It is very clear that there will be no rapid return to life as it was before the coronavirus pandemic. While the extension of the Government’s furlough scheme to October is welcome news in providing continued support to businesses and employees, it is also an acknowledgement that many people will be kept in financial limbo for a long-time yet.
But as much of the nation remains confined to their homes, many have extra time on their hands thanks to their daily commute being from the bedroom to the living room, study or kitchen. This extra time means you can crack through the list of life admin you’ve been meaning to do for months. A little time spent on wealth management planning or financial planning and reviewing your financial affairs can identify easy ways to save money and actions to take that can help both improve your position and in turn help lighten some of the worries. Additionally, if you need help with estate planning, then you may consider reaching out to an estate planning lawyer.
1. Dust off the calculator and get a true picture of your outgoings
The first thing to do is to work out what your current financial situation is and whether it might be changing. Some will be making substantial savings on costs like daily travel, restaurant bills and trips out with friends and family. By understanding the impact of the pandemic on both your income and outgoings, you will be in a much better position to draw up a household budget to get through the current period and beyond.
2. Identify further cost savings and scrap unused subscriptions
You’d be surprised just how many people continue to pay subscriptions, standing orders and direct debits without even realising. Thoroughly reviewing your actual outgoings is an opportunity to identify any further savings. For example, if you weren’t making use of your gym membership before the lockdown, then cancel it. Consider where you can make cutbacks to regular costs; so, scrapping any unused subscriptions, finding a cheaper deal on recurring costs like your mobile phone, energy bills or car insurance. All of this will accumulate extra money at the end of the month which can go into savings, or be invested, in order to give you greater financial stability during these uncertain times.
3. Check your bank balances
Everyone should endeavour to have some ‘rainy day’ cash savings squirreled away, to provide a financial buffer for emergencies and unusual times like these. While a large savings account can seemingly provide a sense of security, over time the future spending power of that cash will be slowly eroded by inflation.
As a first step, pay off any loans or credit card debts, if you are able to do so without incurring any prohibitive early repayment penalties. Take a long-hard look at how much cash you need to keep readily available. Consider feeding any excess cash that you can identify as highly unlikely to be needed in a hurry, into investments for the longer-term.
4. Review existing investments and think about others
Anyone with existing investments should take a close look at what they already own and not leave this until the end of the tax year when many of us typically do. The past is behind us but what matters from here is being positioned as well as can be for the future.
And while many of us will naturally shy away from the idea of investing when markets have experienced a period of turmoil, investing during periods when share prices have weakened can present really strong opportunities for long-term investors. Feeding cash into investments in stages over the coming weeks and months, can help smooth out the daily ups and downs.
5. Plan for supporting your family
If you’re married or living with your partner, have children, or older parents, it’s likely that you’ll be giving extra thought to your family’s future and what your financial situation currently is in terms of long-term support for them. Now might be a time to consider providing them with a financial helping hand. Everyone can make financial gifts of up to £3,000 per annum without adverse tax implications.
Financial gifting in your lifetime means you can help family members when they are younger and perhaps in greater need – for example, to clear debts, buy their first home, raise a family or start a fledgling business – as well as reducing potential liability to Inheritance Tax on your assets when you die.
6. Have a retirement check-up
If you’ve been planning for retirement, whether it be in five years, or 20 or 30, or even longer, the value of your pensions might have dropped as a result of falling investments or reduced monthly contributions. Now is a good time for a pensions check-up. There are options to consider, be it delaying your planned retirement date. Or if you’re about to withdraw, consider taking money from a different pot rather than a pension which comes with greater risks.
7. Protect yourself for the future
While we all hope we are over the worst of the crisis, there is no telling what the future will hold. The economy will eventually bounce back but managing our money effectively will remain a challenge, so it’s important to think about how we can protect ourselves and our loved ones from future uncertainty. Consider insurance arrangements, like life cover, critical illness cover or income protection, that will protect your finances should anything unexpected happen and give you greater peace of mind.