First of all, you are not alone, there are things you can do and people who want to help
Financial uncertainty is a very difficult place to be. You may be feeling really worried about the future, anxious about what to do; it can feel quite scary and lonely and it can seem like there is nothing that you can do. First of all, you are not alone, there are things you can do and people who want to help. Through this article we want to try help you take control of your finances and have some greater certainty at this tricky time. If nothing else remember “cash is queen or king” and short term cash flow ( keeping enough money for the immediate things) is absolutely critical to everyone.
The Government is doing a lot to support everyone at this time, and you should make sure that you check to see if you are entitled to anything. All the information is shown at: https://www.gov.uk/coronavirus
When thinking about your immediate cash flow imagine your household finances are like a business. You have income coming in, costs going out and maybe some level of savings to fall back on.
At the moment the income might be uncertain or indeed out of your control. It might mean now is the time to think creatively about opportunities. There are jobs becoming available in some sectors you may not have thought of and while getting a different skill you would also be bringing in an income. Does someone in the household have skills that are needed at the moment; it might be that another person in the household increases their work and you take on a different role in the house while your work is less certain.
However, you can potentially do a lot about your overheads. We are going to put these into 2 categories, fixed costs and discretionary costs. There is a lot more information on our website about calculating these costs. You can download our Financial Health Check Support Sheet here
Above all though, do something. Take action. Negotiate with everyone. But remember a negotiation is a 2-way agreement. You need to try and offer something back. This might be a promise to pay later – but that might be okay for now.
These are the costs that are regular in your lives, essential costs. Many might go out via standing order or direct debit each month. Here are some thought about what you might be able to do with them
Shopping / groceries
Yes, it might be hard to get everything you want just now, but we are assured this will change. But you could:
- Use cheaper supermarket brands
- Use the supermarkets own brand products
- Try and do 1 bigger shop and avoid topping up at the convenience stores who are more expensive
- Reduce high cost luxury items – could you have a glass of wine each as opposed to share a bottle? Could you give up alcohol for a couple of months?
The Government have made it clear that they have spoken to the Banks about people struggling to pay their mortgage. Even if you think things might be okay why not consider asking for a 3-month repayment holiday. Yes it will mean that you have to pay it back later – but if you are having short term cash flow problems it is worth considering if it really will be a problem making a few more payments in many years’ time to be able to have a bit more cash flow right now.
Rent might be a bit harder to defer as the landlord may need the money. However, if you don’t ask, you don’t get. Try and offer something back – if you give me 3 months’ rent free I will pay it back over the next 12 months! No landlord is going to be able to rent their property easily at the moment, so they are better off having you in this situation than no rent at all.
This can be a surprisingly high cost for many households. Why not consider:
- If you have more than 1 car can you manage with just 1 for now?
- Can you get a tax refund on the car that is taken out of operation?
- Perhaps cancel insurance on a car, or reduce it to third party for now if it is not being used
- Reduce the insurance cost by reviewing the annual mileage of the car
- Shop around for cheaper petrol
But remember to put everything back in place if things change.
These are typically the costs that will be on monthly or regular standing orders or direct debits. Some ideas include:
- Check if you are in credit with your supplier for water, gas or electric and if so ask for the money back
- Negotiate a temporary reduction in direct debits for water, gas and electric. Usage should fall at this time of year. Offer to increase it again when your circumstances improve. Keep them updated with whatever you agree.
- Speak to your council and negotiate payment terms for council tax. Perhaps pay nothing for 3 months and then the remainder of the next 9 months. Council tax is payable over 10 months from April to January – could you pay from June to March instead?
The above are some of the fixed costs that you will have on a monthly basis. Now let’s look at discretionary costs. These will tend to vary depending on your level of income and confidence. Many are regular payments but are not “essential” for day to day living. Some will be seen as essential to you but consider them all carefully. Look at all your direct debits and standing orders to see what else you pay to organisations. Again, some examples:
- Mobile phones. Can you reduce your contracts and save money? Do you know when they expire so are able to consider cheaper alternatives at the appropriate time?
- Broadband. When does your contract expire? Even if it is mid contract, can you break it and find a cheaper alternative?
- Entertainment. An example is Sky Sports. They have agreed you can suspend your sports subscription and save the money, and have it reinstated later at no cost. Make sure you do this now
- Suspend your gym membership and swap out for a home workout platform like Instructor Live
- Stop any regular charitable donations. Perhaps you could consider doing something in the future to raise money instead? Use any extra time to get fit and do something for charity later in the year!
- Regular savings contracts. Perhaps now is the time to temporarily suspend these. But don’t forget to keep reviewing it and start again when you can
There will be others as well. Some of you will have regular payments for protection such as life insurance, income protection insurance or critical illness insurance. Please be very careful before cancelling any of these policies and speak to your Financial Advisor first.
Hopefully if you take some of the above actions you will save a significant amount of money each month. Perhaps you could use a small amount of this to give your household a treat every month. Think of a small reward that would really benefit you all.
There are always other options to consider as well. However, most will probably involve borrowing money. Be careful that you do not take rash actions that get you into expensive debt that you cannot afford to repay. Some of the options above are effectively debts but you are spreading them across a number of organisations and asking each to give you a little.
As a back stop though if you have relatives who can help out then now is not the time to be proud. Ask them for some help if you need to. They may be very willing and able to support you at this time.
If you are experiencing financial difficulty or stress at the moment, then take some action. Don’t just try once and give in, persevere. Keep going back and asking, find a different angle, speak to a different person. We have never seen times like this before. Everyone is affected in some way and there is a strong community building around us all at the moment. People will do what they can to help out where they can.
A great source of inspiration and up to date knowledge is the Monday Saving Expert blog Coronavirus Financial Help and Rights which you can access here
Watch back our free online Face Up To Finances discussion that aired on Monday 30th March at 20:00 "Financial Planning 101: Survive Today to Prosper Tomorrow"
Remember that Vetlife is there, for an independent, informal, confidential and free chat if needed, and can provide financial assistance, information, signposting and further resources. (0303 0402551)