Uncertainty can be scary, and right now, we’re all feeling it. With so much up in the air during this this time, you might be wondering what you can do to feel a little more on top of things.
While none of us know what the coming weeks and months will look like, we understand that money worries can make things more stressful. Whether you were feeling financially strained beforehand or you’re just concerned about the impact on your household finances in the future, there are a handful of precautions you can take to protect your finances now.
1. Take time to evaluate your situation
It’s important to take some time to assess what your current financial situation looks like – consider if you have access to any savings or emergency funds, and whether or not your income over the coming months is safe. You will find yourself in one of 4 possible situations;
No income or savings; if you find yourself in a position with no income and without a buffer of savings to fall back on, it’s important not to panic. Prioritise applying for government support, cut any expenses which aren’t critical, and assess if you have access to credit as a fall-back.
No income but savings; you may find you have lost your income, but have an emergency fund there to support you. In this instance, determine how many months’ critical expenses your savings will last you, and don’t be anxious about having to dip into your emergency fund; this is exactly what it is here for. It’s still important to prioritise applying for government support, and cutting non-critical expenses too.
Income and no savings; if you have a safe and defined income over the next few months but have no savings, it’s important to set a budget and ruthlessly stick to it. At this time, you should be looking to cut all expenses which aren’t critical and reduce remaining expenses where you can – redirect this money towards building an emergency fund.
Income and savings; while this is the best situation to find yourself in, it’s important not to become complacent with your finances. Continue to set a budget for all money coming in and out, determine how long your emergency fund savings will last you if your income were to stop, and keep adding to your emergency fund where you can.
2. Build an emergency budget
Feeling in control of your finances is vital for healthy financial wellbeing. Preparing a budget or spending plan is one of the simplest ways to help yourself feel in control about the money you have coming in and going out.
Take some time to work out what your current financial priorities are and ensure that your money is being directed to the things that are most important. An easy way to do this is to work out what your critical, non-negotiable expenses are, and ensure that these are paid first.
If there are any expenses that are non-essential, such as gym memberships or subscription services you can look to pause or cancel these payments until you are in a place of more certainty with your money.
It’s important to remember too that budgets are fluid and may change materially month to month, as this situation develops. Having a framework in place where you know what your fixed costs are, and where you have flexibility will allow you to be the most intentional with the money you have available.
3. Talk to your lender/s
Even if you can still afford your monthly loan payments or mortgage, it’s important to know the options available to you if you run into any financial setbacks in the coming weeks or months.
Once you have completed your emergency budget if you think you’re going to struggle to meet your loan or mortgage payments it’s important to reach out to your lenders as soon as possible, before it becomes a problem. Many lenders have updated their websites with advice and guidance on what to do if you find yourself financially struggling due to Covid-19, and support options available such as payment breaks.
During this time phone lines for banks and lenders may be incredibly busy, so it’s best to check the lenders website directly to see if there is a way to complete any applications or forms online first.
4. Take advantage of available supports
The government has announced unprecedented financial support measures to support the country through this crisis. To find out what you are entitled to, visit the gov.uk/coronavirus website for guidance on benefits you may be eligible for and how to apply.
If your household income has been severely impacted by covid-19, make it a priority to apply for what you’re eligible for as soon as you can.
Here are the links to the services and sites where you can find more information: