COVID-19 has had a massive impact on people’s finances and we still have a long way to go before we see the longer-term damage. For some, the lockdown has led to a huge drop in income with little prospect of more money coming in any time soon.
While some have continued to be paid there are still concerns about the long term impact not only on the future of work but also on the economy on how we will repay the billions spent by the chancellor, Rishi Sunak.
But regardless of where you sit its impossible not to worry and that is why planning is the best course of action.
Britain is facing a “severe recession, the likes of which we haven’t seen” and lasting economic damage from the coronavirus pandemic. Chancellor, Rishi Sunak
So how can you best prefer yourself for a future of financial uncertainty?
Don’t bury your head and ignore the numbers!
Quite often it is only when a change of circumstances happens that we look at our financial position and although it can sometimes be painful it can also find payments you are making that you didn’t even realize that can save you money. Although many companies are offering reduced interest rates it may seem the easy option to sort yourself out. It’s worth remembering we are all in unknown territory and no one should be complacent. Having a budget and making a note of what you have coming in and what you are spending is really helpful. Make a list of all your primary bills (which are typically your mortgage, rent, council tax, utilities) and your nice to have bills such as Netflix, gym memberships, and amazon services. If doing a money audit feels like a chore, remember you can also think about how much money you have been saving such as not going out to restaurants, shopping for new clothes, weekends away, and reducing your shopping bills by only going once instead of daily.
Ask for help
The hardest part of being in financial difficulty is admitting it. Yet, most financial institutions and service providers have always looked at ways to help you rather than abandon you. It’s not within their best interest to not help you because if it reaches a crisis point no one wins except the debt collector or debt management company who both milk fees off both parties.
Mortgage payment holidays are currently available up until October 2020 and many loans and credit card companies will give you a payment freeze in exceptional circumstances, with the current pandemic being exceptional. The same applies to a rent holiday, although your landlord is under no obligation to offer you any form of rental freeze there is no harm in having the conversation although landlords have been told to pause evictions.
However, if after doing your financial audit you realise you are still in a position to repay bills then it’s within your interest to continue to do so.
These organisations provide financial information and support (some free/some may charge for some services):
- Citizens Advice – www.citizensadvice.org.uk/
- Mental Health & Money Advice https://www.mentalhealthandmoneyadvice.org/en/managing-money
- Money Advice Service – www.moneyadviceservice.org.uk/
- Money-Saving Expert – www.moneysavingexpert.com/
- National Debtline – www.nationaldebtline.org/
- PayPlan – www.payplan.com/
- StepChange – www.stepchange.org/
- Turn 2 Us – www.turn2us.org.uk/
- Aunt Meg – www.auntmeg.com/
- Redundancy Rights https://www.gov.uk/redundant-your-rights/redundancy-pay
- The Money Charity – https://themoneycharity.org.uk/
- Money For Life – https://www.moneyforlife.org.uk/
Look to the future and plan
Even if you believe you are ok now look at where you could be in the next 3, 6, and 12 months. Although the current position may seem as though there has been no impact we could still experience a second wave of infections that may cause more disruption to our livelihoods and the economy so it’s sensible to plan ahead.
If you are lucky enough to have savings then you can relax but if you have no savings but do have spare income now is the time to start letting it build up as a reserve fund. If normal life resumes with no crisis then you have a buffer that allows you.