If the coronavirus pandemic is putting an increasingly tight squeeze on your personal finances (as it is for most people), it’s important to be proactive and reduce your outgoings as much – and as quickly – as possible. Taking steps now will help to keep you going through the challenging and uncertain weeks ahead.
Sally Francis-Miles, money expert at comparison site MoneySuperMarket, said: “The impact of the coronavirus on the UK economy is already significant and may grow more severe, so it’s understandable to be worried about what this means for your personal finances.
“However, there are a number of steps you can take to ensure you are in a strong position to overcome the challenges of the coming months.”
Here, we round up the quickest and most effective ways to cut your household expenditures.
1. Switch energy tariff
Following the government’s advice to practice social distancing, and with children now off school for the foreseeable future, many of us will spending a lot more time at home. This means that your energy bills are likely to increase. If you are on a standard variable tariff, find out if there is a cheaper tariff out there for you. It takes just five minutes to switch and, according to MoneySupermarket, you could save almost £250 a year. With renewables now the biggest source of electricity in the UK, green tariffs can often be the cheapest option – helping to save the planet and your finances at the same time.
The government has also announced measures to help protect vulnerable customers during the coronavirus pandemic. If you’re a prepayment or pay-as-you go customer and are worried about your energy payments, you can contact your energy provider for help.
2. Check your home insurance
If you’ve switched to working remotely, you should check your home insurance policy to ensure that it covers working from home – not all policies do and it’s important to make sure you are covered. If you haven’t switched home insurance provider for a while or if your policy is up for renewal, now’s the time to shop around for a better deal.
3. Transfer your debt
If you are paying interest on a credit card, consider taking out a 0 per cent balance transfer card. This will help you to spread the cost over a period of time – in some cases, as long as two years. Just be sure to make at least the minimum repayment each month (ideally more) and pay off the balance before the 0 per cent interest free period ends to avoid any charges.
4. Borrow responsibly
After the historic second interest rate cut by the Bank of England this week, now could be a good time to borrow. Just ensure that you do this in the cheapest way possible. Whether that’s looking at a 0 per cent interest purchase credit card, or a current account with an interest free overdraft, it pays to research several products before making a decision.
5. Consider remortgaging or taking a mortgage holiday
The Government has announced a three-month mortgage holiday for those in difficulty due to the coronavirus pandemic. However, if your current mortgage deal is ending you could look at remortgaging to a deal with a better rate. If you’re on a variable rate, now’s the time to switch to a fixed rate deal if you can. Deals can be far cheaper and you could save hundreds of pounds every month, freeing up some much-needed cash.
The Chancellor announced on Tuesday that three-month mortgage holidays have been introduced for those worst impacted by the coronavirus. If you think you could be eligible for such an arrangement, you should contact your provider.
6. Speak to your bank if you’re struggling
If you’re struggling to make repayments, speak to your bank or loan or credit card provider as soon as you can about whether you can take a break from repayments. Providers must take your personal situation into consideration and agreeing a repayment holiday will prevent you from defaulting on your mortgage repayments, which will affect your credit profile.
7. Change your bank account
If you haven’t changed current accounts in a while, there are a host of deals available – and some are offering £100 cash incentives just to switch. To ensure your bank is doing the right thing with your money (by the planet and society as well as your pocket), choose one of our Good Egg companies.
8. Think about savings
While it won’t be realistic for everyone, if you can afford to, start putting a little more away into your savings. The situation is changing quickly and it’s sensible to set some cash aside if you can to cover unexpected eventualities.
9. Shop around
If your car insurance is up for renewal, now’s the time to look around for a better deal. For just five minutes work you could save up to £270, according to MoneySupermarket.
10. Get a SORN if you’re taking your car off the road
If you decide to take your car off the road to save money because you’re not using it, you’ll still need to insure it unless you get a Statutory Off Road Notice (SORN) from the DVLA. You will need this even if your car is parked up on the driveway.