Financial expert shares advice for tradespeople on how to manage financial strain

Dominick Sandford, Managing Director at IronmongeryDirect and ElectricalDirect, said:

“The cost of living crisis certainly appears here to stay, and the latest data shows that despite construction wages rising once again, they are lagging far behind the soaring inflation rate.

“In November, average weekly earnings increased slightly to £718 (from £715 in October), thanks to a small rise in bonuses. This a rise of 5% year-on-year, from £683. However, this growth is less than half the current inflation rate, which despite falling a little in the last month, still stands at 10.7%.

“In essence, this means that construction workers have less disposable income available than this time last year.

“It’s a similar picture across the whole UK economy, where wages have risen by 7% YOY, but still pale in comparison to the inflation rate.

“Worryingly, it appears that the crisis is also affecting businesses, and the consequences are being passed onto their employees. The latest ONS data shows that both redundancies (67%) and unemployment (21%) increased at the end of 2022, to 7,000 and 46,000 respectively, although the latter is considerably lower than it was the year before (57,000).

“With finances strained, it’s important that tradespeople are smart with their money. We recently partnered with Rick Smith, Managing Director at Forbes Burton, to share financial advice for those working in our sector.

“He suggests being stricter with invoices and implementing a ‘50% up front policy’ to maintain a steady cash flow. Building up a cash reserve is also crucial in uncertain times, and Rick advises keeping back 30% of your earnings each month, if possible.

“The data highlights how tough the end of last year was for the industry, but there are definitely causes for optimism. Our recent survey of tradespeople found that one in six (17%) are planning on hiring in 2023, and a fifth (20%) believe it will be a good year for their companies.

“Hopefully when we analyse the data in a few months’ time, the statistics will paint a more positive picture, and reflect the confidence that workers are feeling.”