Can old school money tips help us during the cost-of-living crisis?

You can’t glance at the internet or nudge a newspaper without seeing talk about the economic climate. Headlines aside, for many of us, the cost-of-living crisis has hit home, hard. So, when the financial world is metaphorically on fire, have the good ol’ money matters tips expired, or do they still hold true?

The short answer, thankfully, is yes – good advice stays good even when the going gets tough. That said, there may be some things to consider or adapt, given the realities of today.Let’s go through some fundamental money tips you may have heard and possible enhancements that can be made in light of today’s circumstances.

Tip #1: Spend less than you make

Some tips are just good common sense. Put simply, the way to stay out of debt is to stick to spending the money that you have and try spending less of it. That means avoiding borrowing money in the form of loans, overdrafts or credit cards.

Though this is indeed sensible, when times are hard, we may need some extra help. So, if you do need to dip into credit, it’s a good idea to have a plan on exactly how much you can repay, and on what schedule. Avoiding high interest charges is important, so consider paying back as much and as quickly as possible, if you can afford to.

Or, to stick within the parameters of this sensible money tip, you could explore ways of increasing your income to match rising costs, think about taking on a side hustle, for example. It's one way to add some extra income and help your spending stay below the amount you bring in. If you are considering a side hustle, remember to factor in any possible tax implications to see if it still makes sense financially.

Tip #2: Create an emergency fund

The clue’s in the name with this one. Emergencies happen – whether it’s a broken appliance, a sudden job loss or illness. That’s where this pot of cash comes in, and ideally, this fund should amount to three to six months of living costs.

If you already had an emergency fund before the recent turbulence in the economy, it might be a good idea to top it up, if you can afford to. Since costs are rising, it may well be that you need a little more in your stash if it comes down to needing to use it.

Tip #3: Pay yourself first

This is similar to the last tip, in that it concerns savings and investments. But there’s a crucial difference – this one suggests we prioritise saving every month. Again, when costs are looming, it’s understandable to feel pressure to clear as many bills as soon as possible.

However, this tip is a good reminder that building the habit of saving is one way we can feel safer during the hardest financial turns. By siphoning cash to our savings and investments first, we ensure that cash doesn’t get eaten up by other spending. Where possible, even if it’s just a few pounds, it's important to pay yourself first. However, depending on various circumstances, paying into your savings isn't always the best way to make the most of the market. High-interest debt should be considered and paid where appropriate.

Tip #4: Make your money work for you

This classic tip reminds us that, though we need to go and work for our money, our money can also be put to work. Essentially, that means giving our money the task of making more money – in the form of interest and dividends. That means actively saving and investing.

With rising costs, this may well become harder. But in times of uncertainty, having a safety net in the form of savings is even more important.

For savings, choosing a savings account that pays interest is a sensible way to go, like the Chase saver account. While high interest rates on borrowed money are a genuine challenge for many, savings can benefit from the high interest rates resulting from the current financial atmosphere.

Whatever you decide to do, look after your money. Chase's easy-access saver account lets you start saving with as little as you like.

18+, UK residents. A Chase current account is required to open a saver account.

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Disclaimer: The Hub is intended as a knowledge portal to provide information on a range of topics, including financial products. Articles may reference products and services which Chase UK does not currently offer. Tax treatment depends on your individual circumstances and may be subject to change in the future. This article is for information only and does not constitute financial or tax advice. As with all investing, your capital is at risk. The value of your portfolio can go down as well as up, and you may get back less than you invest.