How to manage your finances in 2018: 5 key questions to ask

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Financial planning for 2018

Find out how to budget for a squeeze on income, get the best savings rates, and receive a free financial consultation

1. How can I cope with the squeeze on income?

Inflation is forecast to be 2.3% in 2018, so we face another financial squeeze. It’s worth drawing up a budget to help you identify how to make your money go further.

List your income and spending, then assume prices will rise by 2.3%, and see if you can still make ends meet. If there’s a shortfall, you’ll need to make cutbacks. Start by switching utilities and tracking down deals on everything from insurance to travel, which can save you hundreds of pounds.

2. Should I be worried about debt?

Personal debt should break through £2 trillion in 2018, but debt isn’t necessarily problematic. If you’re borrowing affordable sums for sensible reasons, and making repayments, then it’s under control.

It becomes more concerning when you are borrowing to pay bills or repay other debts, making insufficient repayments, or taking on increasing levels of debt.

If you are worried, the sooner you ask for help, the easier it is to get back on track.

3. How can I get more interest on my savings?

Savings rates were disastrous in 2017 and 2018 doesn’t look much better. If you really need to hold cash, it’s vital to track down the accounts with the best rates.

However, you should also consider whether you need to keep it all in cash, or whether investing some of your money – which offers more potential for growth  – would suit you. A financial adviser will help you find the right balance.

4. Should I be concerned about the pound?

Predicting exchange rate movements is notoriously difficult, but if Brexit negotiations struggle, and UK interest rates remain low, 2018 could be hard for sterling.

Poor exchange rates will increase the cost of imported goods and drive inflation. It will also mean another year of rising holiday prices, so tracking down the best exchange rate and holiday discounts is essential.

5. How can I generate more retirement income?

Whether you’re retired and face rising costs, or mid-career and saving for the future, retirement income should be on your agenda.

For those mid-career, a pension MOT will reveal where you stand and what you need to do now. For retirees, those with defined benefit pensions have little freedom over pension income, but if you face a shortfall, there are still options – from investing for income to drawing cash from your home.

The right solution is different for everyone, so professional advice is invaluable.

Sarah Coles writes on personal finance for many publications, including Money Observer and What Investment

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