Did you know, according to recent UK savings statistics from Bank of England 1 within the last year, 34 per cent of adults are said to have either no savings, or less than £1000, in a savings account.
When considering how mentally draining it can be to manage debt, it is easy to understand why negative effects on mental health and wellbeing can be the result of financial strains for so many people.
With 2023 behind us, 2024 provides an opportunity to make a fresh start with a different approach.
Now is the time to seriously think about those finances a little differently. After all, financial dilemmas are some of the biggest worries the nation has.
There will be those out there who have centred New Year’s resolutions on reducing chocolate habits or an alcohol ban. While such decisions might improve your bank balance and improve your diet, there are other ways to become more financially aware to boost your life too.
Try breaking things down to a bare minimum by understanding what your expenses are. What is coming out of your account every single month versus what is coming in. Does the time of the year affect things?
Once you have worked out those figures then you should be budgeting those against each other – it’s the absolute must that everyone should do to gain some sort of control.
If there is a shortfall in one of those areas, then there are issues that need addressing. That basic level of understanding can give someone so much more financial confidence.
If you are lucky enough to be paid £4,000 a month and your bills amount to £2,000, then where does that extra £2,000 go? Can it be better used each month?
The majority of people live pay cheque to pay cheque. In fact, according to Opinions and Lifestyle Survey 2, around three in ten adults (29%) reported an inability to afford an unexpected expense of £850. But that happens … what if the car or boiler breaks down?
That’s why having an emergency budget is vital for your mental health.
You should understand your payslip. If you get paid £3,000 a month, what do you pay in National Insurance, pensions and other benefits? Do you have death in service and sick pay? If so, what do they look like?
These basics are what people need to understand.
And from January 6, National Insurance percentages will be going down as announced in the Autumn Statement. That means, in theory, there should be more money in people’s pockets.
But don’t get too excited, the energy cap is going to change so a typical household bill is going to increase. You might not have the extra money flying around you thought you would.
Everyone’s mortgage payments seem to be on the up. Do you know what interest rate you have already? Whether that is on a variable rate or standard? You need to know that you will have enough to cover that and to live.
Do you know what your tax code is? You might be getting benefits through work that takes up some of your personal allowance? Benefits such as company cars and private medical benefits are known as P11D benefits.
You might think you need life insurance, but then you could be already covered as part of your employer’s package. Check it out.
Let’s start the year understanding more. That clarity can help you plan more for the longer-term future because that will take care of your shorter-term needs. It will provide perspective on longer-term possibilities.
Most importantly it will give you financial clarity and help you avoid being one of the 34 per cent of the adult population in the UK with less than £1000 in savings.
Here in the North-East we feel that pinch more than most apparently. According to the SJP Financial Health Index in 2022, the gap between north and south widened further.
Those living in the South-East are four times financially healthier than those in this area and more than twice as many have a financial plan in place.
Only 39 per cent of people across the UK believe they are financially comfortable, so make some changes this year – and see where it leads you.
Sources: 1. UK savings statistics from Bank of England for 2022 from Bank of England; 2. Office for National Statistics, Opinions and Lifestyle Survey, June 2023