Almost one in five Brits (18%) can only just afford their costs and often struggle to make ends meet, according to YouGov. The figure comes as Chancellor John Healey prepares to deliver his first Budget on Wednesday, after being appointed by Andy Burnham following his becoming Prime Minister in the summer.
Andy Forsyth, chief financial officer at Evergreen Finance London Ltd, the parent company behind Moneyboat, has suggested people in the UK do five things to “Budget-proof” their finances before the Autumn Budget.
Build an emergency buffer before you need it
Andy said: “If the Budget does result in changes to household finances, the people most likely to feel the impact are those who already have very little room between their income and outgoings. If you can, start building even a small emergency fund before the Budget. You don't need to suddenly find hundreds of pounds to put aside.
“Setting aside £5 or £10 when you can is still creating a financial buffer that could be useful when an unexpected expense comes along. Work out what you can realistically afford to save each week or month without putting pressure on your essential spending, and build from there.”
Give your finances a pre-Budget health check
Andy said: “Don't wait until after the Budget to look at your finances. Go through your last month of bank statements and work out exactly where your money is going. Look particularly closely at recurring payments. Forgotten subscriptions, unused memberships and services you no longer need can quietly eat into your disposable income every month.
“Once you've identified these costs, cancel anything you no longer use and see whether you can negotiate or switch any regular household bills. The money you free up can then go towards your emergency fund or simply give you more breathing room each month.”
Try ‘moneymaxxing’ your existing income
Andy said: “Moneymaxxing is about getting more value from the money you already have, rather than making dramatic lifestyle changes. Check whether you're making the most of loyalty schemes, cashback opportunities and savings rates, compare the cost of regular services and consider whether you're paying for convenience when a cheaper alternative is available.
“You can also look at your spending habits rather than simply cutting everything you enjoy. For example, swapping one takeaway for a home-cooked meal each week or setting yourself a weekly discretionary spending limit could free up more money without making your budget feel restrictive.”
Don't make decisions based on Budget speculation
Andy said: “When people are worried about their finances, it's easy to avoid looking at the numbers altogether. But burying your head in the sand can make a difficult financial situation harder to manage.
“While there is plenty of speculation about what the Chancellor could announce, until the Budget is delivered, predictions are just that - predictions. Don't make major financial decisions based purely on headlines or speculation. Instead, focus on the things you can control, which is knowing what comes in, understanding what goes out, prioritising essential spending and having a plan for unexpected costs.”
Prepare for your biggest monthly expenses
Andy said: “Think about the expenses that would cause the biggest disruption if they increased or an unexpected bill landed. For some households, that could be energy or transport costs, for others, it could be a car repair, an annual insurance payment or a household appliance breaking down.
“Make a list of your biggest essential expenses and consider whether there are any upcoming costs you can plan for now. Putting a small amount aside each month towards known annual expenses can stop them from becoming a financial shock when they arrive.”
