KIS Bridging Loans
 
Presented by KIS Finance
 

I think it’s fair to say that almost everyone in the UK has been touched in some way by the Coronavirus pandemic. We’ve all been affected by the nationwide lockdown, but many have also been affected in terms of health, and also financially.

The government have put several measures in place over the past couple of months to try and ensure the financial stability of workers in the UK. This includes the job retention (furlough) scheme, the self-employment income support scheme, mortgage holidays, and many different reliefs, loans, and grants for businesses.

But even with these measures in place, some have still struggled financially because of the pandemic and many have had to take a drop in income, cut into savings and rely on borrowing in order to see themselves through the crisis.

Now we are starting to see some of the lockdown measures easing, including some people being able to go back to work, this guide will go through some steps you can take to rebuild your finances if they’ve been affected by the pandemic so far.

Prioritise debt repayment

If you’ve had to rely on some kind of credit to get through the pandemic, then it’s very important to make this a priority and get it paid off as soon as possible. Whilst you have debts, it will be much harder to get your finances in order and rebuild savings.

If you’ve had to take out a credit card or run up the balance on a current one, then you simply need to pay off as much as you can every month. It’s important to pay more than the minimum payment as the interest will start to build up quickly and could easily amount to much more than you originally borrowed, depending on how long you leave it for.

If you’ve had to use multiple sources of credit, then it may be worth consolidating these by taking out a balance transfer card or personal loan. Having all of your debt in one place will make it much easier to manage as you will only have one monthly payment to think about, and you will quickly be able to find out how much you have left to pay. Doing this should also save you money on interest.

If you don’t want to consolidate your debts, then it is often easier to continue making the minimum payments on all of your debts to avoid any fees, but to concentrate on one debt at a time until it’s paid off in full. Some choose to focus on the smaller amounts first in order to eliminate the number of debts quicker, but another method is to start with the highest interest loan and work down in that order to keep the debt growth to a minimum.  

Focus on your savings

After paying off your debts, then the next priority should be to rebuild your savings and emergency fund if you’ve had to cut into these to get through the pandemic.

Here are some tips on how to save money quickly and easily.

Continue to live on 80%

If you were put on to the government’s furlough scheme, that means that over the past couple of months you have been earning 80% of your usual income. If you are now someone who can go back to work and your income has gone back up to 100%, try to stick to the 80% you were earning before.

This means putting the extra 20% straight into your savings account after you get paid so you don’t even notice it. If you’ve already got a budget in place to reflect the 80%, stick to this for the next few months to give your savings a chance to build back up.

Save small daily amounts

If you struggle to save big chunks of money at the beginning or end of the month, try saving small daily or weekly amounts instead. If you want to save daily, then here are two easy ways you can do this.

The first one is to round up all of your transactions. This means rounding up all of your spending to the nearest £1 or £5, depending on how quickly you want the money to build up. For example, if you spend £22.30 in the supermarket, you will transfer 70p or £2.70 into your savings account. If you do this for every transaction, you will be surprised at how much you can save in a week. If you bank with either Monzo or Starling, then this can be set up to be done automatically.

The second method is to round down your daily bank balance. At the end of every day, check how much you’ve got in your current account then round it down to the nearest £1 or £5 and transfer the difference into your savings account. For example, if you have £453.20 in your account, then you should transfer either the 20p or the £3.20. Rounding to the nearest £5 will make your savings build up more quickly, but it depends on what you can afford.

Be strict with your budget

We’ve all had to tighten our belts a bit during the pandemic, but this doesn’t mean they should be loosened again the second our incomes go back to normal. If you’re serious about building your savings back up, then you need to be strict with yourself.

If you’ve found that you spend less at the supermarket by only going once a week and by buying frozen and tinned ingredients, for example, then keep doing this even after your income increases.

It should be easier to save money at the moment with non-essential shops, cinemas, pubs, and restaurants being closed. You should also be saving on usual outgoings like gym memberships and commuting, so use this time wisely and save the money you would usually be spending.

Save on your bills

With us all spending a lot more time at home than usual, our energy bills are going through the roof. If you haven’t already, now is definitely the time to check what you’re paying for gas and electricity and whether you can switch to a cheaper tariff. There can be a difference of hundreds of pounds per year between the cheapest and most expensive deals on the market, so it’s important that you do a thorough comparison.

Take up a side hustle

If you want to earn a bit of extra income, now might also be a good chance to take up a side hustle, especially now we all have some extra time on our hands.

Perhaps you like baking or sewing and can start to sell products on your local community social media pages, or websites like Etsy. There are also hundreds of websites which offer payment for completing surveys and online tasks in your spare time; in some cases, you could earn upwards of £50 to £100 per month by doing these.

Any extra money earned through side hustles could be used as your spending money then you save the income from your main job, or you can use it as additional savings or put it towards debt repayment.

 

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