spend a certain amount on the weekly shop because you always have done, or buy lunch in town out of habit. Do a store cupboard challenge to get as much from your freezer/cupboards as possible and start making packed lunches. You'll be amazed how the savings add up.
No extra fixed costs - Now is not the time to sign-up to anything which requires a fixed monthly payment. If your want to get fit, then go for a run or walk to work. Do not commit to a costly gym membership. The same goes for car loans or hire purchase. If it is not absolutely essential, don't sign-up.
Benefit check-up - There are more than £8bn in unclaimed tax credits in the UK every year and now is definitely the time to find out if you are missing out. Check out http://entitledto.co.uk to see if you can make a claim.
Consolidate savings - Dig out all your old and forgotten bankbooks. Most of us have at least one long-unused account containing a few pounds and chances are it will offer a rotten interest rate. Withdraw the funds and close the account down, putting the money into an account where it may earn some interest. Every penny should work harder.
Keep savings safe - As events of the last year have shown, banks can fail. The Financial Services Compensation Scheme covers the first £50,000 of savings per person, per institution. The 'institution' part of this is key, as different banks that are part of the same group count as just one institution. Also some foreign banks offer less protection. If you have in excess of £50,000 in savings, take some time and do your homework and be prepared to spread your cash across accounts.
Pay off debts - Don't sit pretty on savings or an emergency fund to clear debts if you also have credit card debts. It makes no sense. If you owe £1000 on a credit card at a typical rate of 18%, it will cost £180 a year. The same amount in a savings account, even if it is a top rate, will only net around £40. So, pay off the card and be instantly £140 better off. Or think about switching to a better credit card deal if that suits your needs.
Get a deal - There are still cost cutting deals around and it is well worth doing your homework on trimming outgoings with credit card balance transfer deals and switching utilities. Check out too if it is possible to remortgage with a cheaper lender without a penalty.
Give yourself a treat - Keep a little aside for a small treat now and again. If you don’t have something to look forward to, you are much more likely to go on an uncontrolled splurge and ruin all your hard work.
And finally...ask the experts - It's crucial that you seek financial advice to make sure you're getting the best return from your investments.
* Written by Teena Lyons. Teena's opinions are her own and for general information only. Always seek independent financial advice. This article was first published on January 28, 2009.