5 Steps to Improve Your Finances During a Crisis

Your finances can face the biggest challenge when times start to get tough. Most people will find their immediate attention turning to how to ensure their finances stay secure and up to date to minimise this impact. However, 39% of adults, equating to 20.3 million people, do not feel confident managing their money. Here at Wizzcash, we’ve looked at 5 ways you can help your finances during a crisis moment.

Check Your Savings

Having a savings nest egg is one of the places many people will go to when looking for cash to alleviate a financial issue. Whether you have emergency repairs, bills to pay or you’ve found yourself on a lower income or even facing redundancy, relying on your savings for financial help is usually the quickest and easiest way. Depending on your level of savings, you may even be able to resolve your financial issue completely in less time. However, many people struggle to build enough savings to have this as an option, with 15% of UK adults having no savings at all. This indicates that many people need help saving money to be able to rely on this. With the Money Advice Service recommending having 3 months of expenses saved, this figure is incredibly helpful if you have it available, but it may take time for some to build. Check your available savings accounts to see what funds can be used, as if you can avoid taking out any further lending and avoid interest repayments, you’ll benefit in the long-term.

Reduce Your Monthly Bills

If you haven’t got the available savings to rely on, you’ll need to know how to reduce monthly expenses where possible. Any non-essential outgoings will need to be considered and how far you go will depend on how long you expect to be in difficulties for. This can be difficult to decide, especially if your financial issues stem from a health-related crisis or you are unemployed and not sure when you will have another job. According to the Office for National Statistics, over 13% of UK household spend is on recreational and cultural services, with 7% on household goods and services. Additionally, the average weekly household expenditure in the UK at the end of 2018 was £572.60, the highest since 2005. If the figure is higher for your household, then break down what your outgoings are and look for anything you can most likely do without for the time being. From satellite TV packages, online streaming subscriptions for music and movies, to even dining and days outs, you should put on hold anything you can live without. Much like your savings, removing any everyday ‘luxuries’ from your weekly or monthly spend is an easy and quick way to free up available funds.

Plan a Budget

Whilst looking through your finances of what you can look to reduce, you should plan a budget to stick to. You can use an online budget plannerto be able to make this easier, listing everything you currently have coming in and going out for help managing money. Planning out what you can afford whilst struggling with a reduced income or facing an emergency bill, will provide you with a better idea of your current affordability.According to the Office of National Statistics (ONS), the average UK weekly spend is £572.60 on expenses including food, transport, education etc, breaking down to £60.60 on a food shop per week.Once you have considered what you’re looking to reduce in your monthly spend, you should be left with a positive amount to cover all your essential outgoings. You may even find you have the disposable income to use that can help you further, especially when looking at short term loansthat may aid you in the future once your financial issues have subsided.

Depending on where in the country you are, a person’s disposable income varies considerably. In London and the South-East, for example, the UK average disposable income is £8000 a year more than in the rest of the country. Depending on where you live, you could find what you’re leftover with considerably differs when looking to budget.

Emergency Funding

If you’re without other options, emergency funding is an avenue many will consider. What you’ll need to do is ensure you have available funds to be able to afford this option, especially when looking at emergency loans. This is where it is important to work out your budget when you need financial help in a crisis, otherwise you could take out more than you can afford. You may be eligible for other forms of financial help from the government, such as Universal Credit, that can support you in difficult financial times. In wider terms, a national disaster relief fund has been launched to help provide money for voluntary groups who provide care and support for elderly and vulnerable people during social and economic changes. Seek out what’s available to you when there are no other options by checking the Gov.UK website.

Think Carefully About High-Cost Borrowing

When looking for financial help, borrowing money from a lender needs to be a considered option. The issue is that many available options may be high cost, high-interest lending that may provide a cash injection you need, but cost you a lot more in total to payback. In times of financial difficulty and uncertainty, you’ll want to avoid anything that puts further strain on your finances. The average payday loan customer, for example, takes out a loan of £260, with 3 in 4 of these customers relying on this more than once per year. With 83% of payday loan customers finding these online, it’s important that if this option is used that the terms work for you, and that payday loans should only be used for emergency situations.

Here at Wizzcash, we are committed to ensuring our customers are in good financial health and if used as an option to alleviate an emergency situation, they can afford the costs involved. The tips above should give you ideas on how to reduce your monthly expenses, budget accordingly and seek financial help. If you have any queries, please contact us.