We’ve spoken at length about the impact of these ‘unprecedented’ times and the financial implications for businesses during Coronavirus lockdown. There is however the knock-on effect, and that is how it will affect our personal finances.
We’ve put together a bit of a rough guide of different things you can do to help take control of the finances at home, and make sure that when this all blows over, you’ve got enough cash left for a pint and packet of crisps when the pubs re-open.
Personal Cash flow
First things first is getting together a bit of a personal cash flow for the next 3 months.
Now broadly speaking there are two types of people when it come to this. Some will already be personal cash flow masters and be rolling their eyes thinking ‘Duh, obvious!’ at the mere mention of this. For others this will be a new and daunting challenge. To those I say ‘don’t panic’, it doesn’t need to be some big fancy excel spreadsheet, you can jot this down with a pen and paper old school style, but the key is to at least do something.
Start with the knowns – what income do I have coming in this month and what payments am I already locked in to. From this you’ll start to get a bit of an understanding of your personal cash requirements for this period which will help with looking at the next bit – what options are available to help stem the outflows and boost the inflows of cash.
Manage or Boost the Inflows
There’s a lot of uncertainty for many on what they are likely to be receiving during this time. We’ve covered a few of these areas in some of our other blog posts, specifically furloughed staff and the self-employed. If you fall outside of the measures put in place by the government then the next step would be to look at Universal Credit and the new style employment and support allowance. More info on this can be found online at gov.uk.
Check out our furlough FAQ’s here: https://thepeloton.co.uk/furlough-payments-some-commonly-asked-questions/
Our Self-employed post is here: https://thepeloton.co.uk/vat-self-employed-and-ltd-company-directors/
Stem the outflows
Mortgages and Rent
Priority numero uno is going to be keeping that roof over your head, and with mortgage payments often being the largest monthly outgoing for individuals this is likely to cause a bit of worry when finances are being squeezed. As per the announcements of the Chancellor, the majority of UK banks and lenders are now offering payment holidays of up to three months.
This can be applied for direct with your lender (each lender will have their own system of how this can be applied for). Check their websites and there should be more information available. Be aware though of the terms of this ‘payment holiday’ and of how this will be clawed back e.g. added to the next 6 monthly payments, extension of the total term, or spread equally of the remaining payments (term unchanged).
If you’re a tenant, the Government guidelines are that you should continue to pay rent and abide by the terms of your tenancy agreement. That being said, should you be in a position where you are unable to do this, then speak to your landlord at the earliest opportunity. Local authorities are also putting in place assistance for tenants, so it’s worth looking at that too.
Loans and Credit Cards
As above it could be worth exploring the option of repayment holidays or reducing down to your minimum payments in order to ease things in the short term. There are some potential developments to come in this area, with Credit Card companies applying to the FCA to waive regulatory requirements on minimum payments. In short, watch this space and talk to your provider but make sure you factor in the implications with interest etc.
Other areas to look at when reducing outgoings
It sounds obvious and again some might do this anyway but it’s a good time to look at the monthly subscriptions and really having a think about what is important and what could be reduced or even cut. Netflix might be a must right now, but maybe that gym membership could be put on hold. Maybe it’s worth dropping the sports TV package for the next 3 months – I mean it’s not like the premier league’s kicking off anytime soon. This extends even to utilities. It could be a good time to shop around providers or get on the phone and discuss ways of reducing that monthly energy bill.
Hopefully some of this has helped and not been too much of teaching Grandma to suck eggs. At least even if to realise the importance of planning during these times. After all, as our glorious leader likes to say ‘What is measured, is managed’ (and if you don’t measure is you can’t manage it) – (article written by Chris Flannigan)
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