3 ways to prepare your finances for ‘Awful April’

Written by Lori Campbell on 27th Mar 2023

‘April showers’ is taking on a different meaning this year as Brits are set to be swamped by rising bills.

Dubbed “Awful April”, household bills are set to shoot up in the next few weeks as inflation unexpectedly creeps up again.

Whilst the Energy Price Guarantee will continue at its current rate from April 1, a flurry of further price increases from the start of next month is set to see the cost of living in the UK worsened.

Broadband and mobile contracts are to rise by as much as 17.3 per cent in line with January’s Retail Price Index – standing at 13.4 per cent – as well as a 3.9 per cent top-up that telecoms companies are allowed to raise prices by mid-contract.

On top of this, water bills will rise across the board, with the average annual bill coming in at £448.

This year, councils can raise tax bills by up to five per cent and many are doing so, with prices rising by £75 a year on average.

Here are three ways, from budgeting app Hyperjar, to help you reshape your finances ahead of “Awful April.”

1. Try the 70/20/10 rule

The traditional 50/30/20 rule goes that you should spend up to 50 per cent of your after-tax income on essential outgoings, 30 per cent on things you might want. The other 20 per cent goes to savings and debt repayment.

During the cost-of-living crisis, a 70/20/10 rule may be more realistic. Allocate 70 per cent of your take-home pay for essential expenses such as rent, bills and groceries. That leaves 20 per cent for things you want, and 10 per cent for savings.

If you want a holiday to look forward to this summer, try cutting non-essential spending from 20 per cent to 10 per cent. Put the extra 10 per cent in a travel fund.

The average monthly pay for a UK full time worker is £2773 a month, according to the Office of National Statistics (ONS). This means that if you put away 10 per cent of your pay for the next three months, you could save £831 by the beginning of summer.

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2. Visualise your spending, so you can track it properly

It’s important to track your spending – this is true now more than ever. If you can look at your bank transactions and find unnecessary purchases, you’ll be able to see what you need to cut out. With a budgeting app like HyperJar you can visually track your income and outgoings, making your financial situation easier to understand and digest. You’ll be surprised to see how far your money can go if you cut out unnecessary and impulsive spending.

3. Name your goal

Having a desired target in mind is useful as it will motivate you more to cut costs and save towards your goal. A study by National Savings and Investments (NS&I) recently found that people who set their savings goal save faster, and up to £550 a year more, than those who don’t.

Mat Megens, founder of HyperJar, says: “Psychologists know this trick works – achieving goals you’ve named and visualised is way easier than trying to do something without a clear picture in your head of what you want and how much it’s going to cost.

“It’s about making sure we’re doing all we can to make our money go as far as possible. There’s no magic wand, but we can all drill down into our budgets to understand where our money is going, to save and cut costs where we can. Even if you can’t save much at all, being more conscientious with your spending will help you psychologically. An understanding of what you have and where it needs to go will help make navigating this period less stressful.

“Nowadays, when paying is so frictionless, it’s easy to overspend because there’s less of a concrete connection with money. Controlling the controllable is something everyone can do to get on the front foot.”

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