How to Navigate the Cost of Living Crisis for Your Financial Future

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How to Navigate the Cost of Living Crisis for Your Financial Future

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In July 2022, inflation rose above 10% for the first time in 40 years. This spike was driven by the surge in energy prices, food, and fuel. This soar

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In July 2022, inflation rose above 10% for the first time in 40 years. This spike was driven by the surge in energy prices, food, and fuel. This soar in inflation rates and sharp increases in the cost of living has led to what is now being coined as ‘the cost of living crisis’ causing many of us to worry about whether we are going to have to ‘starve or freeze to death this winter.

With that being said, this begs the question- what does this mean for our financial future? Is now the time to invest, save, or put money into our pension pots or not. In this article, we explore how to navigate the cost of living crisis for your financial future.

Should you invest during a cost-of-living crisis?

If you are starting to feel the effects of the cost-of-living crisis, you are not alone and for many of us, the key concern is how we are going to be able to cover the cost of everyday essentials. However, this does not mean that we should completely forget about pension savings and investments- this is particularly important for anyone thinking about selling their investments to cover these rising costs. 

Whilst it might not be at the forefront of your mind right now, the two main pillars in ensuring your financial security for the future are your pension and investments. So, unless you have little to no cash, it is important that you don’t forget the benefits of having these for the future. 

Should you pay into a pension during a cost-of-living crisis?

Whilst retirement might feel like a long time away, it’s never too early to start contributing towards your pension pot. At a time when your day-to-day costs are going up, it could be tempting to suspend these contributions, but there are lots of reasons to keep them going if you can. The contribution you make to your pension gets a boost from the government, as well as your employer.

Your pension is there to help you maintain your standard of living after your retirement. Without one, you may have to delay retirement or live off a state pension which may mean you are unable to maintain your current standard of living. 

Long-term benefits of investing

Investments are an effective way to improve your financial security in the long run. Whilst there are always risks to consider, it can be an excellent way to build wealth and outpace inflation. If you are unsure about where to start when it comes to investing, we recommend getting in touch with an independent financial advisor like Suttons IFA who can provide you with a full range of financial services designed to optimize your financial portfolio- so, whether that is getting a mortgage or developing a retirement plan- an expert advisor is a great place to start. 

Also, ReadPotential Issues With Your Taxes and How to Fix Them

What is an independent financial advisor?

An independent financial advisor, also known as an IFA is a firm that provides independent financial advice to clients and recommends suitable financial products from the whole of the market. The main purpose of financial advisors is to help clients effectively manage their money and are responsible for suggesting investment choices, assessing your financial status, and understanding your financial goals to create a tailored financial plan. With their help, you could reduce your taxes and maximize returns on any of your financial assets. 

Some benefits of using an independent financial advisor include:

  • Customized guidance
  • A transparent fee structure
  • High level of expertise
  • Financial peace of mind

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