Recession: ‘No brainer’ to help improve finances, shares expert | Personal Finance | Finance

Analysts predicted it would fall into England Depression In 2023, many Britons may be wondering what this means for their money. But while there are things people can do to prove recession-proof, there are also some moves people “shouldn’t make,” an expert has warned.

Experts in Judo Britons were surveyed to determine if and how prepared people were for the expected recession.

More than half of respondents said they were not financially stable enough to survive the recession, and 47 percent said they had cut back on their outgoings.

Rajan Lakhani, however, is the resident money expert at Smart Money App PlumSaid: “One worrying trend we have noticed is that people are reducing their pension payments due to the rising cost of living.”

According to Mr Lakhani, Plum Research found that more than one in 10 (12 per cent) are reducing savings or pension contributions as they come under increasing financial pressure, which will become more severe in a recession.

read more: UK plunges into recession as economy shrinks more than expected

Mr Lakhani continued: “If you can afford it and have some pension tax payments left, saving into your pension is always a good idea, whatever the market conditions. This is because there are huge tax benefits for pensions, i.e. Pension Tax Exemption. For example, if you are a basic tax payer, your £80 contribution will be £100 in your pension, while higher tax payers only need to contribute £60 to get £100 in their pension.

“Especially with employee pensions, because your employer usually matches your contributions, you can’t save a pay raise that directly funds your pension.”

But understandably, with rising prices expected to continue into 2023, people may be concerned about how to save beyond this.

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Mr Lakhani said those who save regularly but are under financial pressure should “reduce” the amount they save or invest instead of stopping altogether.

He explained: “It means your pot can continue to grow and you can pay back. It’s also worth noting that by saving in an interest-bearing account, you can now take advantage of improving interest rates in the market, so you can make small savings go further.

Some apps — like Plum — can scan a person’s income and outgoings and automatically allocate a recommended amount to save each week, based on the amount that person can afford.

Mr Lakhani said: “It works best when your expenses change from month to month, as Plum will allocate less when you need to spend more, but save for you in the background.”

read more: 7 Tips to Use Credit for Good Financial Health in 2023

Another top income tip to increase savings pots is to turn a hobby into a side venture.

Explaining how the cost of living crisis is no reason to give up hobbies, Zuto’s experts said: “The only difference is that you have to think about turning these hobbies into a way to make money on the side.”

They continued: “There are tons of websites online like Etsy that allow creators to share and sell their content with the world. All you need to do is set up an account and get started.

“The money brought in can go into your savings or act as spare cash for social events.”



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