There’s no doubt that households will face a number of financial challenges in 2022, from the return of European roaming charges to projected spikes in the cost of energy prices and car insurance.
These issues will compound universal challenges like the rising cost of living and stagnating wages, while the ongoing coronavirus pandemic may also continue to have a stark economic impact over time.
With these facts in mind, how can you look to cope and manage your money better through 2022? Here are some ideas to keep in mind;
Get On Top of Your Debt
While household debt levels may remain below their historic peak of 151.5% of disposable income in Q2 2008 as the great recession raged, it has increased nominally since the coronavirus outbreak in 2020. By Q2 2021, this had increased to 132.2%, so households continue to face a significant financial challenge in the quest to save and accumulate wealth.
So, it may be wise to be proactive when tackling debt in 2022. You can do this by, creating viable repayment plans and eliminating the accumulated interest in certain accounts which will help you to manage your debt effectively. Also, one can consider consolidating debt to create a single, monthly repayment.
Invest Where Possible
While savings accounts offer reliable vehicles for households, the challenge here is that interest rates remain at historic lows. With this in mind, it may be more preferable to invest your disposable income and leverage your existing capital to achieve significantly higher returns.
To achieve this, you may need to liaise with a financial advisor or expert, who can identify opportunities in the marketplace and help you to create a diversified portfolio. You’ll need to start small and scale your efforts in line with your profitability, however, you should avoid over-diversifying and diluting your potential returns.
Get Budgeting
This may sound obvious, but the practice of budgeting can help to underpin a large and broad selection of good financial habits.
From debt management and minimising monthly expenditure to identifying your precise amount of disposable income, budgeting can play a pivotal role in improving all aspects of your financial management.
To budget successfully, you’ll need to be accurate and deal in pence rather than pounds, while making the most of intuitive apps that directly manage your money and synchronise seamlessly with bank and credit card accounts.