When inflation is high, everyone is affected. While it may not be possible to inflation-proof your personal finances, there are steps you can take to mitigate the effect of price rises. These include:
Review your savings. Interest rates have been historically low since the 2008 financial crisis, meaning that cash savings accounts offer very little return on your money. That said, we are currently seeing a significant increase in savings rates following the Bank of England’s increase to the base rate. It’s now more than important than ever to review your savings account. You may want to consider using tax breaks such as ISAs and pension contributions. You can put £20,000 tax-free into an ISA each year and, for every £80 a basic-rate taxpayer puts into a personal pension HMRC will contribute another £20.
Consider stock market investments. If you are looking to the long-term, it’s worth considering investments in stocks and shares. While global stock markets can be turbulent in the short-term, investments offer the potential for better returns over longer periods.
Evaluate your spending. The less you spend, the less your purchases are affected by inflation. Review your budget regularly and see where you can make reductions.
Read our article for more information on how to reduce the impact of inflation on your personal finances. You may also want to consider the benefit of using an independent financial adviser, who will be able to put together a financial plan that considers inflationary pressures when helping you reach your financial goals. For further information, contact us on 01603 967967.