The plight of JAMs (those who are just about managing) has been hitting the headlines on a regular basis over recent times. Essentially JAMs are people who are living from one pay-day to the next, perhaps managing to avoid racking up any (more) debts, but unable to make meaningful inroads into existing debts or to build up savings.
Political parties say they want to help – but can they?
Theresa May herself has acknowledged the plight of the JAMs and politicians of all persuasions have been busily setting out ideas to improve their situation, but realistically it’s an open question as to how much any government can actually do, particularly with all the uncertainties about Brexit on the horizon.
Can the JAMs help themselves?
While it may be disheartening to see how little money, if any, you have left over at the end of the month and to feel that there is no point in even trying, nothing could be further from the truth. The less money you have, the more important it is to make every penny work for you. That’s what will put you on the path to being able to cope, even if the unexpected happens such as you losing your job or becoming ill.
Start by (re)assessing your outgoings in terms of your needs
A need is anything necessary to keep you housed, clothed and fed or anything which is a legal obligation, such as a contract until it expires. Making savings here is likely to involve a combination of education, adaptation and creativity. For example, even if you and your family enjoy meat, the fact is that it is the most expensive form of food around. Cutting it out, if only temporarily, can go a long way towards reducing food bills. If you’ve never tried vegetarian cooking then help is at hand on the net, where there are plenty of budget-friendly recipes to be found for free. Likewise, if you’re put off the idea of using “own brand” products and such like because you worry about what other people will think of you (or your children), then decant them into other containers and only you will know. Make use of every money-saving option you can find, including old-fashioned money-off coupons and online codes and signing up for loyalty cards where you shop frequently. Look at the activities you carry out every day and see if there is a more economical way of doing them. For example, if you get the bus to work, could you walk one or two stops further to get a lower fare? If you take the car to a park and ride, could you cycle instead?
As soon as you can free up a little money each month, start putting it to work
Your first task is to build up some emergency savings, ideally at least two or three months’ salary. Once this has been achieved, start tackling any debts. With debts, the standard advice is to “snowball” or pick the highest-interest debt first and start paying it off. While this can be good advice, if you have lots of “little” debts, e.g. small balances on credit cards, it could be worth paying these off first and closing the cards as this may help to make a quick improvement to your credit rating and help you to transfer your debts to a lender who charges lower interest.
If you’ve managed to avoid debts, you’re obviously in a better situation. In this case, you may want to look at getting professional advice as to how you can use this extra income to generate a return for you and improve your overall situation as quickly as possible.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.