Oil prices hit record highs

Top Tip:

Oil prices hit record highs –A barrel of US light crude rose to over US$103, before closing just over US$101 a barrel.

Many of us have been experiencing rising fuel and energy costs as the rising costs of oil get passed on to consumers, us. In these times, where rising fuel costs are increasingly putting more and more pressure on our finances, it is even more important to draw up a budget – or to have another look at your budget if you already have one. It is only by doing this that you will be able to see if it is possible for you to put money away in a savings account.

It not unusual for a small additional cost, such as a washing machine breaking and needing to be fixed or the time comes to renew the TV licence, to push us over the edge.

Draw up a Budget, using a Budget Form to work out your income and expenditure. Try using the Moneybasics Spendometer to keep track of all your spending for a week or two. This tool can be downloaded for free onto your mobile phone and gives you the option of setting budget categories so that you can see where money is disappearing to and to help you with overspending.

Please read on for a review of the top stories that hit the personal finance news headlines over the course of the week commencing 25th February 2008.

The Financial week that was...

Monday 25th Feb

Mortgage approvals pick up – The number of mortgage approvals for February climbed from the near record low of January according to the latest figures released by the British Bankers’ Association. This result supports the view of Kate Barker, of the Bank of England’s Monetary Policy Committee, and her recent comment that a recession “remains outside the main possibilities.”

Thursday 28th Feb

Parents financially support their grown-up children – A YouGov poll for Scottish Widows Savings and investment has shown that parents continue to bankroll their children’s lives after they reach adulthood. On average, children receive £12,600 from their parents in the form of a gift or a loan. Additionally, 16% more parents were shown to have provided financial support than in the previous year.

There was a big rise in the money given to help children pay off debt (from two in ten parents, to four in ten). While there are often circumstances beyond our control that lead to us ending up in debt, there are some positive actions that we can take to help ourselves. One simple thing that we can do is to distinguish between our ‘needs’ and out ‘wants’. While electricity, water and paying the mortgage are some our ‘needs’, a new fancy pair of branded jeans are not essential – they are a ‘want’ that we should wait until we have enough money to buy. While we all know this, if we don’t take practical steps to making sure that we buy just our ‘needs’, not our ‘wants’, we all end up buying things we know we’ll regret later. A shopping list, for example, can help you to make sure that you only buy what you need when you do your weekly shop.

Services sector going strong – The results of the latest growth figures from the services sector, the backbone and driver of UK economic growth and competitiveness, show that it grew by 0.6% in the final three months (Q4 – Quarter Four) of 2007. The service sector grew by a solid 3.4% throughout 2007 in spite of the problems brought about by the credit crunch.

Friday 29th Feb

House prices fall again in February – House prices fell for the fourth consecutive month in February, falling by 0.5% according to Nationwide. This has resulted in the annual rate of house price inflation falling from 4.2% to 2.7% and if the current trend continues we will soon see annual falls in house prices. However, a spokesperson for Nationwide said that a UK recession remains “a remote risk”.

Prepared for Moneybasics by Jason Taylor, Advocacy Officer (Credit Action).