Spring is the perfect time to take a fresh look at your finances and work out where you could be making your money work harder for you.
With restrictions on movement and potential job losses, a lot of us are wondering how we’ll cope with meeting mortgage payments, bills and household costs.
So, let’s focus on what steps you can take now to save money and maybe even make some along the way, as we ride out the storm created by COVID-19.
1.) Cancel subscriptions that aren’t being used
While now may not be the best time to cancel your Netflix subscription, it makes little sense to continue paying for services that are currently unavailable.
Many companies have already given their customers the option to pause their contracts for weeks or months, with some offering to suspend accounts indefinitely for vulnerable groups like the over 70s.
As so many sporting events have been cancelled, including UK Premiership football, Sky Sports have already given their customers the option to pause their subscriptions to live sport at no cost.
Monthly bills will now show £0 for the sports package, though customers will still need to pay for the rest of their bundle. And even better, you can still watch the sporting replays being shown across the 11 Sky Sports channels at no cost!
Customers should call 0800 151 2747 and say ‘cancel Sky Sports’ or visit the Sky Sports Website for details. BT Sport has also offered to give their customers one month’s credit back, which can be banked or donated to the NHS.
With gyms and health clubs closed, you might also consider suspending or cancelling your gym membership, if your gym hasn’t already paused your memberships fees.
To do this, first check out your gym's official coronavirus policy, which should be visible on their website (if not, you will need to give them a call to discuss options).
Virgin Active are allowing the over 70s and pregnant women to indefinitely pause their memberships, with immediate effect and with all fees waived. For members who are self-isolating due to COVID-19, memberships can be paused for up to four weeks for a £10 fee (this will be waived if you’re able to produce a medical letter confirming that you have had coronavirus).
Other health clubs are offering similar arrangements. If you haven’t yet heard from yours it’s well worth a conversation.
Other leisure activities
While you’re at it, make a list of other subscriptions, like memberships to professional bodies, children’s sporting and leisure activities or any duplicate subscriptions in the household (such as two Netflix accounts) and get in touch with providers to discuss your options.
It’s important to check what each individual company is offering before you cancel the Direct Debit with your bank, as cancelling your subscription before its usual renewal date can lead to penalties.
2.) Reassess your mortgage needs or consider a mortgage holiday
Three-month mortgage payment holiday
If you are already feeling the financial effects of the coronavirus outbreak, you may wish to consider discussing a three-month mortgage payment holiday with your provider. Many lenders are allowing customers to take a break from repaying their mortgage for up to three months without their credit rating being affected.
It's worth noting that this was specifically agreed with the government, although not all banks are required to offer it.
The terms will differ by provider and individual arrangement so make sure you discuss things with your provider to confirm if you can access a holiday from all payments, or if you will only be able to pause the repayments on your capital, for example.
When your payments start again after the holiday, they'll be recalculated, and you may see an increase in your monthly payments (though this should be manageable). Interest will also continue to build at your usual rate during the holiday, so the total amount of interest you pay over the term of the mortgage will increase. This will result in a slightly higher mortgage balance than if you hadn’t taken the holiday.
Think carefully about the best time to take a mortgage holiday so that you receive the help when you most need it. At the moment, some banks are asking people to delay making an application for assistance until they genuinely need it, rather than arranging a date in the future for payments to be paused.
Review your current mortgage
If you’re currently managing your finances well, one alternative to consider is remortgaging, to see if this can save you money.
Talk through options with your lender, use an online comparison site or consult with an independent mortgage advisor to make sure you’re currently receiving the best possible deal for your individual circumstances.
3.) Take stock of household bills and insurance policies
The additional time at home during the lockdown may provide the perfect opportunity to examine your family finances in microscopic detail.
We’ve pulled some tips together here on how to save money on your breakdown cover, but think about all of your outgoings and check whether you’re paying over the odds for utilities, mobile phone contracts, as well as home insurance, car insurance or pet insurance.
If you’re already struggling to pay your bills, it’s also worth contacting all of your current service providers to ask whether monthly payments can be reduced or placed on hold for a short period of time, until you get back on track.
Again, think about how to delay this kind of help until it’s needed, as arrangements can usually only be made to cover short-term difficulties.
4.) Manage your household budget
Cutting costs on breakdown cover and utilities is a good first step, but don’t forget to look at how to save money on food shopping as well.
Here are a few tips on how you can make your money go further.
- Buying only the staples you need, when you need them.
- Cutting down on pre-packaged convenience foods like ready meals and buying more frozen, canned or dried foods.
- Making a list of essentials for each shopping trip, so that you’re not tempted by impulse buys.
- Reducing the amount of food that is wasted by eating or freezing leftovers (the BBC has a great guide for reducing food waste).
- Planning your meals for the week.
- Downgrading from premium range or branded products to basic ranges (often, the only difference is expensive packaging!).
- Downgrading to a cheaper or ‘budget’ supermarket.
- Not overserving food at mealtimes, and trying to stick to smaller portions.
- Buying ‘multifunctional’ products like 2-in-1 shampoo and conditioners or multi-surface cleaners.
- Never shopping hungry, as you’ll be more tempted to grab high fat, high-cost foods.
Along with saving money on food, you can also make an impact on the monthly household budget by mending rather than throwing away damaged clothing.
There are also some brilliant budgeting apps available that will help you to look at the overall picture of your financial health in detail.
5.) How to make money in lockdown
Once you’ve got a handle on your savings and outgoings, you might also want to consider ways to boost your income – this is easier said than done during lockdown!
But there are still ways you can make money from home even if it’s just a little extra to support your family.
Claim £6 a week when working from home
From 6th April 2020, you can claim back £6 per week to cover additional costs incurred from working at home such as heating and lighting. If your employer cannot pay you this additional amount you can still apply for this to be deducted from your taxable income with HMRC. Find out how at gov.uk.
Use the unexpected time at home to clear out attics, basements, garages, cupboards and wardrobes, photographing and preparing listings for unwanted items that can be sold when the lockdown is over.
Search the internet for paid online surveys you can take part in. The reward per survey may be small, but the amounts will soon start to add up if you can devote several hours a day to completing questionnaires.
Online tutoring or freelancing
If you are skilled or knowledgeable in a certain area, you can market and offer your services online. Some people are turning to tutoring via video link while others are offering writing, design, marketing, business management or life-coaching to others, all via the internet.
Taking on any kind of additional work may have tax implications, so it’s important to look into these before you embark on any paid opportunities.
Monetising a blog doesn’t happen overnight, but if you’ve always wanted to start writing a blog, now might be a good time to start building a following, and to express yourself during this difficult time. Take a look at some top finance blogs for inspiration!
However, you decide to spend the next few weeks and months, remember that the health of you and your family, along with the most vulnerable members of society, is paramount.
The advice is simple: stay at home. Surely the simplest way of all to save money!