Managing your money in a crisis
I hosted a webinar for Escape The City last week on how to manage your personal finances in a crisis. You can find the original blog post and video here. I've copied it below too.
"Money… It messes with all of our minds. It’s an inanimate object, but it sparks strong emotions in all of us, particularly in a turbulent time. This article outlines a number of considerations, hacks and resources to help you manage your money in this crisis.
The advice is shared by Stacey Lowman who escaped a career in the investment industry to launch her own business, Pachira Money. Stacey also works on the Career Change Accelerator and is the Community Manager for our 1,500 alumni who have started their own businesses or transitioned into work they love.
Firstly, place no blame or shame on yourself for whatever financial situation you find yourself in. No one could have anticipated this happening.
Our finances are not the most important thing in the world, but they can help us feel secure when other areas are not.
To help you get on top of your finances when times are tough, we’ll take you through five key financial areas:
Savings & investments
Must have spending
Giving & supporting
It’s easy in a crisis to panic about our income, even if it’s real or perceived risk. Some of us have lost income through redundancy, furloughs or contracts cancelled. Others of us fear the loss of income in the coming months. Both are scary and anxious places to be.
There are lots of tips and tricks out there to increase your income (such as moving your services online) and start new side-hustle ventures (selling clothes or teaching skills).
We may also consider taking on part-time roles we wouldn’t have thought twice about a few months ago. There is absolutely no shame in any side-hustle or job that you start right now.
One of the few positive things that are coming out of this crisis, is that we’re really understanding and addressing what valuable work in the community looks like.
From a wellbeing perspective, it may be helpful to think about how much income you actually need to get by right now. Comparing your income to last year or last month might be unhelpful. As long as you are meeting your needs in these difficult times, that can be okay. Accept that a little blip is okay.
When worrying about income, we also tend to go into panic mode and work overtime to try and make more money. This will lead to burnout. Now is the time to take care of ourselves and spend our time wisely.
If you’ve already lost your job or income or are facing the prospect of redundancy, sign-up to a free virtual 4-week programme to get the positive and proactive support you need at this time.
Here are tangible questions to ask to increase your income:
1) How much time can you dedicate?
Think about how much time you realistically have in isolation to spend on generating income. Perhaps you can come up with a specific timetable outlining x many hours on y day. Figure out how much time is a good starting point for you.
2) What are the most lucrative or helpful things you can do to generate income?
Think about what skills you have and who needs help right now. What skills and gifts would give value to people that need it?
Don’t limit yourself to your current or previous job titles, but list out your skills, online software that you’re really good at, any coaching qualifications, whether you’re great with spreadsheets etc…
Then make a list of all the networks and communities that may value that support and how you can offer your skills to them. Be as creative as you can!
Lots of people are offering skills and services for free right now, for example, there are many virtual wellbeing sessions. That’s okay, but if you really are struggling, don’t put yourself under pressure to offer things for free. Maybe set up a donation and be transparent and open about your situation. It’s okay to ask. Don’t feel guilty about charging for your services.
2) Savings, Investments and Debt
When money suddenly stops flowing, not just into our bank account but across the economy, it’s helpful to be clear on what money you have and what money you owe.
List out all of your savings pots, ISAs, investments, account balances etc. List it all out. And take note of any charges, dates and limits that apply on each account.
How accessible is this money to you right now? If you needed it, how quickly can you access it and at what cost? Ideally, we wouldn’t need to cash in any investments, but knowing what our options are is helpful.
If you have debts, is the interest racking up? Financial institutions are all legally required to offer you some sort of support if you’re struggling to pay. Payment breaks, reduction of interest rates or switching balances to other accounts might all be options available to you.
There’s a lot of empathy and understanding right now. Make the call if you need support – all you can do is ask.
If you are one of the fortunate ones whose income has not been affected by the crisis, or you’re getting paid 80% of it due to being furloughed, and/or you are spending less due to self-isolation, you may want to think about where you could be saving money or beginning to invest.
3) Must-have spendings
List out all of your must-have spendings to give yourself an idea of how much money you need to make right now.
Rent: There is legal protection available to you. Landlords can’t evict you if you can’t pay your rent now. If you’re in a situation where you can’t pay your mortgage or rent, collate any evidence that you have that your income has been impacted – so you can demonstrate that your situation is legitimate. Emails, wage slips, paperwork from employers. Keep all of this information somewhere safe.
Mortgage: Three-month mortgage payment holidays are available. Make that call if that’s available to you.
You may also be eligible for council tax reductions. And check whether you can negotiate lower monthly payments or better deals on your internet and utility providers.
When it comes to less-frequent must-have spends, diaries key dates so that you don’t get any nasty surprises!
Look at all your direct debits and subscriptions and cut where you can. Remember to check your phone for app subscriptions too. They are all reversible at a later date.
Think about parking permits, insurances, service charges on your flat, anything that comes out on an annual basis. Prepare for them or see if you can delay or part-pay them if they feel unaffordable right now. MOT’s can also be postponed.
4) Everyday spendings
If we’re self-isolating, one silver lining is that some of our every day or monthly expenses will not be spent. Travel, going out for food, costs related to socialising etc. They are all expected to go down.
Think about those things you won’t be spending money on and how might this give you more freedom to earn less or save more? Check previous months statements to get a figure of how much your spending might fall by.
If you have a travel card that you’re no longer using, some travel providers are offering refunds.
Have you spent money on events that are no longer going ahead? Ask for refunds, and if you’re struggling to get any from the company itself, call your bank and they may offer compensation or help.
There are a lot of free trials available right now (audiobooks etc), if you sign up to any, take note of dates when you would be expected to start paying again.
5) Giving & supporting
Lots of us want to help those affected by COVID-19: the NHS, the vulnerable, local businesses and freelancers etc. If you have the capacity, what causes really matter to you that you want to support financially and how best can you do that?
This is also a good time to reflect on what kind of world we want to live in. What does a positive post-COVID-19 world look like for you? Are there anyways you can support or donate to causes that are aligned to this vision?