Managing Your Finances During Covid-19: 7 Practical Tips
With huge changes to the current furlough scheme being implemented, the COVID-19 pandemic will likely continue to have a crushing effect on livelihoods in the UK. With this comes the headache of further financial worries.
However, with the right advice, you should find it a little bit easier to manage your money. With that in mind, we’ve compiled these 7 tips to help you navigate these austere and unprecedented times:
1) Check What Benefits You Are Entitled To
It can often feel overwhelming trying to navigate the benefits system, particularly if you’re used to working full-time and have never considered state help in the past. If you’ve never made a claim before, now might be a good time to check if you are entitled to any benefits – particularly if you are undergoing a period of low or reduced income.
Even if you feel apprehensive about applying for benefits, it’s important to realise that most people need a little help here and there in these unpredictable times. In addition, benefits are paid for from tax and National Insurance contributions, which means that if you’ve been working, you’ve been paying into a system designed to provide you with a financial safety net.
You can find out information about the benefits you and your family are entitled to via the government’s benefits portal. Here, you can undergo a complete benefits check and apply for benefits online. You may even be eligible for an advance payment to help with any immediate bills, depending on your circumstances.
2) Review Your Outgoings
When it comes to taking control of your finances, the first step is to understand when and where your money is spent. If needs be, take a day to review your monthly spending. Next, go through your bank statements and make a list of essential payments (such as your mortgage/rent, utility bills, groceries and so on), then try to figure out if you can cut any of your non-essential outgoings (media streaming services or fast food orders, for example).
Sure, we all need to enjoy a treat once in a while – but moderation is key. So while you might not feel like tightening the purse strings just yet, you might be surprised by how much you could save by cancelling services you don’t use or need and cutting back on luxuries like coffee-to-go in the morning.
3) Read Your Insurance Policies
It might be the case that you have one or more insurance policies in place which would cover things like mortgage payments or even supplement your income in the event of loss of earnings. You might even have taken a policy out without ever considering that it could come in useful further down the line. For example, accident, sickness and unemployment insurance and PPI (payment protection insurance) are often offered in accordance with life insurance policies and mortgages, and it’s easy to forget that you’re actually covered.
In most cases, these sorts of policies have a minimum time period before they payout (usually several months). However, you may find it helpful to talk to your insurer for further information, particularly if you face redundancy or worry about being made redundant in the future.
4) Contact Your Creditors
Financial providers are obliged to offer help and assistance to you during times of difficulty, so it’s worth informing them of your current circumstances and asking if there’s anything they can do to help. It’s usually the case that a creditor will be in a position to freeze interest, offer payment holidays or come to an alternative payment arrangement with you, which should be able to take the pressure off a little. However, your creditors can only do this if you contact them – don’t bury your head in the sand. Act now before it’s too late.
5) Keep up to Date With Government Advice
Since March, the government has made numerous changes to the benefits system and how creditors can recover debts. These changes have been made to help support millions of individuals who are experiencing financial difficulties due to COVID-19. However, as circumstances surrounding the pandemic continue to change (especially as we enter the cold winter months), you can expect government rules and financial advice to change too. Therefore, it’s important to keep abreast of all the latest changes which could affect you, which means you should regularly keep an eye on the latest government information surrounding coronavirus.
6) Avoid Unarranged Overdraft Fees
If you’re struggling with your finances, it can be all too easy to end up spending more than you’ve got in the bank on everyday things like groceries. Unfortunately, if you go over your agreed overdraft limit, you could find yourself liable to pay unarranged overdraft fees, which could cost you up to £6 per day.
The easiest way to avoid this is to regularly keep an eye on your outgoings, including any pending transactions which have yet to be processed. However, if you find yourself in an unarranged overdraft, you might want to consider taking out an emergency loan or payday loan to help bring your account back into the black.
While borrowing to cover money owed might not seem like a great idea, there’s some sound logic at play here. FCA regulations stipulate that interest fees on payday loans are capped at £24 per £100 borrowed over 30 days. In contrast, high street banks can charge in the region of £6 per day in unarranged overdraft fees. So by taking out an emergency loan, you’ll reduce your bank charges and enjoy having a little extra money to tide you over until your next payday.
7) Speak to a Charitable Organisation
If you require further guidance and support regarding your finances, or if you’re worried about falling behind with payments, you may find it useful to speak to a charitable organisation. Groups like StepChange, Citizens Advice and National Debtline Management can help to provide advice and information and could even help you set up a debt management plan.« Covid Layoffs – Employees Need Support With Their Finances 16 Tips to Help You Save Money This Christmas »