It’s estimated that only 8% of New Years’ resolutions are actually kept, and this is concerning when you consider that the vast majority relate to finances.
While this hints at an inability to successfully manage money, it’s fair to say that the current generation of customers are being restricted by an extremely challenging economic climate. More specifically, households are being hamstrung by a lack of knowledge concerning the economic and financial landscape, making it hard for them to make informed and progressive decisions.
In this post, we’ll look at what you can expect from personal finance in 2018, as you look to make plans that can secure your fiscal future.
Credit and Debit Card Changes will Continue to Fall
For years, customers have found themselves gripped by a cycle of debt as a result of using credit cards. While some have suggested that this is largely the result of irresponsible spending, lenders have also come under increased fire for applying excessive, arbitrary and occasionally erroneous charges.
This is now a thing of the past, however, after a number of potential charges historically applied to credit and debit card usage were finally outlawed. These often hidden fees have cost Britons millions of pounds over a period of years, while they have made it difficult for consumers to retain control of their finances.
Most importantly, this enables customers to use their credit card with far greater transparency, while reducing the overall cost of paying for goods and services.
The Rate of Inflation May be About to Fall
The big story from 2017 was the rising rate of inflation in the UK, which continued to increase at a disproportionate rate to earnings during the first three financial quarters. Inflation rates tend to be cyclical, however, and the good news is that this could well be braced to decline incrementally throughout 2018.
After peaking at a five-year high of 3.1% last November, the headline rate of inflation has already fallen slightly to 3% at the turn of the year.
This will lower the overall cost of living for households across the UK, with essential items such as food and energy likely to become noticeably cheaper over time. As a result, we should be able to look forward to higher levels of disposable income even as real wages continue to stagnate.
Interest Rate Hikes Should be Scarce in 2018
When the Bank of England (BoE) decided to increase the base interest rate in the UK to 0.5% last autumn, the decision was greeted with genuine dismay. While this measure was taken largely to offset the sustained rise in inflation, many argued that increasing mortgage repayments in a strained climate could cause untold issues for households.
With inflation set to fall in 2018, however, there will be less pressure on the BoE to hike interest rates further (even as the UK continues to report weak levels economic growth). This means that the base interest rate should remain relatively stable during the next 12 months, with just a single, incremental increase likely to take place before the end of the year.
This should help to cap mortgage repayments as earnings continue to stagnate, making it easier for you to manage your finances and secured debt throughout the year.
