In 2020, looking at how to manage your finances is probably at the forefront of a significant proportion of the population’s minds. People have most likely not thought this much about money, nor been this concerned about their finances, since the financial crisis in 2008/2009.
Unfortunately, we are in a position where millions of the population were placed on furlough with the very realistic possibility of being made redundant when furlough comes to an end. In the 3 months to September 2020, the Office for National Statistics (ONS) data shows 314,000 had already lost their jobs. With the country still feeling the pains of coronavirus, with lockdown measures still in place, finding a new job will not be easy for these people. Therefore, we thought that it would be important to put some tips together to assist people with managing their finances to get through the impact of the COVID-19 pandemic.
So, what can you do to manage your finances and get through the impact of COVID-19?
Have a budget plan
A budget plan can often be thought of in a negative way, with people often thinking of it as placing restrictions on their enjoyment. However, if used in the correct way, it can empower you for the future.
The importance of a budget plan is for you to keep track of what you have coming in and what you have going out in expenses. This can provide a picture of your financial position and if you have a surplus or deficit at the end of the month, and how big this surplus or deficit is.
When you budget, however, the most important tip we can provide is to be as thorough as possible. We are all guilty of picking up items here and there, without accounting for it in our head. Over the course of a month, these things can add up. Therefore, when budgeting, get out your old receipts, or go through your bank statement, as this will help you be as accurate as possible.
We recommend that you split your items of expenditure into the following categories:
If you find yourself in a position where your outgoings are more than your incomings, please carry on reading.
We have a budget planner on our website, click here to go straight to the tool. We have a budget planner on our website, take a look and if you have a deficit, come back and carry on listening.
Save money where you can
Saving money or tightening your finances can be tough and even more so if you have children. However, it is important to keep the end goal in sight through this period, knowing that this is a process that can end your money worries and those sleepless nights.
These are some of the first areas that you can look to save money:
Build an emergency fund
Once you have your budget plan in place and have surplus money each month, before you start spending this, let’s build an emergency fund.
An emergency fund is very important as it is a pot of money to fall back on should you either find that your income reduces, such as losing your job, or if you have to pay for something unexpected, such as having to replace your boiler.
A good rule of thumb for the size of your emergency fund is between 6 and 12 months’ essential and lifestyle expenditure. However, once you get to this stage, see if you can get to 12 months’ income to provide you with a great safety net for the future!