Martin Lewis gives financial advice on dealing with debt
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Now more than ever, it’s crucial for people with debt or those living from pay check to pay check to set financial goals that can lead them to financial freedom. With thousands of families losing over a thousand pounds each year due to the £20 per week Universal Credit uplift ending, and the rise in energy bills it may be hard to set financial goals and stick to it as it may feel as if there is no extra money to actually put aside and save.
However personal finance expert Peter Komolafe urged Britons to “get back to basics” as it’s only then people may be able to survive the winter months.
He spoke exclusively with Express.co.uk on what exactly getting back to basics means, and how important it is for each person to do this to finally feel at “ease” with their finances.
He explained that setting financial goals can often feel “daunting” however it doesn’t need to be as “it can be very simple” if people can set budgets to keep to day to day.
He said: “A budget is extremely important now especially with the cuts to Universal Credit and what means for a lot of people and a lot of households.
“We know that times are hard right now so what is really important is getting back to basics.
“Financial goals can be building an emergency fund – a pot of money set aside so that you can be covered for three months or six months if worse comes to worse.
“It could be paying off your overdraft or paying off a credit card. Just plan towards that.
“Try to understand what your needs and wants are.”
People’s needs are described as things that are “relatively non-negotiable”. It includes day to day basics such as rent, and food. Things can people need to survive.
Wants are described as things that can “wait until later”. This includes things such as holidays, gym memberships, eating in the latest restaurant.
Understanding one’s wants and needs is “really important” when it comes to budgeting.
This can help people control what they have coming in every month, and what they have coming out.
Mr Komolafe added: “In order for you to work on most financial goals such as paying off a credit card, getting a deposit for a house, or simply just trying to make sure you have enough money in a household, budgeting becomes really really important.”
Financial goals can be very specific, it’s just about each person learning how make a plan and “stick to it”.
He stressed that “it’s all about planning” and sticking to a “really rigid regime”.
This is crucial to ensure that people can retain or manage the money they have.
He said: “That will give you more of a sense of freedom than living on the cusp of almost having enough every month.”
That feeling of “not having enough” is always “the catalyst source of anxiety” for Mr Komolafe’s clients.
However, by making these “hard decisions” about what is a want and need, people can start planning how to survive the next couple of months if they are struggling financially.
He concluded: “When you sit down and separate the needs from the wants, people will feel at ease.”
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