In light of the impact that COVID-19 is having on our organisation and the use of Furlough schemes in the countries that we operate, together with the upcoming changes to working patterns for our UK based team, we recognise that our people have and will be impacted financially, but the extent of the impact on each individual will vary.
In our effort to support our colleagues as much as we can throughout these changes, we wanted to provide you with some helpful hints and tips for managing your money. If this is something you would like to look into a little further, we have also provided some links, at the end of the article, to two free online courses hosted by the Open University which you may find beneficial.
Whilst the majority of information is UK focused, some of the tips will be applicable and useful to colleagues in other locations too.
Being a savvy shopper and building a budget
- Categorising the items you are buying/would like to buy into the following three categories: an essential, a non-essential and a desirable (not an essential but something you can’t really do without). If you need to make cut backs on your spending, start with the non-essential items and then, if required, take things off the desirable list too.
- Phone contracts and insurance – compare phone contracts on comparison websites to see where you can find the best deals. If your phone contract is coming to an end, see if you can change to a sim only deal and keep the device. Look at potentially having two separate contracts for the phone and the sim (these can sometimes work out a lot cheaper). Check what data/texts/calls you are using and see if you can lower the deal you are on to suit your usage. Analyse whether it is absolutely essential that you insure your phone.
- Your biases do affect your shopping – we all use heuristics – ‘shopping beliefs’ – to assess situations where there’s only limited information available to us. People sometimes pay a higher price for an item or a service they want because they think the higher price equals higher quality. So they’re using price as a mental short-cut to assess quality. But any link between price and quality might or might not exist, or at least the difference in price might not mean a difference in quality, especially when it comes to more expensive branded items.
- Comparison websites – comparison websites are a common part of making spending decisions, for example when you’re looking for the best deal on a phone or a new pair of trainers or car insurance. They’re also widely used to research utility services and e-services – to help choose between gas and electricity suppliers, and internet providers. UK money experts such as Martin Lewis recommend being a ‘switcher’ as opposed to a ‘loyal customer’ as there are more financial benefits involved, and switching is often less hassle than it is perceived.
- Cashback websites – use a cashback website where available to make both purchases and enter new contracts for utilities and phones etc. its money for nothing even 1% cashback adds up over time.
- Mortgage – if you are due for renewal and have lapsed on to a variable rate, you might be missing out. UK mortgages are at a very low rate at the moment and you may be able to get up to five years at a fixed rate. This will give you a set outgoing every month, making it easier to budget. If you are in this situation contact a mortgage advisor/broker for more advice. The majority are free to contact and discuss options with, or use a comparison site and go direct to the lender. If required, mortgage lenders will give a payment break, just remember this will then add to the time and a little more in interest to your overall mortgage.
- The benefits of budgeting – it helps you control spending by comparing your income with your spending. It helps you check that you have enough income to pay current and future bills without having to borrow and it enables you to plan on how to meet your longer term goals.
A good credit rating and how to keep it (for UK based employees)
- Analysing whether purchases are absolutely essential and, if they are, what the best way to make these payments.
- Agencies will be able to gather the following information in order to assess your credit score: Have you any County Ccourt judgements (CCJs) (in Scotland, decrees) or other court orders indicating that you have a history of debt problems? Have you ever been convicted of a fraud? Has anyone stolen your identity in the past and then used this false identity to commit fraud? Have you ever defaulted on a payment (not paid a bill in full when it was due)? Defaults normally stay on your file for 6 years. Are you still in default? How do you operate your bank and credit card accounts? For example, do you pay off your credit card bill in full each month? How many applications for credit have you made? Note, though, that the agencies cannot find out whether you were accepted or rejected when you made these applications. Are you on the electoral register? This is one vital piece of non-financial information that will affect your ability to borrow money.
- These are some bits of information which are not recorded by the rating agencies: your income or pension, details about your savings and investments, your medical records or time taken off work for sickness, your race, religion, ethnicity or any political affiliations (like membership of a political party), student loans – unless you’ve defaulted on payments, your record in making Council Tax payments on time, fines for driving and parking offences.
- Check your credit files at least once a year.
- As well as checking your files make sure that you’re registered on the electoral roll or, if you’re not eligible to vote in the UK, that you have proof of residency. The electoral roll is updated annually. Staying registered is vital because if you’re not on the roll it’s unlikely that any institution will want to lend to you.
- Make sure you’re not late or miss completely any credit repayments.
- Get into the habit of paying all your other bills on time.
- Don’t apply for too many accounts – particularly within a short time period.
- Dispense with unused credit cards and make sure the accounts are closed. Even though you’re not using them the credit limits for these cards might limit your ability to borrow elsewhere.
- Try to manage down your debts, particularly the more expensive ones, as this can help your credit score.
- Avoid action that can seriously damage your credit score – for example taking out a payday loan.
- Build your debts and repayments into your budgets.
Free Online Open University Courses
Additional Resources
- Step Change
- Citizens Advice
- Benefit Calculator – for employees to calculate whether they are entitled to any UK Government Benefits.
- Grant Calculator – for employees to discover whether they are applicable for any charity grants. Some local charities support individuals who are experiencing financial hardship.
- The Money Advice Service
Please note that the information referred to in this article has been taken from the Open University online courses.