5 Ways To Manage Your Lockdown Budget
Whatever your financial status, COVID-19 has forced everyone to adapt to a new way of life.
Whether you’ve never cared about financial planning before, or you’ve lost a substantial amount of your income from being furloughed, there’s no better time to take control of your finances.
Take a look at our tips on how to reshape your budget – cover yourself now and protect your future finances.
Double check your outgoings
For the majority of people, the outgoings you normally pay on a monthly basis will have changed dramatically with the new rules of working from home.
Everything from travelcards to lunches at Pret have been put on pause. So, now’s the time to refine your monthly outgoings to scale down your budget.
For some, this is a positive opportunity to put money into savings, an emergency fund or even boost their investments.
Others will be forced to scale down due to reduced income or lost jobs.
Either way, the first step to creating your budget is to note down all essential monthly expenses (rent, bills, foodshop etc), and then writing down all of the nice-to-haves that you can adjust – the gym, Netflix, the expensive phone bill and so on.
Use the list of nice-to-haves to see where you can squeeze your budget.
Don’t ignore your debts
Just because life has taken a pause, doesn’t mean your debts have.
Even if you’ve applied for a repayment holiday on your debts,often the interest will still be applied, so it’s important to continue paying towards them – if possible.
If you can’t afford to chip away at your high interest debts, you could look into refinancing your debts with a low-interest loan or 0% balance transfer credit card. This should be carefully considered and you’ll need to understand how your income could be affected further down the line.
Leap offers loans from £500 with interest rates as low as 3% representative APR, so you can feel confident that you can repay your debts without growing them during lockdown.
Don’t Burn Through Your Savings
Although we should be saving money by working from home – many are finding the time indoors to finally make a start on that long-ignored DIY list.
But with a slimmer income and an uncertain immediate future, make sure you don’t rely on your emergency fund to repaint the house or dip into your savings to add an extension to the kitchen.
With our interest rates remaining low, you can borrow from £500 to £15,000 to make your house a dream home. Take a look at our interest rates and borrow today.
Don’t Use Your Credit Card To Top Up Your Income
The temptation to top up your monthly income by leaning on your credit card can be incredibly tempting.
Even though the average credit card rate has sunk to 20.71% in 2020, it’s still a substantial amount to be paying to cover a loss. This could end up swallowing your income further in the long run.
We suggest trying as much as possible in reducing your monthly outgoing – cancel the Netflix subscription, swap your bill providers to get the best deals – and if that still doesn’t cut it, look into comparing low-interest loans and alternatives.
We pride ourselves on offering loans that will only better the quality of life for our customers, read up on why we care about financial wellbeing.
Invest in Life After Lockdown
Whilst the rest of the financial landscape seems to be in complete disarray, P2P investments remain optimistically stable.
Due to the incredibly thorough vetting of our borrowers, we’re less likely to see defaults across our portfolio (where a borrower cannot make the repayment), so the investments remain unaffected by COVID.
If you’re fortunate enough to have a little extra each month from working from home, then consider how you can grow your future finances in a safe and stable investment.
With P2P you could earn up to 5% over 1-5 years with that money. However your investment is not protected by the FSCS and your money will be at risk. Find out more about the risks of P2P and how we try to minimize them.
Don’t Beat Yourself Up
Go easy on yourself.
It’s an incredibly tough time for everyone – and difficult finances can make it that little bit tougher.
If you’re struggling to pay rent, repay your debts or just generally need some help pinning down your budget you can talk to your bank, the citizen’s advice bureau or even the money saving expert to get advice.
And if you find yourself spending a bit more on the food shop – or you don’t want to cancel that tv subscription even though you can’t really afford it – don’t beat yourself up about it. We all need something to cheer us up during this difficult time.