Be wise and curb your spending, but don't drop the essentials

By: Isla Campbell
Submitted: 2008-10-10 17:17:48
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News of the downturn in the world’s economy has been hitting the headlines for over a year now. Energy prices have been soaring, and along with the rising cost of essentials like food and fuel, most people have felt the pinch.

Britain is no exception, with reports that the average household shopping bill has risen by £750 a year, whilst the average gas and electricity charges (when paying by direct debit) have grown by a fifth.

With this increase in basic living costs coupled with rising interest rates, which have pushed up things like mortgage repayments, people are finding themselves with less disposable income to spend. Job losses are also affecting both individuals and the overall economy.

In light of the current economic situation therefore, people are having to be smarter with their money and think carefully about where and how they spend it. Not all is doom and gloom however, and with a bit of forward planning, it can be easy to save cash and survive the credit crunch.

Financial experts advise that it is an intelligent idea to draw up a strict budget, where you write down your monthly income and expenditure. Not only does this let you balance what you are spending against what you are bringing in, but it also allows you to see where your money is going. This, they say, can help identify unnecessary areas of spending, which you could cut down on.

There are lots of things that can be done to curb expenses, such as shopping in cheaper supermarkets or looking around for better deals on your credit cards, and there is an abundance of information being issued on how to do so. There are however, certain things that should not be discarded.

Take insurance as an example. It is a worrying fact, say financial experts, that people are cutting back on essential policies like life insurance, in a bid to save money. Indeed, whilst it is said that more than one third of Britons value life insurance above other cover, one in ten would be willing to cut it from their budget to ease the strain. And, a recent survey suggested that a quarter of consumers are actually doing so, as a result of the credit crunch.

However, the experts argue that things like life insurance are even more important in times of economic uncertainty, especially since things like critical illness cannot be predicted. And, if you lose your job due to an unexpected accident or illness, there is no protection for you or your family - this hits even harder during times of recession.

Although it may be tempting to cut out certain non-mandatory insurance policies, it is important to think about the decision clearly before doing so. One solution to save money on existing policies is to search the marketplace and compare life insurance, for example, to see if you can find a better deal elsewhere.

Article source: Expert Articles