How to manage your money in uncertain times
Financial wellbeing is the sense of security and ease that comes with knowing you can pay your bills today, deal with the unexpected and that you're on track for a healthy financial future. Sounds dreamy, no?
Financial wellbeing matters because it's hard to think clearly and make decisions that serve you when you're living under a cloud of money worries.
Well, I don't need to tell you that these are uncertain times – globally, politically, economically. If you're overwhelmed and living with money worries, it's understandable.
Money is emotional
Money is emotional. Our emotions, such as fear, despair, guilt, shame, sadness and anger influence how we behave with money.
Managing your money in uncertain times is about understanding your relationship with money and managing your behaviour accordingly.
While's it's not helpful to act out of fear and panic, it's also not helpful to procrastinate and not make a decision at all.
Start by checking-in with yourself. How are you feeling about your financial situation? What does financial security look like for you now, in the next six months, in a year's time?
Financial review
Then, review where you are now. Your income, your outgoings, your savings, your investments.
Once you know where you are, you can make an informed decision about what, if anything, needs to change to increase your financial security and give you peace of mind.
Set financial goals. Get clear on what you want to achieve and why, and take action.
Focus on what's within your control. Shopping around for the best interest-rates on savings and mortgages? Within your control. Setting interest rates? Not so much.
Managing behaviour
How is this playing out in real life? For one of my money coaching clients, it's speaking with her husband about life insurance and income protection as they're soon to become parents.
For another, it's reviewing her income and outgoings and looking for a new, higher-paid role after being informed her current job is at risk of redundancy.
Another client is reviewing the balance of savings versus investments.
Jon Nicholson Ashcroft is an independent financial adviser at Ashcroft Wealth, based in Cardiff. We spoke about how he helps clients manage their behaviour with investments, particularly following the effect of the announcement of US tariffs on global markets.
Talk through fears
Ashcroft says: 'I emailed clients after the tariffs were announced to explain what we were doing, what the fund managers will be doing, and that we would be in touch if anything changed.
'I had one client call me, who's a particularly nervous client. And that's absolutely fine, that's what I'm here for – managing expectations, helping clients talk through their fears, coaching them really and helping them make sure that they're still investing for the right reasons.
'If people want to cash in their investments motivated by fear or panic, if they think that the market is going to keep going down and they're going to end up with nothing, it's my job to try and reassure them, reminding them why they're invested.'
'Investing shouldn't keep you up at night'
'I have said to clients in the past who are overly worried that perhaps this isn't right for you,' Ashcroft says.
'Investing shouldn't keep you awake at night. You need to be happy with what you're doing and if you're not, then maybe it's not for you. I give people that option because there should be no pressure.
'People shouldn't think they need to be invested. It has to be something that works for them and delivers an end goal rather than something that causes them to worry about their money disappearing.'
Personal finance is personal
'Personal finance is personal,' says Funmi Olufunwa, qualified mortgage adviser and finance expert.
'One thing that frustrates me is that we have all of these headlines that talk about mortgage interest rates. Yes, those rates are available in the market but they're not necessarily rates available for you.
'I see it a lot on Facebook groups I'm in. People will ask others: 'How much did you borrow? Where did you borrow? What rate did you get?'
But this doesn't mean that particular lender is going to lend you that amount of money at that particular rate.
'The most important thing you can do is work out your financial goals, then speak to somebody who can then say: 'Based on your situation, this is what's available to you.' Which may not be, for example, the 4 per cent mortgage rate you're hearing about in the news because that's likely to be for people who have a big deposit of at least 40 per cent.
'There was a period of time when everyone was saying 'just go for a tracker mortgage '.' This is a variable-rate mortgage that tracks a base rate, typically the Bank of England base rate.
Know yourself
But, says Olufunwa, 'If you're the sort of person feeling sick in the week leading up to the base rate announcement because you're worried the rate's going to go up and you know you don't have a lot of leeway in your budget, that would suggest a tracker mortgage isn't the type of product for you.'
If certainty over your monthly mortgage repayments will help you sleep at night, a fixed-rate mortgage may be the better product for you, says Olufunwa.
'So, ignore what Bob next door's doing because you don't know Bob's circumstances, how much flex he's got in his budget or what his risk tolerance is.
'Bob might love the anticipation of the base rate announcement, whereas you're freaking out. Personal finance is personal.'
Talia Loderick is a money coach. Talia helps people understand and take control of their behaviour with money so they can stop stressing about money and have enough to live well – now and in future. Visit: talialoderick.co.uk
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
33 minutes ago
- Times
US trade policy risks global financial panic, BIS warns
US trade protectionism will fragment the world economy and raise the risks of a financial panic centred on the global bond market, the Bank for International Settlements has warned. Known as the 'central bank of central banks', the BIS warned that global trade policy has deepened economic fragmentation and could feed into broader financial stability concerns. The bank highlighted the ballooning government bond market as a major source of financial vulnerability, as owners of these assets are increasingly hedge funds that take on debt to buy bonds to benefit from small changes in prices. The BIS said: 'The post financial crisis landscape has government bond markets at its centre and asset managers of various stripes as the key intermediaries. As a result, a key risk today is liquidity stresses in government bond markets.' Bond markets were at the centre of a financial storm caused by President Trump's 'liberation day' tariffs on April 2. A sharp rise in US treasury yields and a decline in the dollar forced Trump into a partial retreat by announcing a 90-day pause on proposed tariffs for most countries. April's bond sell-off was exacerbated by the actions of hedge funds that were dumping their holdings of US bonds. The International Monetary Fund has also warned the UK's gilt market is more vulnerable to shocks due to the presence of hedge funds, that make speculative bets on bonds, rather than more 'patient' long-term investors like pension funds. The future of US tariffs is under question as the White House approaches its July 9 deadline, after which 'reciprocal' levies are due to come into force for more than 100 countries. If tariffs go ahead as planned, it would 'represent a further step towards greater trade fragmentation. These tariffs could accentuate the decline in productivity growth as supply chains come under further pressure. Ageing populations and less migration will reduce supply capacity', the BIS said. 'Long-standing economic relationships that have sustained global prosperity for decades are now under strain. Yet we should not look back with rose-tinted glasses. The global economy was already wrestling with structurally low productivity growth, persistently weak fiscal positions and the build-up of large and often opaque non-bank financial positions,' it said. • How to save London's stock market, by LSE boss David Schwimmer The dollar has been one of the biggest losers from US trade and economic policy, falling to a three-year low as investors have sold the currency, even as stocks and bond prices have rallied in recent weeks. The BIS also highlighted dangers in the $111 trillion global foreign exchange swap market which is dominated by dollars and shadow banks. 'Financial conditions have become more sensitive to global risk factors. This calls for a deeper understanding of the cross-border challenges inherent in a more market-based financial system and underlines the value of co-operation among central banks,' it said.
Reuters
4 hours ago
- Reuters
Trade risks to keep shrinking Australia's resources earnings, report says
SYDNEY, June 30 (Reuters) - Australia's mining and energy export earnings are expected to continue to slide over the next two years due to elevated risks of trade barriers, falling bulk commodity prices and a weak global economy, a government report said on Monday. The June-quarter report by Australia's Department of Industry, Science and Resources said uncertainties swirling over U.S. President Donald Trump's policies have disrupted global trade, forcing businesses to delay their investment decisions. "The increased caution has induced further weakness in activity. The associated uncertainty is likely to impinge on world commodity demand, as the nations that Australia supplies are impacted," the report said. "The outlook is more uncertain than normal." In April, Trump imposed a 10% tariff on goods from most countries, although he suspended higher levies on many trading partners for 90 days until next month. Trump said last week that the U.S. had signed an agreement with China, Australia's largest trading partner, related to trade but he did not provide details. For the 2024-25 financial year ending this month, Australia is estimated to post commodity earnings of A$385 billion ($252 billion), down from A$415 billion in 2023-24. That is expected to fall to A$369 billion next year and to A$352 billion in 2026-27. Prices for iron ore, Australia's top export, and liquefied natural gas will likely ease due to higher global supply, the report said. Iron ore export earnings could fall from A$116 billion this year to A$105 billion next year and to A$97 billion in 2026-27. Gold will shine next year and is expected to become Australia's third-largest export after iron ore and LNG at A$56 billion with both volumes and prices expected to increase, the report said. "Higher prices for gold, and forecast higher copper and lithium exports, are partly offsetting the impact of lower prices for iron ore, coal and LNG," Resources Minister Madeleine King said in a statement. Lithium prices are expected to recover slowly after the recent drop, with revenue forecast to rise from A$4.6 billion this year to more than A$5.5 billion next year and more than A$6.6 billion in 2026-27, the report said. ($1 = 1.5279 Australian dollars)
Telegraph
4 hours ago
- Telegraph
After a dreadful first year, Starmer has no hope of fixing the economy
