Managing Your Finances And COVID-19.
Perhaps managing your finances and COVID-19 should be considered an oxymoron. By now we’ve all established that this COVID-19 pandemic is a very surreal, almost dystopian time for everybody. In a matter of weeks our lives have been turned upside-down. We’re all trying to find our feet quickly, staying responsive in an ever-changing and evolving situation.
And honestly, it’s not that fun. Of course, we’ll find ways to stay positive. To lift each other’s spirits and to keep each other company (if only virtually), until this is all over. But all of us – every single one of us – is having to take the time to assess their finances. And because of that we will all be making some challenging changes and difficult decisions over the coming months.
Dealing With Uncertainty.
Even if some of us are okay financially now, we are all facing the reality of uncertainty for the foreseeable. None of us know how long this is going to go on for or what our new normal will be. And uncertainty is something we don’t tend to deal well with.
We depend on routines and structure in our lives to give ourselves that sense of certainty. That way we can predict with some confidence what’s likely to happen in our day-to-day lives. And our finances are one area of our lives we especially rely on structure and routine for.
There is no secret that a sensible way to manage your money is to:
- Monitor your incomings and outgoings.
- Make sure your incomings are always more than your outgoings.
- Use your disposable income to invest or save.
Being told the world needs to come to an almost standstill, with no idea how long it might be for. Or what the recovery looks like personally and economically…that’s enough to make anybody grimace.
So then, what are we supposed to be doing financially? From our everyday spending and saving to our plans for retirement: I hope you’ll find some useful insight during this blog series; Your Finances and COVID-19.
Your Finances and COVID-19: First things first. More haste, less speed.
As tempting as it might your head in the sand or make snap financial decisions depending on how news of the pandemic develops. Now is not the time to rush into or out of anything. This is a stressful situation, but you can afford to be measured and considered when you make financial decisions during this crisis. And it’s important to take this approach too.
If you haven’t already, now is the time to review what you could be entitled to from the Government if you are suffering a loss of income. The Money Advice Service have a whole page dedicated to what you’re entitled to depending on your circumstances, take a look here. The .GOV website also has information on different topics related to Coronavirus, which you can view here.
Your Emergency Budget.
Once you’ve found out and applied for what you are entitled to, it’s time to do an emergency budget for the next 8-12 weeks. You likely be worried about cashflow and it is possible you’ll need to cutback on any non-essential spending for the time being. Most utility providers and councils are being flexible with bills due, and some of you may even decide to take this opportunity to review your current tariffs with suppliers, to see if there are any savings to be made there.
Either way, if there was a time to be both thrifty and hasty, this is it. Map out your income and spending for the next 3 months and find out where y
our gaps in cashflow are, and whether you can cut back on any expenditure for the time being. Be sure to make a note of the dates, reference numbers and types of schemes or grants you have applied for too, so you can follow up if you haven’t heard back.
Not quite the rainy day you were imagining…
Okay, so perhaps that rainy day fund doesn’t look too good as a pandemic crisis fund. But if you have savings you can rely on to tide you over, it’s a good idea to use them. Some financial providers are even lifting penalties on fixed term and notice savings accounts, which means you can access your carefully saved funds without having to pay the usual fees to access them.
It’s worth remembering though that any fixed accounts may be on a higher interest rate than current fixed savings accounts offer, so it’s wise to do your research before withdrawing to make sure you’re withdrawing from an account which will mean you sacrifice as little interest as possible. Check with your bank or building society to find out what your options & limitations are or speak directly with your Financial Adviser if you have one, so that they can do the legwork for you.
In the unlikely event.
Now is also the time to be looking at your insurance policies. You might have taken out some kind of accident, sickness or unemployment insurance or have another similar policy which offers potential pay-outs in these kinds of situations. Take a good look at your life insurance and mortgage paperwork too. These types of insurance are often offered as an add-on and it’s easy to forget you have them at all.
It’s important to review the pros and cons of claiming on any insurance you might have vs. any schemes or grants from the Government you are eligible for. There are going to be plenty of options available, so make sure you take the time to find out which is best for you and your circumstances before making any commitments or decisions.
Communication, communication, communication.
At a time where there may always seem to be a part of you that just wants to bury your head in the sand, now is the time to be communicating with your creditors. Naturally, this is a challenge right now, with most creditors experiencing a dramatic increase in call volumes, with some prioritising call centre queries for specific queries only.
If you can, have a look on your creditors website first. Find out if there is already a process outlined for those who need to discuss the impact of Coronavirus on their finances. Much like utility providers and local councils, many creditors and financial providers have outlined ways you can notify them of any issues you might be having, and also list ways you can ease the financial impact during this crisis.
Similarly, you may be able to arrange for things like overdrafts to be interest-free for a period of time. Some creditors are offering payment holidays for up to 3 months if you are unable to make your normal payments. Make sure you keep open lines of communication with your creditors. That way you can avoid any negative impact on your credit rating where possible. Find out creditors and financial providers what you can do to alleviate any financial pressure too.
Your Finances And COVID-19 Recap:
1. More haste, less speed.
Don’t rush into any decisions. You can afford to be measured and considered in your approach to figuring out your financial situation.
2. Find out what you’re entitled to
Visit the links in this blog to find out and apply for any schemes or grants you’re entitled to.
3. Use any savings
Use savings if you have any. So, be sure to do your homework on any interest you might be sacrificing as a result. Speak to your Financial Adviser or Bank/Building Society in the process.
4. Communicate with creditors & other financial providers
Keep your creditors in the loop with what you can afford. And find out what else you may be entitled to from other financial providers. Like Interest freezes and payment holidays, for example.
Your finances and COVID-19 are important, but most important of all, make sure you set aside time to do this kind of task, and then make sure you set this aside too. Make sure you de-stress. At a time which is going to be talked about in history classes for centuries to come; be as proactive as you can, then rest.
You can read more on other financial topics in the Your Finances and COVID-19 series as they are published here, on my blog. And above all else, look after yourself and your loved ones, and stay safe.