Cost of living crisis: how to make smart money decisions in tough times

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"If you stop your pension contributions, it may stop your employer paying into the pension. So it's not just your money that you're not receiving any more, it's quite often the employer's contribution as well." You would also miss out on tax relief on money going into the pension, as well as the opportunity to buy into investments while markets are low. "A period of a few years of not contributing to a pension doesn't sound like much," Stone says. "The discipline of saving into a pension is much easier than the discipline of saving into an Isa, for example, since it's done through your employer," Stone says. After George Osborne's changes to pension rules implemented in 2015, lots of over-55s have been able to withdraw money from their pensions, 25% of which can usually be taken tax-free. "Someone who has been saving into a pension since they were 20 or 25, for example, might live to 100. When they retire, the hope is that their pension will be invested for another 30 or 40 years, because it should be invested for ever. You shouldn't spend it - you will need it until the end."Stone says individuals also need to consider the tax implications. "Above your tax-free cash entitlements and personal allowance, people will be paying their marginal rate of income tax, 20%, 40% or 45%, on withdrawals. Those are large numbers to lose in tax. If people decide to draw more income than they need in this year, they could be paying too much tax and cementing, in the majority of cases, at least a 20% tax bill, which really means a 20% loss in the value of the pension as it's paid out in tax and cannot be recovered."How do I cope with an unexpected expense?Your boiler needs fixing, your car's clutch gives out, you need to repair the guttering. According to a recent Money and Pensions Service survey, 9 million people across the UK have no savings, while another 5 million have less than £100.Do you have the money for unexpected expenses such as having your boiler repaired? Photograph: David J Green/AlamySome people may have family or friends who are able to bail them out with a interest-free loan but if you don't have this option, make sure you borrow at the lowest possible rate and pay it back as soon as possible.