These are very strange times we are living in. In just a few short months our lives have been turned upside down. Due to the Coronavirus pandemic millions of people have lost their jobs, parents are trying to home school their children while juggling working from home and worrying about their financial situation, and those that have managed to hang on to their jobs are worried that they may lose them further down the line.
If you are worried about how you are going to be able to pay all of your bills this month, or indeed, in the months to come, you are not alone. According to a survey carried out by the Office of National Statistics 56% of people agreed to some degree that Coronavirus will cause problems for their household finances. They go on to say that those with worsened household finances were much more anxious than those financially unaffected. A report in the Guardian says that British households are expected to wrack up combined debts of £6bn as people fall behind on credit card payments, council tax and utility bills.
The good news is that there are things you can do if you lose your job or your income has dropped. There are steps you can take right now to help you regain some control over your finances.
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CREATE AN EMERGENCY BUDGET
Have a look at what you’re spending and what income you have coming in. You may need to cut back as much as possible in order to get through the next few months. While this is essential in the current climate it is also extremely good practice for regular day-to-day life. How can you take control of your finances if you don’t know your basic income and expenditure? Can you see any areas in which you can cut back? The magazine subscription can go for now. It’s not forever- but you may actually find that you don’t even miss it!
USE YOUR SAVINGS
Do you have any savings that you can use to get you through? You shouldn’t worry about using your emergency fund – this is exactly the type of situation it is for! It is far better to use your savings than to get into debt. Once you are more financially secure you can start to build your savings back up again.
Are your savings in a fixed term or notice account? Most providers have now relaxed their rules and you should be able to access your money without penalty. Check with your bank and see if they are able to help.
TALK TO YOUR CREDITORS IF YOU THINK YOU ARE GOING TO MISS PAYMENTS
The worst thing you can do is to bury your head in the sand. If you think you are going to struggle to meet payments talk to the companies you owe money to BEFORE it becomes a problem. In the current climate many are allowing reduced payments, thereby freeing up some of your money.
CHECK YOUR INSURANCE POLICIES
Some insurance policies may cover your mortgage payments or replace some of your income. These include payment protection insurance, mortgage payment protection insurance and accident, sickness and unemployment insurance. You may have taken such insurance policies out when taking out your life insurance policy or when organising your mortgage.
LOAN AND CREDIT CARD PAYMENT FREEZE
Banks and credit card companies have now extended the ability to freeze payments for three more months. This applies to store cards too. Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period. Do take time to think if this is really necessary for you though. If you can afford to keep payments going then it is best to do so. Taking advantage of a temporary payment freeze will not affect your credit rating.
CHECK IF YOU’RE ENTITLED TO ANY HELP
Depending on the circumstances of your household there are a few potential sources of help available if your income has changed. There are means tested benefits that you may be entitled to such as Universal Credit or Council Tax support.
Take a look at entitledto.co.uk. There is a huge amount of information on their website. You can even input your figures into their calculator and it will give you a list of any benefits you may be entitled to and how much that may be.
Finally, do remember that this is all temporary. Yes, it is extremely stressful but we will come out the other end. It is ok to adjust your budget right now. You might not be able to throw as much money towards your debts or towards your savings but you will be able to get right back to it once this has blown over.
