Landlord voice: the cost of living crisis
What can landlords do to get ahead of the cost of living problem?
The short answer is perhaps to anticipate problems in advance and act as quickly as you can – procrastination is the worst thing to do when rent payers or landlords are in trouble. The longer answer is actually, you can do quite a lot.
A regular savings habit
Building up a savings cushion to see you through the difficult periods is a habit both tenants and landlords should pursue.
Saving money every month, for those that can, is an important part of dealing with your debts and avoiding them in the first place. Saving may mean cutting out some luxuries. Cutting some of your discretionary spending, if you have some, can keep a budget on track and cover planned expenditure, like an MOT on the car, or those pesky unexpected bills like an appliance breakdown.
Your budget
The best way to budget – and I have always used this when I have been planning a project, and especially when finances are tight – is a cash-flow forecast or budget.
This is a fairly simple device anyone can use who’s familiar with building a spreadsheet. It is a 12-month forecast of your income and expenditure which tracks against your bank balance throughout the forthcoming year. It can be a rolling budget so as one month falls out, another is added at the end, so it is always for a full 12 months.
It lists an opening bank balance at month one, to which is added all your income: wages, salaries, pensions, rental income if you have any, etc. Deducted from all these items of income are your total cash payments out that month: rent, electricity, gas, insurance, council tax, miscellaneous spending – everything you pay out.
If you have set up monthly direct debits for a lot of items it makes the budgeting task easier. The opening balance, plus income, less expenditure leaves a closing balance, which is transferred to the opening balance of month two. It should also reconcile to your end of month bank balance. Eventually the whole forecast ends with the closing balance on month 12.
You can find rental property spreadsheet templates online, for example here.
