Can budgeting help through this period?
It is a challenging time for the world and many people are not only stuck at home but also have had incomes cut or disappear. Many freelancers and self-employed have found themselves with all their income drying up in a matter of weeks. Many companies struggling to keep the lights on have furloughed their workers and some have even made them redundant, despite the government’s best efforts.
The UK government has offered support to companies and paying 80% of salaries but if you are living paycheck to paycheck already this may be hard. If you are self employed the government has also set up plans to help financially but the exact amount you will get is still to be seen and this is unlikely to come through before June. There are also a number of people who fall through the cracks.
In summary there are a lot of people who have found themselves in a financially challenging situation.
Financial uncertainty and our mental health
We are in an unusual situation at the moment and many of our usual crutches for mental health have disappeared; seeing friends, going to the pub, going to the gym, being in isolation can be its own struggle. Most people are already finding the current situation challenging and adding financial uncertainty will make this even more stressful. We are surrounded by uncertainty in most aspects of our lives and this lack of control drives anxiety.
Taking back control
We have probably read many blogs now around routine and how to get through isolation. I think injecting a little planning and organisation can really help us get a sense of control in a very uncertain time. With our finances this is about taking a look at our outgoings and our current income or savings and controlling our spending where we can. It may also require taking a more proactive approach to get financial support from the government.
Taking a look at our spending really helps us take control and at the moment we all have a bit more time to take a step back. We can see where we are spending currently and make the decisions of where we can cut back. We can also use this as a time to reflect and think about what we really need and what gives us joy.
Start by opening up a spreadsheet (if this turns your stomach a pen and paper can also work). Starting at the top with your income and then working through all your major expenses. Below is a very high level suggestion of where you could start:
** If you have some payments that are only every quarter or annual e.g holidays try build this in too. You don’t want any nasty surprises.
Where can I save?
In this odd time we are for very obvious reasons not going out. This means your Friday night maybe a bottle of wine from the shop for £7 rather than a night at the pub for £40++ . We aren’t going on holiday, we aren’t doing our usual classes, going to the gym etc and therefore for most of us aren’t spending as much. If you have suddenly had a huge shock to your income then this is a bit of a silver lining.
Cancel you direct debits – log into your bank account and you will likely have some direct debits you forgot about or no longer need. Go ahead and cancel them. You can always resubscribe once you are back to earning.
Watch out for increasing your spending on clothes and items. First we often find buying things can make us feel better but this dopamine high is short lived. We also find online shopping as an activity. Just take a step back before going to the checkout and confirming your order. Do you really need this? Will this help me get through isolation? Can I really afford it? Take a look at our blog The Emotional Connection – Happiness and spending
This is a hard time and there is a lot of uncertainty but hopefully taking a look at your spending can give you a bit of control in a difficult time. Get in touch if you would like to talk through your finances.
If you are really struggling there are some things the government have done to help out:
If you really have lost your income you can apply for universal credit. Look here for more details on how to apply – https://www.gov.uk/how-to-claim-universal-credit . Some of you will also be eligible for more to help out with costs of housing.
Renting and can’t pay – Speak to your landlord and ask for a reduction and change to your payment plan, they have been offered support for lost earning by the government.
Mortgage – speak to your bank – they are offering mortgage holidays and other ways to reduce your payments, they do not want you to default so just ask.
Freelance – you have the ability to ask your bank for a loan, think carefully if you need this and if you are eligible will likely get a lump sum from the government in June.