The necessary steps we are taking as a country to limit the spread of Covid-19 are having huge financial impacts. For millions of households across the UK, the closure of workplaces can mean a reduction in hours, only getting paid 80% because you’re on furlough (if your workplace was forced to close) or even potential loss of a job.
If your household has experienced a drop in income, here’s 5 steps to think about taking:
Re-do your budget
If your household’s income changes, it’s time to review your budget. You can use our handy spreadsheet template which will do the maths for you.
Work out what your new income will be, and note all the expenses you currently have coming out. Using a budget will help you to see how much money you need to cover any critical expenses, and if the income you still have coming in will be enough.
Cut costs where you can
Once you’ve worked out the difference between what you’re earning and what you’re spending, you can try to close the gap between income and expenses by cutting any unnecessary costs. Some of these costs will have decreased for us anyway as a result of the coronavirus measures - such as reduced spending on transport, eating out and social activities. There are other ways to decrease your expenses as well - check out our cost cutting guide.
Talk with your lenders
Debt is usually an obligation that you are stuck paying even if your income changes. That’s slightly different in this current environment, so it’s worth talking to your lender to see if they can offer some kind of repayment plan. For example, many banks are now offering three month mortgage payment holidays. The interest on your mortgage will still get added during this time, but you won’t be charged any extra fees. You could also see if you can consolidate your debt onto a lower rate or even look to find a 0% credit card – freeing up some extra money each month.
The Financial Conduct Authority is also looking into other ways to ask lenders to help, such as payment freezes on other loans which may come into effect later in April.
Go easy on yourself
It’s ok if you feel like you’re going backwards a bit financially right now. The coronavirus pandemic is a serious situation so it’s normal if you’re worried about it. Everyone is going through similar difficulties and the government is working hard to provide health and financial support. Mind.co.uk has some great resources to support our mental health during this time.
Get the benefits and support that are available
The coronavirus pandemic is so out of the ordinary, that the usual rules around benefits and entitlements have changed to support more people. You can find more details on the Gov.uk website, but here are key things to note:
- Coronavirus Job Retention Scheme: If your employer is struggling, your employer could pay 80% of your wages (capped at £2,500 per month)
- Statutory sick pay: You can get this from day one if you need to self-isolate, cannot work and normally earn more than £118 each week (£120 from 6th April)
- You may be eligible for universal credit, child tax credits or housing allowance. Check what you're entitled to by using a benefit calculator like www.turn2us.org.uk
- £15 shopping voucher weekly if your child normally gets free school meals
Need more information and ideas? You can find all of our information to support your finances during coronavirus here.
Important: This content is for guidance and educational purposes only and is generic in nature. Salary Finance Limited (trading as Neyber) does not offer regulated financial advice. Please seek independent financial advice.