It’s easy to hide from money problems, especially when your wage has been cut. So, with the economy heading towards probable turmoil, you will need to ensure that you have made good choices when it comes to money and savings. These are our top tips to avoid financial difficulties over the coming months and years -
1. Clear your credit cards quicker
A good approach is a money detox to reduce spending and simplify your finances - including tracking down unwanted direct debits, cutting utility bills and building a small emergency fund. However, at the top of most people’s list should be clearing any credit card and high-interest loans if they can afford to.
Many people have been given payment breaks for rent, mortgages, or other debts - but these will come to an end fairly soon and will be needing to be paid back with interest. If you are actually saving more money during lockdown, then now is the best time to clear any outstanding debts… as no one knows how bad the economy will be hit over the next year.
If you are struggling, talk to Property Debt NI, but also good budgeting will help you cope better during this time.
2. Claim the benefits you are entitled to
Financial support from the government may be there for you, but you will probably need to claim it.
There are benefits such as statutory sick pay, employment and support allowance, jobseekers' allowance, and personal independence payments.
There are also others that can top up your income, providing you are eligible, such as universal credit, where the amount you receive depends on what you have already. Applying for universal credit can stop other benefits such as tax credits, so it is worth checking before you claim. Click here to find out more about universal credit.
3. Get refunds on subscriptions
With gyms having been shut as a result of the lockdown measures, now is the time to chase up refunds for unused subscriptions (this also goes for subscriptions to clubs and many other services).
Consumer law states if anyone can no longer use products or services due to the lockdown, they are fully entitled to cash refunds. So get in touch to see what you’re owed! If you are having difficulties, the regulator, Competition and Markets Authority, will take complaints if you are unsuccessful in receiving refunds to your dormant subscriptions.
If you have subscription or bills to pay but cannot afford them, don’t stick your head in the sand or cancel any payments without consultation - this will do more harm than good. Contact Property Debt NI to get information on how you can address your household and property debt issues.
4. Review your savings
If you already have savings, don't just leave them in an old account, but check the best buy tables to see if a bank or building society will give you a better return. By reviewing regularly over time, this can make a big difference to how much is in these accounts - even though interest rates are not very good at the moment.
After this is over and hopefully, your income recovers - remember to keep saving. Just a little bit each month can make a difference. There may be a luxury that you can do without, and save instead.
In financial terms, the current crisis is very serious in comparison to many other recessions of the past – so it is not out of the question that you may need to fall back on this sort of savings to avoid racking up huge debts. However, when planning your budget priority should be given to your essential household bills such as food, utilities and taxes.
A second wave of infections could mean further disruption to the economy and livelihoods, with the effects of the current wave of closures continuing over time. The most sensible thing to do is to try to build up your savings while you can. If you have cash put aside, you won’t need to turn to credit cards, some of which still have interest rates around 20%, even though the Bank of England base rate is close to zero - which is not ideal for those who want to save.
If you choose to put money away, the safest option would be to place the funds in an easy access account so you can get hold of the money when you need it. The simplest option is to choose one offered by your main bank as it is straightforward to access. But if you feel that you want to make it a little harder to dip into, shop around for an account with a better rate with a different bank or building society.