One helpful step you can take is to use this opportunity to tackle your finances, know what financial support you’re entitled to and what to do if you think you won’t be able to pay your bills.
Five ways to take control of your money
1. Pay off debts if you can
If you’ve still got a regular income, you might notice you have a little more money at the end of each month now. Since most of us won’t be spending on entertainment, restaurants or even the daily coffee, we could be saving a bit. With any extra money you’ve saved, now is a good time to think about chipping away at your debts.
If you have any credit card debt on a promotional rate, be prepared for when this expires. You might find it more difficult in the current climate to get a new promotional rate, so overpaying now could save you some money when it returns.
Look at any existing agreements like loans or your mortgage, and see if it’s worthwhile overpaying. Always check with the lender to make sure there’s no penalty for doing this.
Finally, most people typically have less than a month’s expenses in savings. This might be a chance to put something aside, just in case.
2. Talk to your lenders
If you’re struggling to repay debts whether it be your mortgage, overdraft, credit cards or personal loans, there is help available to you. New measures from the Government and the financial watchdog – the Financial Conduct Authority (FCA) – mean borrowers can apply for a three-month payment holiday for some products, called a ‘payment freeze’. Interest still racks up, but it can provide important breathing space. You can also discuss other options such as restructuring the debt to reduce monthly payments. Find out more here.
3. Check your credit report
Your credit report contains your financial behaviour from the last six years. When you apply for credit, lenders will use it to help decide whether to lend, and at what rate. Your credit score shows lenders how likely you are to repay your credit accounts. Generally the higher the score the better, and it usually means you’ve done a good job repaying in the past.
It’s a good idea to check your credit report to understand your credit score, and to make sure it’s correct.
4. Reduce outgoings
Make a list of your regular payments, such as energy, phone and broadband, TV subscriptions and credit cards. You could be in a position to switch to a better deal. If you find you’re still within a contract period, make a note in your diary of when it expires so you can then move to a better deal, penalty-free.
You might be paying costs for things that you cannot use for the time being, like sports channels, gym memberships or even data on mobile phones. Talk to your lenders and see if they have options for pausing payments or reducing packages to something more suitable.
This is a good time to get a budget sorted. Budgeting apps connect electronically to your bank accounts to keep track of what you’re spending, and many of them are available for free. Mint and You Need A Budget (YNAB) are two popular budgeting apps.
5. See what assistance you’re entitled to
Many benefits go unclaimed every single year. As a result of Coronavirus there are extra benefits available.
Turn2Us runs a helpline and online benefits calculator that directs applicants to the benefits they might be entitled to. Turn2Us can also step in by providing grants of up to £1,000 usually within 10 days of application.
Income Max can help you understand what benefits you could be entitled to and sort out your personal finances.
Entitledto is another useful charity that offers online help on the money that’s available for struggling households and how to access it. It doesn’t, however, answer questions about your individual benefit entitlements.
Charities warn that response times to emails and wait times on helplines are likely to be longer than usual.
If your debts are too serious to remedy with extra careful budgeting, there is professional help available to you. A free debt advice provider can advise you, and act on your behalf to help with debts:
All have comprehensive websites with lots of information about how they can help get debt under control using one of several options from a simple debt management plan - an agreement between you and your creditors to pay your debts – through to filing for bankruptcy.
During this challenging time we want to help give you as much guidance as possible. You can find more information on our Coronavirus help page.