What Does the Future Hold for Your Family Finances?



Without the benefit of a crystal ball, predicting the future, you’re left making educated guesses about your personal finances. Even with a strong commitment to financial success, money management comes with a high level of uncertainty, influenced by circumstances beyond your control. As you work to maintain healthy cash flow and make financial plans for the future, the best you can hope for is accurate information and a little luck on your side.

You never know exactly what is going to happen in the British economy and global financial markets, but things can change quickly. As a new year dawns, it’s important for you to stay informed about financial trends. According to some experts, you can expect a number of things to affect your finances this year, including the following possibilities.

House Prices Will Stabilise

Housing markets sometimes resist expectations, but many experts agree; UK house prices will not continue rising at the rate seen in 2017. Most agree a 0-2 per cent rise is likely, with the possibility for house prices to decrease in the capital. It is thought that for the first time since the global housing crisis, UK incomes may outpace housing, rising faster than house prices in 2018. First-time buyers may enter the housing market in higher numbers, as a result, easing price prohibitions that kept them out last year.

Spending Squeeze Will Continue

The cost of living has been on the rise in the UK, squeezing family budgets. Ticking upward at a rate of 3.1 per cent, according to recent numbers, inflation in the price of goods continues to outpace growth in personal wages. Salaries are currently growing at a rate of 2.5 per cent. With earnings lagging behind the cost of consumer goods, Britons are actually sliding in the wrong direction, forced to make ends meet, despite real wages on the decline.

Among the most burdensome expenses; car cover, energy, and petrol have experienced persistent price hikes. Though petrol is expected to have a relatively stable year, other types of energy and car insurance may not offer the same relief, potentially rising throughout the coming year.

Unfortunately, many analysts agree that signs for 2018 herald similar conditions, as rising prices are expected to outpace real wage increases for most of the year. If a Bank of England prediction holds true, inflation will back off to around 2.4 per cent nearing year’s end, which could represent the first time in years British workers will see their real wages rise faster than their consumer spending obligations. A Government move to boost debt repayment could also help earners balance personal cash flow.

Interest Rates Will Rise

The Bank of England bumped the Base Rate a quarter-point higher at the end of 2017. Experts predict another such adjustment in the spring, moving the rate to .75 per cent. Tracker and variable rate mortgages have already been impacted by the end of year increase and for those still paying variable rates in 2018, further moves by the Bank would push payment amounts still higher. If the single increase of an additional quarter point is the only movement to the Base Rate, UK mortgage interest rates are expected to remain low.

Stock Markets Won’t Sustain 2017 Growth

Stock markets fared well across the globe in 2017. While a catastrophic correction isn’t thought to be inevitable, many observers agree stocks can’t continue on the same trajectory for another year. Investors should expect more modest returns from their securities investments than they brought home in 2017. Cautious experts are not ruling out the possibility of a substantial bit of turbulence in global markets at some point during the year.

Financial outcomes can’t be predicted with certainty, so conditions could unfold differently. These are only a few of the possibilities facing British consumers in 2018. For the best success managing money this year, take these and other trends into account, using the knowledge and information to make educated financial decisions.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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