As the coronavirus lockdown continues, how are you managing with your finances in these tough times?
Many people are facing a few weeks, potentially months, where income may fall due to being furloughed or having their hours/wages cut.
At the same time, investments are reacting to stock market volatility while savings attract little interest.
With finances, the answer is always preparation. Having a plan in place that considers all kinds of scenarios is one of the foundations for financial planning at Co-Navigate, including tough times.
Even if the worst happens, by having something in place you won’t worry as much because you’ve already considered the situation and will have a plan.
Your task list
- Finding savings in your budget
- Making some cash if your hours are reduced
- Protecting your credit score
- Prioritising your bills if you can’t cover everything
- Thinking through your next move if you lose your job
Look at your spending
Having a budget means you are aware of where your money is going so you can adjust it when needed.
During times of regular, uninterrupted employment it can be easy not to think about budgeting, but if you can work on your budget now, you’ll be better prepared for most eventualities.
If you’re unsure about what should be included in your budget check out an online planner like this one from the government’s Money Advice Service.
Once you’ve worked out where your cash is going you can spot spending that can be trimmed or removed. If you can save some money you can build up an emergency fund.
You don’t need a lot for an emergency fund, although we do advocate trying to save at least 3 months’ income to see you through the tough times.
Make some extra cash
This suggestion isn’t as crazy as it seems. Have you got a hobby you can make money out of? After all, this is how most successful businesses get started.
If you’ve got the materials and can make something that you can sell online, then that could bring in a bit of extra cash.
How about your current job? Can you turn your knowledge into an online course that will help others develop their skills?
Teachable allows you to set up everything you need for just over £30 a month. It could be a good investment if you can attract 5 people who pay £30 for your course. Not only will you cover the cost you will add a little bit extra to your income.
Protect your credit score
Be careful with credit cards during the lockdown. Retail therapy online might give you some pleasure but don’t allow it to cost you your future.
If you’re used to paying off your balance each month, don’t worry about having a little bit on your card. Make sure you don’t exceed your limit and if you need extra time to pay contact your card issuer as they may give you leeway during the Coronavirus.
You could switch your card to one offering 0% on balance transfers for a year or two, which would make your money go further. But beware think about credit checks and remember that having multiple credit checks can impact your credit score/rating.
Safeguarding your credit score is essential because having access to credit can help you navigate through unforeseen tough times.
Prioritise your bills
When you have a reduced cash flow unexpectedly, bills you’d normally pay without hassle may be more difficult to manage.
Look at your survival at first in these cases. You need to cover your food, home and utility costs first. After you meet those costs, you can then prioritise other bills.
Business owners are used to speaking to creditors to reassure if they hit a rough patch to extend terms. Try this in your personal finances too. If you deal with it head-on it’s better than receiving a letter and problems later.
Think through your next move
Industries that would normally get by in a normal recession could be hit badly through the coronavirus crisis. As a result, no profession is safe from job losses, sadly.
If you’re fearing for your job or business, don’t panic! If you have a game plan in place you won’t end up with brain fog should the worst happen.
For business owners there is lots of support around to try and help you through this difficult period. You can find more help here https://www.gov.uk/coronavirus/business-support
If you’re employed but on furlough, update your CV during lockdown and use online networking, such as LinkedIn, to catch up and create new connections. Who knows where it might lead?
Our ethos at Co-Navigate is try not to panic. Our financial plans build in worst-case scenarios so that you always have a back-up plan and financial security.
We would urge you to do the same! During lockdown spend the extra time at home to plan for the unexpected… then it won’t be quite as unexpected, and you’ll feel more in control.
If you’re still concerned during these tough times, why not get in touch?