This Friday is the anniversary of Labour's victory at the polls, presenting us with an opportunity to assess Sir Keir Starmer's first year in office. I cannot comment on foreign affairs or domestic social issues. My bailiwick is simply the economy and the Government's influence over it. If a week is a long time in politics, then a year is a short time in the life of an economy. It is perfectly possible for things that have started badly to turn out well in the end and, equally, for things that started well to turn sour. So a judgment this early in a government's tenure must be provisional. We should start by acknowledging all the difficulties the Government has faced. It inherited a low-growth economy, accompanied by a serious fiscal problem. Notably, a deficit of nearly 5pc of GDP and a debt ratio not far off 100pc, and still climbing. Moreover, given the continuing war between Russia and Ukraine, and especially since Donald Trump's return to the White House in January, the international environment has not been favourable. With all that said, how has the Government done? Long ago, Labour's leaders acknowledged that the fundamental problem of the British economy was low economic growth, associated with weak productivity growth. They identified a low rate of national investment as the most important driver. Accordingly, much of Labour's wish list has been about increasing the rate of investment. It has undertaken a number of measures, including redefining the fiscal rules, to enable a higher rate of public investment. The effects of this change have not yet come through. And it has sought to reduce the planning obstructions to building more houses. As regards business investment, however, its approach so far has been woeful. It seems to have believed that, after the leadership chaos and infighting of the last 14 years, merely by not being Conservative, the new Labour Government would engender greater confidence. Things have turned out rather differently. For a start, the underlying problems were always more serious than Labour's diagnosis acknowledged. Moreover, the gloom and doom about the ' fiscal black hole ' relentlessly pumped out by the Chancellor didn't help develop any sense of optimism among business leaders. Then there were three key mistakes. The first was committed more or less immediately after taking office by caving in to the striking rail workers. This gave a green light to other militant groups to act, and it will surely take a long time for the Government to restore any sense of confidence that it will firmly resist militant union pay demands. In a similar vein, it conceded to junior doctors and thereby, in all likelihood, set off a wave of claims and industrial disputes across the public sector. Second, having boxed itself in with a pre-election commitment not to raise the main rates of personal tax and yet feeling that it had to increase some sort of tax to fund its increased spending, the Government then imposed a huge increase in business taxes in the form of increased National Insurance contributions for employers. Moreover, this came on top of a large increase in the minimum wage. To cap it all, the Government is in the process of getting the Employment Rights Bill through Parliament. This will greatly strengthen the bargaining position of workers against their employers. Many small businesses, in particular, are fearful that they will be in a weak position to stand up against rogue employees. It is hardly surprising, therefore, that business leaders feel depressed and are disinclined to invest or take on employees. Ultimately, it seems Labour really doesn't seem to appreciate the private sector or understand what makes businesses tick. Simultaneously, the Government has failed to understand the nature and scale of the problem concerning the public finances. Admittedly, most Labour Party supporters seem to think that we can increase the share of GDP accounted for by government expenditure without incurring any ill effects. Yet anyone reviewing the international evidence will conclude that government spending taking as high a share of GDP as it currently does is doing grave damage. One of the most important drivers of surging public spending is the ballooning benefits bill. Admittedly, the Government has made a nod in this direction by announcing various measures to combat the inexorable rise in welfare spending. But these measures have been pitifully small in scope. They amounted only to a total saving of some £6bn, compared to a projected total welfare bill (including pensions) this year of £326bn. Moreover, the Government has already retreated on some of its proposals. It may be about to abandon the rest of them this week. If you want to be optimistic, you could say that it is still early days. Even Margaret Thatcher's first year in office in 1979/80 was very far from an economic success story. Indeed, she began by agreeing to the pay recommendations of the Clegg Commission on public sector pay (no, not that Clegg). And her monetarist obsession caused interest rates to be jacked up from 12pc to 17pc, prompting the pound to soar and much of the British economy to go down the tubes. The economy picked up two years later, but it didn't really start to motor until after Thatcher's second election victory in 1983. Somehow, though, I don't see this Government's dire beginning leading to any sort of major recovery, let alone a Damascene conversion. With a tailwind from the international environment, things may get a bit better next year. But any sort of economic transformation looks unattainable. In that case, Labour's other aspirations will fall by the wayside. Meanwhile, the Government somehow has to find the wisdom to appreciate the peril that this country faces from foreign aggression – and to muster the political courage to spend what is necessary to defend us against it.
