Financial planning and budgeting during the corona pandemic
Everything you need to know to help you financially during the COVID-19 outbreak...
We’ve already seen shocks to the economy because of the coronavirus pandemic and with increasing levels of uncertainty, understandably you may be worried about your finances.
If you don’t have an emergency fund (which experts say should be around three to six months’ income), don’t panic.
To help prepare for the financial uncertainty that many of us are facing, here are some money moves you can make now to protect your finances and build up a rainy day fund…
Scale back
Do take a close look at all your outgoings and cut back on any non-critical or non-essential spending. Even if you are currently working and getting paid, put some money aside for that emergency fund. One idea is to put any money you're saving from limited travelling, eating out and other events.
If you already have your emergency fund, that’s great, but now might be a good time to top it up and make it a 12-month emergency plan, especially as no one really knows how long the Covid-19 pandemic will last.
If you find yourself out of a job or taking unpaid leave for an unknown period, then the bigger your slush fund the better!
Make sure you hunt out the best possible savings rate for your money. Compare rates at MoneySuperMarket.
Stay calm
Try and stay calm. It’s hard to make good decisions in a state of stress or panic. Research shows that our brains are wired to be more reactionary under stress and this can limit the options we feel are available to us. Try to keep yourself calm and stay positive.
Making mortgage and rent payments
The government announced on 17th March that all mortgage providers should offer a three-month payment holiday to anyone affected by Coronavirus. Speak to your lender to find out more. If you need advice on your mortgage or are looking for a new one, the Mortgage Advice Bureau offers telephone advice to put your mind at ease.
If you're renting, the government has brought forward emergency legislation to protect you from eviction if you can prove you can’t keep up with payments - new rules mean they cannot evict you for at least three months.
If you are worried about rent, make sure you talk to your landlord or your letting agent and see what they can help you get through the coming months.
Credit card and other debt
A number of companies have put measures in place to help those struggling with debt because of the Coronavirus. If you have debt, such as credit cards and loans, call up your providers and explain to them you are struggling to make payments.
The Financial Conduct Authority has also suspended its credit card persistent debt rules, which means providers cannot cancel your card until October, at the earliest. This will give some relief to those relying on credit for everyday living costs.
If you are looking to apply for a 0% balance credit card to transfer any existing debt, do it now. These deals may not be available for much longer.
Overdrafts
If you have an overdraft, talk to your bank to see what it can offer you. Barclays has, for example, waived one months' interest on overdrafts for customers.
Lloyds, Halifax and Bank of Scotland have introduced three months' interest-free buffer.
Make sure you talk to your bank of you have an overdraft and are relying on the buffer, as they may not automatically apply.
This is good news at a time when many would have seen a significant spike up their overdraft charges (as much as 40%) due to new Financial Conduct Authority rules over clearer charging structures.
Accessing fixed savings
If you have money in a fixed rate savings account, there is usually a penalty for withdrawing money before the fixed period ends. But most banks will now drop this charge. If you have a good interest rate, only withdraw money if you really need to, as this rate may not be available again for some time.
Check your benefits
If you’re self-employed and self-isolating or caring for a child who is ill, and you aren’t on any benefits, then you may be able to get Employment and Support Allowance or Universal Credit. Find out what benefits you may be able to access at entitledto.co.uk.
If you need more information, financial help or advice, here are some useful resources:
· Turn2US
· GOV.UK