Family finances in the post-Brexit world

No matter which way you spin it, it’s been a difficult past decade for many families in the UK. Since the recession, the financial climate has made things appreciably tougher, and recent data illustrates how clearly Generation Y and millennials have been – and will continue to be – squeezed.

Make no mistake about it – it’s hard going for working families out there at the moment, and Brexit will likely make it a whole lot tougher. At least in the short term anyway. Yes, there may well be opportunities that come with it, and perhaps a big economic boom awaits down the line. But for now, it seems like the waters ahead are going to be pretty choppy, and that’s likely to affect all of us.

Photo from Unsplash - William Iven
Photo from Unsplash - William Iven

The falling pound

Many experts have said that the drop in value of the pound is exaggerated by the fact that it was overvalued before the EU referendum anyway, and, from a more technical standpoint, some argue that it’s a good chance to rebalance the UK economy, as we are too reliant on imports. All that may be true, but the bottom line is that at household level, it leaves us on the cusp of higher prices for things like our weekly shopping, fuel and other retail items.

The other impact, of course, will be on overseas holidays. As families, trips abroad already put tremendous strain on budgets given the tendency of airline companies and travel agents to hike their prices during school holidays, while there is the controversial fine system for doing this during term time. So the fact that changing money will now yield fewer euros or dollars only adds to the squeeze.

Interest rates

You often read about how the drop in interest rates has hurt savers, and particularly pensioners, and since the Brexit vote, we’ve heard that interest rates will be further cut. No doubt that for those with savings, finding somewhere to get a decent rate of return is like trying to draw water from a stone. Even the popular Santander 123 account has seen its interest rate cut from 3 percent to just 1.5 per cent.

The upshot of this though is that borrowing money has become a lot cheaper too. For those with variable rate mortgages, it effectively means more pennies in the pocket – and straight away too. For those looking to take out a personal loan – perhaps to make home improvements or purchase a new family car – the good news is that with rates dropping and the market becoming hugely competitive, there are plenty of good deals around.

Taking care of household finances

To a large extent, there isn’t much we can do about external things happening in the wider economy. The key is to keep your personal finances healthy at home, and simply doing the little things right. It starts with having a budget, or at least a clear plan.

Keep it simple: don’t think of your income(s) as the base for your budget. Work out this figure, less automatic expenses and outgoings. Also factor in other hard costs like travel, food and clothing – essentials that you can’t do without, and then decide on a daily allowance per person. It’s really important to get buy-in from both your partner and kids too. If you’re all pulling in the same direction as a family, it’s a lot easier to make significant savings.

There are also other ways to get more bang for your buck without having to sacrifice too much. For example, certain cashback deals when you spend on credit cards offer rewards of up to 5 percent. Banks are also offering significant incentives for switching current or savings account providers. And switching energy provider – something which is actually nowhere near as much of a hassle as it sounds – can also save you hundreds of pounds a year.

These and many other perks are effectively freebies, and result because of the fact that we still live in a country of highly competitive marketplaces. So be sure to take advantage, because in these challenging times, it makes sense to get all the help you can.

It certainly isn’t all doom and gloom, and there are many ways to make your pound go further, and forge a comfortable life for you and your family. But the one fundamental way of ensuring this happens, which is applicable to all families, is to instil a good ethic of disciplined spending within your home, and plan for the future as much as possible.

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