As we near payday in our first full month of lockdown, it’s a good time to do some planning and evaluation as to how you may need to change things in your finances for the next month. You currently still just have sufficient time to negotiate changed amounts in direct debits, for example, depending when in the month they are due to go.
If you have your income unchanged, but are saving on commuting costs, and on going out and about as you might usually, your changes can be all positive. Yes you may well have spent a little more on food (and possibly alcohol!) than usual in the month, but take account of that, and then whatever surplus you have once all your regular bills are paid in the month can be moved to savings.
A further note on savings too - those who had the Tesco Internet saver accounts recommended by Martin Lewis, but have since moved money out of them because the interest rates have fallen, it may be worth checking to see if you have had an interest payment land, depending on how long your account has been empty for. I got a nice little surprise when I logged into ours the other day - knowing that we had money in there until the end of last year and that interest was due to be paid in March. That money has now been safely rehomed into somewhere currently earning a little more interest! I’ll cover a bit more on savings accounts next week, so if that interests you, check back at the same time next week.
If your income has dropped, then you may need to think about stopping some payments you might usually make. Remember the priority list - you MUST pay your mortgage, or rent - or apply for a payment holiday. You MUST pay your council tax, and you should make sure that your payments for heat, light and water continue. You must also ensure that you have sufficient money for food, remembering that your “at home” food costs may have increased slightly. If your shortfall to cover all other expenses is small, take a look at routine payments that you may be able to suspend - gym memberships for example, or payments to membership organisations where you cannot currently access the benefits that you directly pay that membership for (some I believe have said that they will offer either a 3 month extension to memberships, or a suspension in monthly payments for the time being) - organisations where you pay simply to be a member, or to support the aims of that organisation and are perhaps given certain benefits as an “aside” are a slightly different case - so for example the RSPB - we are members by way of a monthly DD payment, and get free access to reserves off the back of this, but our membership is to support the organisation NOT to get the free access - if you can possibly manage to continue with payments like that then I’d urge you to do so although never at the expense of being able to meet your priority bills.
If you have debt payments going out that you are unable to meet then contact the companies concerned and let them know that you need to drop to token payments (usually £1 per month) for the time being - ask that they freeze interest and that they don’t put a marker on your credit file currently. Continuing to pay something should ensure that you don’t get hit with defaults, at least. Many financial providers are currently being surprisingly understanding about the issues people face in the current situation - as always the key is to talk to them though, if you cannot get through on the telephone, send an email. If speaking with someone on the telephone and agreeing an interest freeze or other temporary amendments, take the name of the person you spoke to and note the date, time and duration of the telephone call for your own records.
Above all, don’t panic - keeping a calm head and planning things through will save the day here. Hopefully the government Job Retention Scheme will ensure that not too many are losing more income than they absolutely must - and indeed for many the decrease in costs like commuting and buying lunches, coffees etc during a regular working day will cover that shortfall to a large degree anyway. Ironically although I am now furloughed those savings don’t apply to me as we car-share for our commute anyway, and I take lunch with me and don’t buy coffees! Think about all the other areas where you may be able to make easy win savings - I posted a couple of weeks ago on these. If you reach the end of the month and find you have a surplus from your March pay, using this to offset any difficulties you will experience in May as a result of reduced April pay will also be a good idea - although if the reduction in pay is going to continue you must remember that you will not have that benefit next month!
Robyn.
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