This article is a guest post by Coral Pearce Mariner. Coral regularly writes article for a number of top finance related sites, she recently published one titled Why is my Credit Score Bad? Check it out.
Are you one of the 700million people who would have to borrow money to meet an unexpected £200 bill? Clearly, it’s not uncommon to have little disposable income and a deficit in your savings which means you’d struggle to cover a £200 eventuality. 10million people would be able to find £200 without borrowing, but would have to make big cutbacks elsewhere during the month. This can mean that you’re living in fear of things going wrong – if you don’t have a decent emergency fund then things can unravel pretty quickly. You may have seen it happen to a friend or a relative.
Research conducted by Think Money found that around half of over 65’s would be able to cover a £200 bill with no problems. This is likely to be because they’ve had a lot of time to build up a decent amount of savings, and because they come from a generation where it was easier to save. Growing up in a time where you didn’t have advertising blaring at you from every corner, there was little pressure from social media and you couldn’t shop unless you went to the store yourself is bound to create a different set of habits and priorities in a person. In contrast, just less than 10% of 18-24 year olds could cope with the same £200 of unexpected expenses.
So if you know you’d struggle, what should you do? Firstly, it’s important to evaluate your budget to see where you’re spending the most. Of course, some bills can’t be tweaked, like council tax and rent, and some can’t be switched, like water rates. You can, however, take control of your usage when it comes to utility bills. Cutting your electricity, gas and water usage is easier than you think and it doesn’t involve you sitting in the cold and the dark! Simple things like moving to a water meter and having water saving devices fitted (many of which are free from your local water authority) could save you hundreds a year.
Where other spending is concerned, like food shopping and discretionary spending, it’s easy to make cuts. If you buy a lot of brand-name foods and cleaning products, then you could save hundreds a year by switching down a brand level. It’s likely that you’ll find you won’t know the difference, and you’ll be spending far less. While it’s difficult to break the habit of picking up the foods that you always do – try to find recipes and products which are more cost effective but just as delicious.
Many are put off saving by the fact that they can’t put a substantial amount away. It doesn’t matter if you only have £2.93 to add to your savings at the end of the month – it’s better than not putting anything in at all. It’s human nature to want to round up or down, so if you’ve got £47 spare, it’s more likely that you’d put £40 away and keep the £7 back to spend. Why not save everything that you can next time, even if it’s just pennies? One day you may be glad that you did.