The coronavirus has led to some drastic changes in modern life, affecting everything from travel to the weekly shop. But perhaps one of the most severe effects has been on people’s finances. Many people now find themselves in much less fortunate circumstances and are struggling financially. But do not worry, there are plenty of ways to save money during these uncertain times.
One way companies are weathering the coronavirus storm is through the use of furloughing. This economic technique is being utilised by companies who no longer have work to give to their employees, but do not want to make their staff redundant. Rather than forcing their employees to take redundancy, these companies continue paying their employees through the help of a government coronavirus job retention scheme, helping them pay up to 80% of their employee’s wages. While this benefits employees, many of those who find themselves furloughed may not be paid their full wage, meaning they are forced to find alternate ways to save money.
Applying for a payment holiday
To help people survive financially during the current pandemic, many banks and loan companies are providing their customers the chance to take a payment holiday. This means that these organisations are temporarily allowing their customers to stop paying their loans, mortgages and rent, typically for 3 months. Direct lenders such as luckyloans.co.uk are actively encouraging any customer facing financial difficulty to apply for a mortgage break to prevent falling into further debt. But how do you apply for these payment holidays?
For those with mortgages, the best method of obtaining a payment holiday is to apply for one online through their bank or mortgage provider’s website. However, there is a small waiting period in the application process as lots of people nationwide are applying for mortgage holidays. Latest figures from UK Finance show that 1.2 million customers have taken a payment holiday since the coronavirus crisis started, highlighting just how popular this concept is. It is worth noting that it is solely at the mortgage provider’s discretion if your application is approved and they are under no legal obligation to provide everyone with a mortgage holiday.
If you live in rented accommodation, the best way to obtain a rent break is to simply contact your landlord and see if they would be happy to freeze rental payments. However, not all landlords will be willing to allow this. If your landlord does refuse to temporarily pause rental payments, and you find yourself unable to pay rent, then do not worry as the government has currently restricted landlords’ abilities to evict tenants for up to 3 months in England and Wales and up to 6 months in Scotland.
Both credit cards and short term loans can also undergo a payment holiday, with the Financial Conduct Authority (FCA) telling lenders that they need to provide payment holidays to those affected by the coronavirus. Customers have until 14th July 2020 to apply for these 3-month payment holidays, and most lenders do not require you to provide proof that you are being negatively affected by the crisis. However, do note that interest will still be charged on the loans. As with mortgage holidays, the best way to apply for a payment holiday is by going online as phone lines are likely to be busy.
Different ways to save money
If you still find yourself struggling with money, there are still plenty of ways to save during the crisis. For instance, one of the best ways to save money is by switching supermarkets. Many discount supermarkets such as Aldi and Lidl offer the same quality goods for cheaper prices then their competitors, so it is worth shopping around for the best deal.
Another great way to save money while being furloughed is to simply go over your household finances. While this may seem like an obvious suggestion, it could lead to some serious savings. For instance, looking at your direct debits may reveal that you are paying for subscriptions you no longer need such as gym memberships, sports packages, or multiple video streaming services. It is also a good idea to take this time to look into what help the state can provide. This includes checking if you qualify for certain benefits such as Universal Credit and tax relief schemes.
Finally, consider reducing your salary sacrifice deductions, if this is possible. To ensure we can all live comfortably during our retirement, the government encourages us to pay into a pension pot. However, temporarily reducing or stopping these pension payments will increase the amount of pay you take home each month, providing you with more money during the current crisis. However, remember to resume these payments once you return to full-time work to ensure you are making the most of the various pension schemes available.