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16m Brits Have Less Than £100 Saved – What Do You Do If You’re One Of Them?

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Studies have revealed that 16 million British citizens have less than £100 in savings. In some areas, that means nearly half of the population have less than £100. Northern Ireland and the West Midlands are the areas most struggling to save, with more than 50% in the non-saving bracket.

It’s a worrying number, but one made all the more concerning by the fact that household debt is continuing to rise. A population of citizens with high debt and no savings is a ticking time bomb. In fact, it’s these such circumstances that meant the pressure of the 2008 financial crash was felt so keenly. The financial history of the UK suggests that we do not do well when millions of households find themselves in this kind of situation. Yet here we are, not even a full decade later, and the warning signs are blaring again.

If you find yourself as one of the people included in these disconcerting statistics, then there is no strength to be had in numbers. However, there’s also no judgement. Wages are stagnating, meaning that for many families, the only way of surviving is to put essential expenses onto credit. There is simply no money left over at the end of the month to be able to save anything.

While understandable, the situation is a chronic problem that needs to be handled. To break free of a high-credit and low-savings cycle, examining your financial circumstances and seeing what you can tweak becomes a priority. This is not easy; if it was, then there wouldn’t be a problem, and everyone would be able to right their financial course for the better.

So what if you want to be one of the ones who manages to save and reduce their debt load at the same time? Is it even possible? Yes, it is – but it requires a lot of work.

Step One: Build An Emergency Fund

A perfect number for an emergency fund is £1,000. This should cover any immediate expenses that you have no choice but to rectify, such as your fridge breaking down or an unexpected repair bill on the car.

While you’re in the process of building your emergency fund, pay only the minimum amount to any creditors. This somewhat flies in the face of conventional financial advice, which always insists you pay above and beyond the minimum payment. However, this is extra cash that you need for the emergency fund; the existence of which is going to be able to prevent you from needing to rely on credit so much in the future. So for the moment, this is a good strategy.

Saving might not come easy to you, but remember that every small amount you can contribute helps. Even if you only manage £2 some weeks, that’s fine – so long as it’s building, you’re taking steps in the right direction.

Step Two: Pay The Most Expensive Debt

 

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When you have managed to put together an emergency fund, the next step is to work out which of your debts is costing you the most money. This is the balance of a credit card or loan that has the highest interest rate. If you don’t know what your current interest rate is, then a quick call to your provider can usually find this information.

When you have located the debt that is costing you the most money, channel all your spare money after living expenses into paying down this debt. When you have cleared the most expensive debt, you move onto the second most expensive, then the third, and so on and so forth.

Step Three: Investigate Good Deals

The best way to free up your financial constraints so you have the money available for all of the above is to be careful when you spend money. That means you have to be on a constant “deal hunting” footing; and it applies to everything. Never just renew insurance without getting competing quotes; check for interest-free balance transfer cards; constantly revise your TV and broadband packages. It’s time consuming, but just paying a little more attention to the money you spend on direct debits every month can make a real difference – but you have to be committed.

Getting back onto a sound financial footing isn’t an easy task. There will be a lot of times when you will feel like it’s not really worth the effort, but it is. Take your time, work consistently towards a defined goal, and eventually you will be able to see nothing but a sound financial future ahead of you.