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The last couple of years haven’t been a whole load of fun for anyone.  It has, however, definitely been harder for some than for others.  Millennials have been particularly badly hit.  In addition to the financial damage, a lot of millennials have had to postpone important life goals.  Fortunately, it is possible to recover although it will take effort.  Here are some tips to help.

Rebuild your emergency savings

Emergency savings are often known as “cash cushions”.  They protect you from the inevitable bumps you’ll encounter on life’s highway.  Even though the pandemic appears to be entering its final stages, there could still be quite a few bumps to deal with before it’s all over.  Then, of course, there’s Brexit to consider.

If your emergency savings have been decimated due to the pandemic (or any other reason), you need to rebuild them as quickly as you can.  If you never had any, then you need to start getting into the savings habit now.

One useful point to note is that you can have both a regular ISA and a Lifetime ISA.  That means you can put your emergency savings in a regular ISA and save for your first house (or retirement) in a Lifetime ISA.  Just remember that the whole point of emergency savings is that they’re there whenever you need them.  That means they should be in cash rather than shares.

How big an emergency savings pot you’ll need depends on your situation.  As a rule of thumb, you should be looking at a minimum of three months’ living expenses.  Six months is better.  Brutal as this may sound, even if you qualify for benefits, there can be a lengthy delay before you get them.  You need to be prepared for this.

Work on your credit record

If the pandemic impacted your ability to pay your bills, your credit record has probably been impacted.  Even if late and/or partial payments were not actively flagged, the gaps in your payment history can still be spotted by any company that checks.

There’s nothing you can do to change the past.  You should, however, make it a priority to repair any damage as quickly and thoroughly as you can.  One key point to note, however, is that you don’t get “bonus points” for paying more than the minimum on your debts each month.  There are lots of good reasons for doing so if you can but only if you have emergency savings.

It is, however, vital to pay the minimum in full and on time if you possibly can.  If you can’t and you have emergency savings, then it’s usually totally justified to use them.  Then replace what you “borrowed” as quickly as possible.

Attack any debts strategically

If you’re a millennial, you do have one big advantage over people of previous generations in a similar situation.  You’re probably at least competent with technology.  You’ve grown up with the internet so you understand how to use it.  Leverage this to tackle your debts strategically.

Your first decision is whether you’re going to start by tackling your smallest debt or the debt with the highest interest rate.  These two approaches are often called the snowball method and the avalanche method.  You can look at the maths and see which gives the better result.  In reality, however, it’s often best just to use the approach that appeals more to you.

Once you’ve made this decision, it’s time to put it into practice.  As part of this, you’re going to want and need to get the best deal you can on both your debts and your purchases.  This is where the internet comes in. Research everything before you part with any money.  You might be amazed how much you can save if you really try.

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