Watkin Davies Logo
Your 2024 Financial health check up

Your 2024 Financial health check up

Posted on Jan 02, 2024

Much like tending to your health during the winter, it’s equally crucial to review your expenses. With reports indicating that 77% of us are feeling stressed about finances, the impact of the cost of living on our well-being is significant. While recent reports suggest a 'slowing down' of inflation, what does this truly mean for our wallets?

Is UK inflation on the road to recovery?

At its core, inflation measures the increase in prices for goods and services, diminishing the purchasing power of money. For consumers, this could translate to higher costs for weekly groceries, clothing, and other essentials. However, with the current deceleration in inflation, a slight respite may be in store. It doesn't necessarily imply a decrease in prices but rather a slowdown in the rate of increase.

Even though the current inflation rate stands at 4.6%, this is an average across all items. Food inflation remains high at 10.1%. Your 'personal inflation rate' could be much higher than the national average, depending on the proportion of your income spent on food.

While discounts and holiday sales might provide some relief, prudent budgeting and vigilant pursuit of better deals are advisable. Remember, resist the temptation to purchase unnecessary items just because they are on sale. If you wouldn’t buy it at full price, think twice before succumbing to a deal.

How will inflation impact the next cost-of-living adjustment?

The cost-of-living payment, crucial for many households, is typically adjusted in response to inflation rates. With signs of inflation slowing, concerns arise about its impact on these payments.

It's important to note that while inflation is slowing, it hasn't entered negative territory. This implies that the cost of living is still rising, albeit at a slower pace. Adjusting the cost-of-living payment might still be warranted, but likely at a more conservative rate.

The government's cost-of-living payments are set to end after this winter, with the last payments made between October 31 and November 19, 2023. This could result in "incomes after tax and inflation falling by a further 1% between 2024 and 2025." Those with below-average incomes are likely to be the most affected.

Alleviating the burden for mortgage-payers

The direct impact of inflation on mortgage rates can be a double-edged sword. Typically, central banks might raise interest rates to combat high inflation, leading to higher monthly payments for those with variable-rate mortgages.

However, with inflation slowing, the Bank of England may be less inclined to implement drastic rate hikes, at least in the immediate future. Individuals contemplating a mortgage might find this winter a more stable time to make their move. Nevertheless, seeking financial advice and staying informed about any policy changes is crucial.

If you're moving house or considering remortgaging, a mortgage broker should be your first point of contact. Navigating lender websites directly can be overwhelming, and a broker can often secure a better 'broker-only' deal. Save yourself the hassle of entering repetitive information and increase your chances of finding the best deal tailored to your circumstances.

Have you recuperated from the energy price shock?

The cost of heating remains a significant concern every winter. Energy prices have contributed significantly to recent inflationary pressures. With global energy markets experiencing volatility and the UK's shift to greener energy sources, various factors determine your energy bill.

While the slowdown in inflation is positive news, it doesn't guarantee lower energy prices. Factors like the Russia-Ukraine war, global oil prices, national energy policies, and supply chain disruptions play a role. Prepare for potentially higher energy bills and explore ways to make your home more energy-efficient, whether through better insulation or efficient heating systems.

If you're struggling to pay energy bills, consider checking your direct debit, negotiating an "able to pay plan," and ensuring you claim all entitled benefits and reliefs.

Could your bank account benefit from a thorough examination?

Money management can be a significant source of stress, with 20% of people admitting to being afraid to check their bank accounts. Regain control and confidence about your financial inflows and outflows by thoroughly reviewing your accounts.

Download or print your last few statements, tick off, highlight, and add notes to ensure you're aware of every transaction. Look out for unused subscriptions and regular payments. Creating a monthly Excel spreadsheet can help tally up expected outgoings, providing a clear view before committing to any changes.

Cut down on unknown or unnecessary expenses by cancelling unused subscriptions or services. Ensure you're only spending on what you genuinely need, saving extra money every month.

How can you lower your insurance premium?

In the current insurance market, it's likely your car and home premiums have increased significantly. Premiums have been gradually rising, much like the cost of food. Rather than auto-renewing, which may result in a suboptimal deal, consider speaking with a broker to find the best-value policies available.

Brokers can save you the hassle of comparing quotes from different sites, offering extra value for money. Tailor your policy to your needs, exploring options like reduced mileage policies or adjusting excess with excess protection. Stay proactive, informed, and prepared for whatever winter and the election year bring. While the slowing inflation signals economic stabilization, the day-to-day reality won't change overnight.

As the winter months approach with heightened expenses, it's more crucial than ever to budget wisely, seek financial advice when necessary, and stay informed about the broader economic landscape.

Get the latest news directly to your inbox
Subscribe to our email newsletter
* indicates required
Newsletter preferences

Watkin Davies & InstructorcoverPlus is a trading name of A-Plan Holdings, which is authorised and regulated by the Financial Conduct Authority No. 310164. Registered in England and Wales under company registration number 750484. Registered Office: 2 Des Roches Square, Witney, OX28 4LE. Calls may be monitored and recorded for quality assurance purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.