How to be recession proof as the worst on record looms

Almost half of Brits are turning their heating off to be financially stable for the recession

• New research reveals the sacrifices people in the UK are making to be financially stable through the recession, as well as their knowledge of the current financial landscape
• Less than half (49%) of Brits claim they are financially stable enough to be comfortable during a recession
• One in ten (12%) are cancelling holidays and 43% have turned the heating off to make ends meet

With unpredictable energy prices and rising interest rates, new reports [1] confirm the UK is on the brink of its longest ever recession, but is the public prepared for the effect this could have on them?

Experts at Zuto Car Finance have surveyed Brits [2] to determine if, and how, people have prepped for the recession, and have offered their expert guidance on how they can recession proof their finances.

How have Brits prepared for a recession?

Although a percentage of people are taking positive steps to become recession-proof, others are having to make sacrifices for financial stability.

The majority of people (54%) are living within their means to prepare for a recession, and 47% have tried to reduce any outgoings. Others (11%) however have taken up an extra job and 12% admit they haven’t financially prepared.

How have you prepared financially for a recession?	Percentage
Lived within your means	54%
Reduced any outgoings	47%
Have a savings account	41%
I haven’t financially prepared	12%
Taken up an extra job / made another source of income	11%

How have current financial instabilities affected people?

Many people are taking drastic measures to ensure financial stability.

As we enter the winter season, 43% of Brits are not putting their heating on, and a further 30% are sacrificing their Christmas to save money. One in five (20%) are  even walking more to reduce petrol costs.

How has the cost-of-living crisis / recession affected you?	Percentage
I’ve turned the heating off / reduced the times it’s on	43%
I’ve budgeted less for Christmas	30%
I’ve been walking more to avoid fuel costs	20%
I’ve cancelled holiday(s)	12%
My business is at financial risk	9%
I’ve not paid off my credit card each month	8%
I can’t find a new job	5%
I lost my job	3%

Experts at Zuto recommend the following five tips to start recession-proofing finances:

1. Start boosting your credit score

Applying for credit in financially trying times isn’t necessarily recommended, but if you find yourself with no other choice, then a good credit score will at least give you lower interest rates. But where do Brits stand with regard to their score?

If you’re unsure what your credit score is or think you have bad credit, it’s best to reach out to one of the main credit reference agencies and ask for your credit report as soon as possible.

As an added bonus, here are 15 tips on how you can improve your credit score today.

2. Use budgeting apps

Another saving tip to consider is using budget apps to monitor and track your spending. Apps like Emma help with avoiding dipping into overdrafts, whilst also recognising any opportunities to pay off debt.

Alternatively, Money Dashboard is a financial management service that categorises transactions so you can clearly see which areas of your lifestyle you’re overspending in. You could even switch to a bank such as Monzo to setup spending budgets, letting you put any excess cash into a saving pot.

3. Turn your hobby into a side hustle

Most of us have probably heard the phrase ‘do what you love, and you’ll never work a day in your life’, and the current cost of living crisis is no reason to drop your hobbies. The only difference is that you should think about turning these hobbies into a way to make money on the side.

There are plenty of websites online, such as Etsy, which let creators share and sell their content with the world. All you have to do is set up an account and get started. The money brought in by this can then go towards your savings or act as spare cash for social events.

4. Save sensibly

No matter your financial situation, everyone gets hit in a recession. But regularly putting away a small percentage of your pay each money will go a long way towards creating a financial safety net.

Sites like Money Saving Expert or Money Supermarket can compare the best interest rates on savings accounts, and you even open a locked account with a time limit to ensure you aren’t dipping into the savings for unnecessary purchases.

5. Talk about your finances

Above all, if you are struggling with your finances, it best to talk to someone about it. There are many support lines out there for people in financial difficulties, plus debt and credit charities that offer advice and step-by-step solutions.

UK Debt Supportline, Debt Careline, and Money Advisor are all services that can advise you how to balance the books and get back on track with your finances.

For further detail on the five tips above, plus five extra pieces of essential advice, visit the Zuto blog here: https://www.zuto.com/blog/how-can-you-prepare-your-finances-for-a-recession/

Lucy Sherliker, Head of Customer at Zuto commented on the data: “The current times of financial uncertainty are worrying for many, however there is support in place to help people through out the cost-of-living crisis.

It’s of great importance that people start to recession proof their finances, and we hope our guidance can inspire people to prepare now. For further helpful information relating to finance and credit, you can visit https://www.zuto.com/blog/“