💸 The cost of everything is rapidly rising, and it can be difficult to even think about investing when all you’re doing is just trying to get by.

In today’s episode, we speak to Iona Bain, a Scottish-born musician turned financial journalist and popular expert on millennial money. We cover everything from the causes of the cost of living crisis to inflation and the key principles of investing.

***
You can listen (39 min) and subscribe here:

Apple Podcasts

Spotify

Podfollow

***

what exactly is the cost of living crisis?

• The cost of living crisis refers to a combination of really high inflation that we have not seen for several generations, and a much more specific energy crisis which is feeding into inflation.

• It is also partly down to some of the decisions that have been made by central banks in recent times, particularly the decisions that were made around the Covid lockdowns to pump money into the economy through quantitative easing.

• It was first deployed in 2008 after the financial crash, and at that time it was seen as an emergency measure. You could argue that it was successful up to a point, although it did have a lot of very negative downstream consequences, especially for younger people, because of inflated asset prices.

• However, some economists argue that if you keep printing money and you do so once the economy is open back up again, there's a real risk that you will push up inflation

• We are also having this very specific energy crisis, partly caused by the Russian invasion of Ukraine and how dependent Europe had become on Russian gas. We're also starting to see the consequences of failures in the UK energy market — there's been a big debate around whether UK energy suppliers have been effectively regulated enough.

• When it comes to dealing with the crisis, we need to make sure that we are conserving energy as much as possible. The less energy we use, the less we will have to pay.

• Undoubtedly for a percentage of people at the lower end of the income scale, this winter is going to be incredibly difficult. That is why the government has come under so much pressure to provide more emergency funding for those households

a checklist of things to do

• If you are struggling to pay your bills now, understanding your rights and your options is really important here. Your energy supplier has a legal obligation to make sure that you can keep up energy repayments.

• If you have started to build up arrears and you are struggling to pay those back, then speak to your energy supplier. You work with them, and you come up with something that's sustainable.

• Try and see whether you’re doing everything you can to insulate your flat and to keep it as warm as possible.

• Another really important thing about managing your money is to try to be pragmatic and to try to take the emotion out of it.

• Try to make some conscious changes to your lifestyle to just try and get into better habits as the winter comes.

• Keep a close eye on your meter readings and check that the direct debits are reflecting cutbacks that you're making.

the key principles of investing

• You've got to make sure that you are only investing money that you are genuinely okay with losing. So if you haven't yet saved enough money for a rainy day, if you have still got some very expensive debts that you need to pay off, then concentrate on those priorities first.

• Don't put all your eggs in one basket, and diversify. If you're starting out, then opting for funds, whether that's active or passive funds, to really outsource the diversification and get fund managers to decide on a sensible diversification for you, that's a very quick and easy route to diversification.

• Ignore all the headlines, ignore all the FOMO, ignore all the noise. Really figure out how long you're investing for and how much money you're hoping to generate.

• Tune into the experts, tune into that wealth of research has been done around investing and what works, and stick with that.

• Strike the right balance between having investments that you feel proud of, that you think are actually making a difference out there in the real world and not having a portfolio that is basically setting you up to be an adrenaline junkie.

****

You can follow and connect with Iona at:

• Instagram: Iona Bain

• Young Money Blog

#ad Sponsored by Chase, a digital bank that makes every day rewarding. Get 1% cashback on your everyday debit card spending, 24/7 customer support, and a numberless debit card to help keep your details safe. Download the free Chase app today. 18+, UK residents. Cashback exceptions apply.