Managing your finances can be tricky at the best of times but it’s certainly a whole lot harder when you’re in the midst of a pandemic. Since the outbreak of COVID-19 earlier in the year, many families have seen their finances thrown into disarray.
With the virus still continuing to spread, the true economic impact of COVID-19 is not yet known. However, there are ways to take control of your money, even whilst coronavirus is still causing uncertainty across the UK. To learn more, take a look at these top tips to help you cope with your finances amidst a pandemic:
1. Create a Budget
First and foremost, you need to know exactly what your current income is and the cost of your essential bills. If your job or employment has been affected by COVID-19, your household income may have changed, so it’s important to use up to date figures when creating your household budget.
Essential bills are things you can’t do without, like utilities, food and your rent or mortgage. Once you’ve deducted your essential costs from your income, the figure you’re left with is the amount of disposable income you’ll have each month.
2. Cut Your Costs
Now you know what your expenses are, it’s time to reduce them as much as possible. Changing to a different energy provider could drastically reduce your utility bills, for example. Similarly, switching your mortgage to a different interest rate could minimise your monthly repayments.
As well as looking for cost-saving options amongst your essential bills, take a look at what else you’re spending your money on. If you have unused memberships or subscriptions, for example, check whether you can cancel them without incurring any fees.
3. Plan Your Expenditure
Unforeseen costs can crop up at any time but some expenditure you can plan for in advance. If you’re a parent, for example, take a look at this finance guide from New Horizons, https://newhorizons.co.uk/finance-credit-guide-for-parents/. With access to hundreds of lenders via New Horizons, you can find finance credit options to suit your family’s needs, if you require them. What’s more – you can access quotes in seconds and check your eligibility without a credit footprint being left on your file.
Similarly, consider any one-off or ad hoc bills you’re likely to get throughout the next 12 months. Your car may be due for its MOT soon, for example, or you may need to pay for semi-urgent house repairs. By working these costs into your budget now, you can minimise the impact they’ll have by the time they’re due to be paid. Alternatively, you can arrange finance credit in advance to ensure the funds will be available when you need them.
4. Find Out What You’re Entitled To
Single people, couples and parents are all entitled to financial support from the government, depending on what their personal circumstances are. From topping up a low income to free childcare hours, you might be surprised at the level of help that’s available. Even if you’re already receiving some form of support, double-check whether you’re missing out on what you’re entitled to.
In addition to the standard financial support, you could also qualify for extra help due to the pandemic. The Government previously introduced COVID-19 stimulus packages and more help might be on the way. Stay up to date with the latest news and do regular online searches to see if new packages have been announced.
5. Cash In Your Investments
If money’s tight and you want to access more funds, now might be a good time to cash in any investments you have. However, there are two important things to note in relation to this. Some investments might be performing badly at the moment, which means they might not be as valuable as you’d like. By cashing them in now, you could miss out on a bigger return later.
Secondly, some investments or savings plans have penalties for early withdrawal. This means you could face additional charges if you decide to cash them in or withdraw your savings early. Check the terms and conditions on your documentation before making any decisions and, if in doubt, seek independent financial advice.
6. Talk to Your Creditors
When you’re having money troubles, creditors always advise you to contact them and let them know what’s going on. Many lenders are receptive when customers experience financial hardship, so you may be able to reduce your repayments for a limited period of time.
Since the coronavirus outbreak, lenders, banks and finance companies have been acutely aware of the financial strain families are under. Due to this, many have introduced new policies to assist their customers. You may be entitled to take a payment holiday or drastically reduce your minimum monthly repayments, so be sure to contact them and ask for help if you need to.
7. Start a Side Hustle
Depending on your personal circumstances, you might find that you have time to start a side hustle amidst the pandemic. If your hours at work have been reduced, for example, a side hustle could be a great way to replace the income you’ve lost.
As well as helping to increase your family’s income, a side hustle can be a fun way to spend your time. By choosing something you’re passionate about, you can earn money while doing something you enjoy. From writing a blog and tutoring students online to working as a freelance consultant, there are many ways to put your talents to good use when you’re looking for the right side hustle.
8. Use Your Assets
Take a look at the assets you own and think about how you can use them to generate cash. For most people, their home is their biggest asset, so why not consider renting out a room or taking in a tenant? Providing it doesn’t breach your mortgage terms and conditions, this can be an effective way to generate a second source of income.
9. Start an Emergency Fund
If you don’t have one already, start building up an emergency fund as quickly as you can. Unforeseen expenses have a habit of appearing at the worst possible time, but an emergency fund will ensure you’ve got something to fall back on. If you have any disposable income left at the end of the month, set some aside for future emergencies.
10. Practice Self-Care
The outbreak of COVID-19 has changed the way we live, work and interact, so it’s not surprising that many people are experiencing increased stress and anxiety. If your finances are a source of worry, be sure to ask for the help you need. Whilst managing a lower income or dealing with on-going uncertainty can be difficult, there are millions of people who are in the same position and understand exactly what you’re going through.
Dealing with Your Finances Despite COVID-19
The effects of coronavirus will be felt for a long time, so don’t despair if your financial situation seems bleak at the moment. With industries adapting and businesses re-opening, the potential for economic growth is certainly on the horizon. While COVID-19 might mean you need to rethink your budget and cut costs for a little while, a calm, proactive approach will ensure you’re back on track as quickly as possible.