We often think of the coronavirus pandemic as a health crisis, but there’s no doubt that its most tangible negative impact may ultimately be felt by the economy/
Personal debt levels had certainly increased by the end of March 2021, at which point Brits owed a total of £1.712.9 billion to creditors. This number had increased by £27.1 billion year-on-year, with this equivalent to an extra £511 per UK adult during this time.
With this in mind, you may need to take proactive steps to improve your personal finances. Here are some ideas to help you on your way:
- Create and Adhere to a Budget
The first and most important step is to organise your finances, while developing a clear insight into your cumulative debt levels and precise fiscal circumstances.
The key to achieving both of these objectives lies with budgeting, as you look to accurately estimate your incoming and outgoings over a weekly or monthly period (depending on how you’re paid).
It’s crucial that you’re accurate and deal in pence rather than pounds when budgeting, as this will outline the exact amount of disposable income that you have each month and enable you to spend within your means.
By maintaining this over time, you can also begin to consistently pay off any accumulated debts and increase the amount that can be committed to savings every month.
- Become Financially Literate and Recognise Lifestyle Inflation
Financial literacy is a huge issue in the UK, with an estimated one-in-three adults in England and Northern Ireland unable to work out the correct change from a simple shopping trip.
Developing an understanding of finance (particularly the function of debt and interest rates) can be highly beneficial to your fiscal security, while you should also build knowledge pertaining to the wider financial infrastructure in the UK.
You’ll also need to be aware of the concept of “lifestyle inflation”, which is built on the principle that your spending increases as you earn more money. This can lead to disproportionate spending over time, which is why long-term budgeting is such an important tool in your armoury.
- Create Passive Income Streams to Boost Your Earnings
Given the socio-economic impact of the coronavirus, speculating to accumulate may be the best course of action for finance-oriented Brits.
The key is to seek out passive income streams where possible, so that you can maintain a full-time job and optimise your earning potential over time.
Take forex trading, for example, which is now widely accessible to investors through platforms such as the MT4 webtrader.
Through this platform, you can also build knowledge and leverage detailed analytical tools, while utilising the demo account feature to practice and hone your strategies in a simulated marketplace for a period of up to six months.