With the ongoing Covid-19 global pandemic causing widespread economic uncertainty, you may be thinking more closely about your financial security. In an uncertain world, the certainty provided by having a financial cushion is more than welcome. It’s very easy to bury your head in the sand and hide when you’re facing a money challenge – being made redundant or facing a cut in wages or working hours. And yet with the continuing uncertainty in the economic world, now is definitely the time to get organized and be honest with yourself about the reality of your money situation.
There’s no denying that the ongoing coronavirus situation has had a financial effect on most of us. Some households have even experienced a significant drop in income, and are facing a future where money coming into the house is limited.
Or you might be one of the fortunate ones – able to fully work from home and not dealing with any drop in salary, while also saving money on commuting and social activities. This could lead to something that has been termed ‘enforced savings’. Even for people in this lucky position, you’re likely to have thoughts about the future and what may come. With a severe and prolonged recession on the cards, the picture doesn’t look good for anyone. So what advice should you be following in order to put yourself in the best position, no matter what your financial situation.
Check Your Bank Balance Regularly
When reality seems a little scary, sometimes our reaction is to retreat into ourselves, and for many in an uncomfortable position with money, that can mean not checking their bank balance. Ironically, most people in this situation are constantly worried about money, and yet aren’t managing to deal with the reality of their straightened circumstances. The attitude from many is to carry on and hope for the best, or use high-interest borrowing to fund their daily living expenses. This is a recipe for disaster that can quickly spiral into serious amounts of debt at excruciatingly high interest levels. It’s important to be fully aware of the cold, hard reality of your finances at all times. You can learn more about your finances using online tools. This is actually an empowering move to make, because when you have all the information you can make a plan to help yourself. Begin by redoing your household budget, going back through the last three months of statements to get a clear picture of all outgoings. Then identify discretionary spending that can be paused or deferred to help you during harder times. There are apps that can identify unused subscriptions and help you cancel them, or you may decide to make choices such as forgoing your gym membership in favour of C25K training outside. It might also be possible to minimize the expenses that you can’t avoid. Things such as using price comparison sites to make sure you’re getting the very best deal on utilities, and swapping your food shopping for own brand items can all add up when practiced over time, and realistically aren’t going to impact your quality of life. You might also be able to spot opportunities to claim money back on unused items such as season tickets. It’s about taking lots of small actions that collectively can make a big financial difference.
Up Your Income
If your work has been affected by the pandemic and you’re dealing with a cut in hours or living on a reduced salary, have a think about what skills you could use to try and make up some of the shortfall. Anything from providing babysitting to doing odd jobs, providing lessons in something or being able to make and sell a product – you may have a hobby you can turn into a sideline or set up a small business. Or you could try to pick up additional casual work making deliveries or providing a service online. It doesn’t have to be a huge amount, but sometimes this additional cash is well needed and can mean the difference between tipping into debt or not. You could also decide to do something like eBay reselling, where you source items from places like charity shops, yard sales and local selling pages, and list them for sale on auction sites. There is a small initial outlay involved, but if you have an eye for the right things, or are willing to use eBay sales data to figure out items that sell well, you can make money to supplement your income.
Ask For Support
If you’re getting into a financial mess, you need to seek support as soon as possible. It can be extremely hard to take this step, but you’re certainly not alone at the moment, and it will benefit you in the long run to do this. Now is actually a good time, as banks and lenders have been told that they must offer payment holidays to customers whose incomes have been hit by the effects of the pandemic. This actually makes it easier to seek relief than under normal circumstances, so take advantage. If you can secure a three month payment holiday it can often make all the difference to give you the breathing space you need to sort out money matters. Bear in mind that you should only consider this if you’ve run out options, because your debt will continue to accrue interest during a payment holiday. If you’re concerned about not being able to make rental payments, it may also be worth speaking to your landlord and seeing what options might be available.
Plan For The Worst Outcome
Of course, no one wants to think the worst, but the current second wave of infections is going to have economic consequences, and so it’s prudent now to plan for the worst case scenario. Aim to build up your savings so that you have an economic cushion should something unexpected happen. The importance of having some kind of financial safety net cannot be overstated, especially at the moment. The goal is to have six months salary available in an easy access account, ready to use if you suddenly lose your income. That may seem hard to achieve but it’s definitely something to aim for – and any amount is better than nothing.
(Cover Image: Pexels)