18/03/2020

What the coronavirus means for your finances

18/03/2020

What the coronavirus means for your finances

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COVID-19 – more widely known as the Coronavirus – has become a global pandemic in a matter of months.

With so much uncertainty in the air, many people have been left wonder what impact it’s going to have on their finances.

Here we offer a guide into all you need to know about what the virus could mean for your finances and the steps you need to take to make sure you don’t end up in a worse situation than need be.

Your income

Depending on what happens with social isolation in the coming days and weeks, your income could be affected by the virus – although it’s unlikely due to government policy.

Some employers will have processes in place that mean their employees are entitled to sick pay when they cannot come into work due to illness. However, others will not so it’s important to check what procedures are in place with your employer.

For those faced with the prospect of self-isolation, it was announced by Chancellor of the Exchequer, Rishi Sunak, that everyone will receive Statutory Sick Pay (SSP) from the first day you are absent from work, even if you have no symptoms of COVID-19. This currently stands at £94.25 per week, but employers can pay more if they want to.

However, this does not apply to the self-employed, who instead will be entitled to Employment and Support Allowance (ESA) to help them get by should they have to take time off.

The Chancellor also revealed that he will be temporarily removing the minimum income floor for Universal Credit, which means the self-employed will be able to claim during the time they aren’t at work due to sickness.

Speaking on the matter, Dame Gillian Guy, Chief Executive of Citizens Advice, said: “The Chancellor’s decision to extend statutory sick pay to those self-isolating will be a relief to some workers. But the self-employed and people in the 1.5 million jobs that don’t qualify for sick pay are still at risk of falling through the gaps if they become unwell.

“We’re pleased to see the waiting period for contributory Employment and Support Allowance has been removed, but we know those who need to apply for Universal Credit will still face a lengthy wait for a full payment and could be pushed into debt as a result.”

Overall, the virus is going to affect everyone differently and the economy is likely to take a hit. Does this mean we should panic? No.

Assess your income and make sure you know what measures your employers have in place. This will give you a better chance at preparing for the worst.

Your bills

Understandably, many who will end up on SSP may find it hard to keep on top of certain bills due to the income drop – especially if you have a mortgage to pay.

SSP is often significantly lower than most regular incomes and helping make sure people survive without falling into financial difficulty as well is more important now than ever.

If you find yourself fearful about how the virus will impact your ability to keep on top of payments, then it’s important to contact providers and lenders as soon as possible to make them aware of your situation.

Most companies are willing to support those affected by the virus by offering flexibility as they don’t want people falling into debt/further debt.

It was reported by ITV last week (March 10) that multiple banks and building societies have actually introduced measured to help customers dealing with the virus, with NatWest and RBS actually allowing people to defer their mortgage payments for up to three months.

However, it’s important to note that this will be looked at on a case-by-case basis and customers may be offered other options as well.

The article reported that Brits will also have the option to “close fixed savings accounts to access cash with no early closure charge.”

Customers may also have the option to ask for an increase in their withdrawal limit on their debit cards.

Santander and Barclays likewise joined in by offering their customers support such as the option to defer or reduce repayments due to come out their accounts or the removal of penalty charges.

What now?

The main thing to remember is to try not to panic, and to come up with a plan as soon as possible.

Take into account your current income and how it might change should you become affected by the virus in any way. Match this against your outgoings and map out any changes you could make or steps you can take to minimise any financial difficulty you could come across.

Prioritise your payments accordingly and make cuts where you can to help ensure that you make the most of the money you do have. This can also help minimise your outgoings as much as possible until you’re back on your feet.

When it comes to any debts you’re dealing with, check your paperwork. A lot of agreements will have payment protection, which potentially allows you to make an illness-based claim.

No one wants the stress of dealing with debts when they’re sick, so do what you can now before you find yourself in financial difficulty.

If you’re worried about Coronavirus affecting your finances, contact us today for free and confidential advice. All you need to do is call us on 0808 2085 195 or click the button below to be connected to an expert advisor.

You could write off up to 75% of unsecured debt with our debt assistant.

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