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Recessions come and recessions eventually go but if you were born in the 1980s or 1990s, you may not know what to expect or how to cope during a period of financial uncertainty. This guide gives all you first-timers a few pointers on surviving and riding out the difficult times.
Your attitude:
Stick to the essentials
Decide what's essential and what's not. A recent survey for CreditExpert, the online credit monitoring and identity fraud protection service, found that half of us have given up thinking about a new car this year and 30 per cent have decided not to buy a home.
A quarter of 25 to 34 year-olds have also worked out that children are expensive and have put plans for a family on hold and 12 per cent are delaying their wedding. So, if you don't really need a new car but do want to get married, set your budget accordingly.
Bye-bye bling
Bling, flash and ostentation are out, so you might want to ask your grandparents for tips on scrimping and saving. They've been through harder times than this and survived.
Be money wise
Get a handle on your money. Go through your bank and credit card statements and look back through your major bills. Identify where you can cut back, then set yourself a budget and stick to it.
Your finances:
Know what you owe
It's easy to overlook a credit card, loan or catalogue account, so take a look at your credit report, which lists your credit accounts and repayment record. It gives you a snapshot of your current position and helps you to identify which accounts are costing you more, which can be closed and which you should aim to pay off. It's free for a month too.
Understand interest
Make sure you understand interest rates - and know the rates you're paying on your loans. Another CreditExpert survey shows that two-thirds of us don't know the interest rate on our credit cards and more than half of us have no idea what the APR is on our loans.
Without these facts, you can't decide if the loans you have are a good deal or whether you would be better off with a different source of finance.
If you've got a mortgage and your payments have fallen, consider using any money you've saved to pay off higher interest debts first before paying off more of your home loan.
Polish up your credit status
If you need to borrow, it pays to polish up your credit status. Start with your credit report - lenders look at it when they decide whether to make you an offer and what interest to charge, so correct clerical errors, challenge misunderstandings, register to vote at your current address and ensure it's up to date and accurately reflects your situation.
During your CreditExpert trial, you can also order your Experian Credit Score for just £5.95. It won't be the same as the credit rating calculated by a lender because everyone uses a different formula but it will give you an indication of your creditworthiness.
Don't dig
If you do get into a financial hole, avoid borrowing to pay off existing debts. Instead, talk to your lenders to see if payments can be rescheduled and get free advice on how to manage - try Citizens Advice at www. adviceguide.org.uk, National Debtline at www.nationaldebtline.co.uk or the Consumer Credit Counselling Service at www.cccs.co.uk
Be benefits aware
You might be entitled to state benefits that you're not claiming. Go to www.entitledto.co.uk to see if you are missing out.
Your lifestyle:
Little luxuries = major expenses
We all like our little luxuries - but the cost soon mounts up. Cutting out shop-bought coffee and sandwiches can save hundreds, while tap water is virtually free. Swap DVDs instead of going to the cinema and visit family or friends instead of taking city breaks. And remember - eating in is the new going out, so invite friends over to socialise.
You can host two or three dinner parties for the cost of one restaurant dinner, especially if you buy ingredients at a discount supermarket or local market.
Useful utilities
Use price comparison sites to make sure you're getting the best deal on energy and telephones. If you're not water metered, look at the pros and cons of installing one. Get into the habit of turning off lights, appliances and taps - it's good for the planet and your wallet.
Be swish
You may not be able to afford lots of new clothes but don't worry - swapping events, known among fashionistas as swishing parties, are a hot trend. Ask around and check the internet for swaps near you. You can also look in charity shops, which carry some great bargains in nearly-new designer wear.
It's also worth checking out online services such as www.uk.freecycle.org where people post unwanted items of all kinds, from plants to domestic appliances. You only pay to collect them.
Get fit for free
Travel is an expensive business, so walk or cycle to the shops or work if you can. You don't need a gym to take a run - go to the park instead, buy some weights and download a fitness programme from the Internet.
Your reward
Surviving a recession means learning to swap the sugar rush you used to get from a spending spree for the lasting satisfaction of managing your resources effectively. You'll not only feel more confident that you'll get through the current economic turmoil but will also learn good habits that could help you to achieve your financial ambitions when the upswing comes.
It will become second nature to keep a close eye on your budget, not to fritter your cash away and to check your credit report regularly, so you can afford the life you want without building up a mountain of debt.
Improve your rating: To view your personal credit information that lenders are currently basing their credit decisions on, apply now for a free online credit report. Click here for a free 30-day trial and a free copy of your Experian credit report
