I do hope that everyone is managing to stay virus free and that you are not going stir crazy just yet. Things must be getting desperate at our house because we having a raclette tomorrow evening, something I never thought we would do again, after the last time in about 1972!
On a more serious note, the daily numbers of deaths from coronavirus are very disturbing, particularly of course as each death represents a personal tragedy for the families involved. However, the numbers from Italy and Spain are starting to look more encouraging and the longer this improvement continues, the nearer we come to a release from the lockdown. In the hope of saving many more lives, I am sure we can all endure the relatively minor inconvenience (for most) of staying at home for a few more weeks. We will all be able to emerge from our houses and meet up with family and friends soon enough.
The following is something I received yesterday from The Chartered Institute of Securities and Investments (CISI), it is a sort of checklist for people who might be struggling to deal with basic money worries during this crisis. I don’t expect this to be of direct relevance to most my clients but you might know someone who could find it useful, it’s mostly common sense but it can be hard sometimes to see the obvious when one is enveloped in a cloud of uncertainty. Please do feel free to share with anyone you think it might help.
“Financial Planning is here to help you
By Jacqueline Lockie CFP™ FCSI, Head of financial planning, CISI – 8th April 2020
In the UK the Office of National Statistics (ONS) has released its first weekly ‘rapid’ statistics data during the Coronavirus pandemic.
The initial results from the new Business Impact of Covid-19 Survey show:
73% of households in Great Britain, whose household head is an employee, had enough financial assets to cover a 25% fall in household employment income for a period of 3 months
54% were able to cover a 75% fall for 3 months
76% of self-employed households had enough financial assets to cover a 25% fall in their household employment income, and 61% could cover a 75% fal for 3 months
The ONS found that older households were most likely to be able to have enough savings to cover a fall in their household employment income for this period of time. After that the picture changes significantly.
This guide aims to help you think about your finances by highlighting the important factors that our community of leading and highly qualified experts from all over the UK - CERTIFIED FINANCIAL PLANNERS and Accredited Financial Planning Firms – think you should look at during this uncertain and challenging time.
Solve the task at hand now - Cash management for individuals and families
Many people have seen a cut in their income each month. Some of you may have been made redundant and might now be claiming benefits. Other families are bracing themselves for more severe reductions in their income in the coming months. Here are our top tips for looking at the cash you immediately have available if you have a sudden loss in income:
1. Prepare a clear budget for food and other essential bills:
Write down everything you buy and review objectively. Can you cook more and save on more expensive processed meals? Do a daily food menu and only buy what you need to save wasting food. Write down all your other bills and when they are due. Cut back now on all non-essentials. Research online what state assistance or charity help you might be eligible to receive and apply. Avoid taking on significant loans with high interest rates. Talk to your mortgage lender and bank about what they might be able to do to help you in the short turn. Check with your local authority if you can spread your council tax over 12 months rather than 10, cancel any travel tickets not now being used and sell unwanted items in your home such as old consoles and mobile phones that might be hidden away in drawers.
2. Stop all unwanted or forgotten direct debits and standing orders from your accounts.
Review your credit card statements and bank statements to ensure you are not paying out on unnecessary or forgotten regular payments. Please be careful what you are cancelling and make sure you understand the implications – money being spent on insurance as they might be the fall back items you might need longer term.
3. Be aware of scams:
Many people are worried about their futures at the moment. This anxiety in the global population can be an opportunity for scammers to pounce. When you are rushing to secure your own financial situation, you might be more susceptible to falling victim of a scam. Follow simple rules: do not answer texts or calls asking for bank details unless you are expecting the contact. If in doubt use the number on the back of your cards to contact your provider. Never give your bank or credit card details over the phone to cold callers no matter who they say they work for. Here is some guidance from the City of London Police on common ways you might fall victim to foul play.
4. Look after your physical and mental health:
Set a daily routine for yourself, talk to loved ones via video links and ensure you get enough sleep. These are all practical things you can do to help yourself stay healthy and keep a sense of perspective when dealing with money. There are many free apps and other online resources for yoga, meditation, sleep and exercise. Take advantage of them and encourage others to participate with you. Being tired and worried can lead to poor decision making when dealing with your finances. See the CISI’s mental health portal for advice on how to look after your well-being. LINK
5. Get help early:
Don’t wait until you have no money for essential items - ask for help from your local government, charities or other institutions now and try and plan ahead. It can take time to find out what sort of help might be available to you and you may need to apply for that help. If you know that you are going to struggle to pay your mortgage, contact your lender now – most banks are operating a simple form online to apply for this. Talk to them about mortgage premium holidays and other ways to reduce your mortgage payments. Make sure you understand the implications of taking a payment holiday – some mortgage terms will mean you still have to pay the interest on those payments, so your monthly payments may go up once you start paying again and it might take you longer to pay off your mortgage. Check to see if you have any insurances that you could make a claim on.
Managing through the cycle
It is important to keep a close eye on your finances whilst we work through this global pandemic. Ignoring issues will only make matters significantly worse later on.
Revisit your budget regularly and identify where you have been struggling. Tackle those areas with a calm attitude and seek professional help if needed.
Be realistic. Don’t deprive yourself of all your pleasures in life, but don’t go overboard. If you put yourself on a strict crash diet for your finances, it might work for a few weeks but probably isn’t going to work for many months. Be sensible. Cut down on luxuries but don’t cut everything out unless your financial position really necessitates it.
Take small actions to improve your financial situation. Is there any part-time work available? Are there things you can make from your own home that you can sell online? Can you do anything to help family, friends and local charities?
Try to stay positive Do not constantly watch or listen to the news, restrict your news updates to once a day. Plan out what you are going to do each day and you will feel a sense of achievement by doing those tasks. Stay in touch with others and be honest about how you are feeling but don’t spend the whole conversation talking about the virus.
Try to plan for the future when we get out the other side of this pandemic. Yes, we are going through very hard times right now, but we will get through this. We need to stay focused on solutions to our financial issues and not continually focus on the pandemic. For example, what can you do at home? What can you plan for when curfews are lifted and we can all go about our daily lives again? Are there things that you have wanted to do but never had the time to do?”
As always, please do feel free to call me at any time to discuss anything that might be concerning you.
Please do keep safe and of course, Happy Easter!
With warmest regards,
Yours sincerely
Graham Ponting CFP Chartered MCSI
Managing Partner
