It's not too late to storm-proof your finances, says Skipton FS

Many people will be worried about their finances with the relentless doom and gloom announcements that inflation is swiftly gathering pace, the FTSE is now in a bear market and Britain is on the brink of recession.

However, if you haven't already taken some practical steps to protect your finances, it is not too late to start.

Matthew Cox of Skipton Financial Services commented, "It is never too late to take steps to recession-proof your finances. When everything is looking rosy, managing your finances seems easy, but it is at times like this when it is even more crucial to keep an active eye on your finances. Whilst we understand many people will be nervous about the impact of any possible recession, the fact is that, with some basic planning, you can mitigate the effect on you and your family. People will spend 10 times longer planning a holiday than planning their finances yet only the latter will give their family long-term security and peace of mind. Now is not the time to be an ostrich and put your head in the sand - now is the time to adopt a battle-like mentality and do everything you can to protect yourself for anything the coming months might throw at you."

Here are Skipton Financial Services simple steps to storm-proofing your family's finances:

If you are worried that you have neglected your finances, the first and best bit of advice we would give is to do a simple budget plan of what you have going in each month and, more importantly, what your monthly outgoings are. It is much quicker and easier to reduce what's going out each month, than increase what's coming in, and you may be surprised to find out you have a deficit each month.

With the price of utility bills rocketing, switching from uncompetitive gas and electric suppliers could save you a packet each month. You should also review any other providers you are not tied into, including mobile phone, landline and broadband suppliers. Check out simplyswitch.com.

Cancel any non-essential regular payments. For example, consider going pay-as-you-go at the gym if you are not getting value from the monthly membership fee. Also check all your current direct debits as you may find you are paying for something you no longer need so you may be able to cancel some payments.

Ideally everyone needs to have three to six month's salary (at least £5,000) on instant access for short-term needs and emergencies but it is vitally important that this cash is still working hard for you. Check out your rate of return, particularly if your rainy day fund is in a bank current account. You can receive 6-7% on online accounts but savers who prefer a face-to-face service could do worse than look at Skipton Building Society's Branch Access account, which pays 5.35% and won the Moneyfacts award for best no notice account in 2007.

Check any outstanding credit card or loan debts. If you are not paying 0%, it is likely they are costing you more each month than you are receiving in interest on your savings than you should pay them off immediately, rather than leave surplus cash sat in an account. Either that or transfer your credit card debts to a 0% deal.

Ensure you are utilising your Isa allowance for preferential tax treatment - currently £3,600 for cash Isas and £7,200 for stocks and shares Isas. Don't assume stocks and shares Isas mean lots of risk. There are products out there which can guarantee your capital if that's what you need, with others which don't offer such a guarantee but do offer the potential of much greater returns.

It is important to ensure you have the right kind of protection for you and your family. Those with young families are probably most at risk if a recession hits so you should ensure you have adequate life insurance and, if you are nervous, take out mortgage payment protection insurance.

As a whole of market financial adviser, we can review your existing investments as it is very likely that we will be able to increase the income you receive each month, to take the pinch off over the coming months. If you are concerned about inheritance tax, there are ways you can invest to receive regular income, whilst mitigating IHT.

To have a clearer picture of what investments they've already got, investors can consolidate all their existing investments through a platform such as Fidelity FundsNetwork. This way at the click of a button you can see the performance of all your investments in the same place. Visit sfsinvestdirect.co.uk.

It is vital to annually review the make up of your investment portfolio to ensure there is adequate geographical and asset class diversification. In current conditions it is more important than ever to hold a balanced portfolio. Whilst banking stocks have struggled recently, commodities funds have performed well this year. Nobody really knows which will be the number one asset class next year but diversification in the different asset classes is the key to financial success. Likewise, whilst markets close to home may not have set the world alight, a portfolio investing in different areas of the globe can help ensure you receive a piece of the pie from the best performing area so ensure you are globally diversified.

If your financial goals are medium/long-term and you don't need short-term access, historically investing in shares over five years or more is likely to generate better returns than investing in deposits. Don't worry though if you cannot afford to invest lump sums. Investing regular amounts each month is actually less risky as you will benefit from ‘pound-cost averaging' (buying cheap units at times of underperformance).

Higher rate tax payers can make the most of any surplus income by making additional pension contributions. They will receive basic tax relief (20%) on contribution and a further 20% tax through their tax returns. Whilst it may seem an easy option to reduce those pension payments for a few months whilst times are hard, this should be a last resort as it will only come back to bite you when you retire and need all the income you can get.