Getting your financial affairs in order post-lockdown:-preventing a money meltdown before it’s too late


Getting your financial affairs in order post-lockdown:-preventing a money meltdown before it’s too late

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6 minute read

Unless you are a global billionaire, coronavirus (C-19) is affecting your life in more ways than you know.

The impact may be temporary, or it could have long-term implications for your financial health. You can control some aspects of your life, like wearing a facemask and social distancing, but you can’t control taxation, debt, or the worldwide economy.

This article offers guidance on why it is important to focus on your financial affairs now. There are tips, hints, and guidance to help you avoid your own money meltdown.

For all its drawbacks, lockdown is actually an ideal opportunity to get your finances in order. This includes your income, savings and investments, as well as your borrowing and longer-term debt.

Businesses are struggling to survive and are laying off staff. According to The Guardian, two million people in the UK have already lost their jobs. Another six million fear the same could happen to them, and many of these are already on furlough.

Controlling debt

Some people in lockdown have managed to save money because there is so little to spend it on. The Guardian also reported that £7.4 billion of consumer credit has been paid off. This is the highest debt repayment in 27 years.

For those who have already been laid off, however, these figures offer little comfort. With no earned income and a dependency on state benefits, finances will be a struggle. Rainy-day savings can easily be eroded during a C-19 crisis that has already lasted months.

How you spend is very important. Rent and mortgage payments are a priority. You need a safe roof over your head. Then utility payments. Heat, lighting and water are essential. This spending is not optional.

The ins and outs of financial control

Start off by looking at your circumstances in a simple yet structured way. Don’t make this difficult or overcomplicated. It’s not rocket science.


One sheet of A4 paper is enough, with a line drawn down the middle from top to bottom. On the left put a heading called OUT, and on the right a heading called IN. Under the out column, list your monthly expenses in order of importance or size, with the largest cost first. Don’t leave anything out. If your broadband, phone and TV package is £100 a month, put it in.

Once you have listed the key outgoings like rent/mortgage, utilities, food and insurance, draw a line underneath and add them up. Then start on the next categories like transport, broadband packages, holidays, eating out, subscriptions, clothes, credit card payments etc. Draw a line and add it up.

The final list includes the things that are not essential but nice to have. You know what they are, and to give you a nudge they could be: spa treatments, coffees out, personal treats, unnecessary online shopping, downloading online movies, ordering take-aways. Add it up. Then total the three costs. This is what you spend each month.

Turn to the in column. Include your after-tax salary or wage. Any pension or bonus. Social security benefits. Rental income, dividends, and interest. Add them all up. This is your in total. You can now see immediately if you are a net saver or a net spender.

If you are a net saver, great. Hopefully, you have identified a few regular costs that you don’t really need. Cut them out for now and see how it goes. You can always reinstate them in better times.

If you are a net spender, with more going out than coming in, you need to act now. Work your way up the list from the bottom. Cut back wherever you can until you get to the basics you need to maintain yourself. Your goal, at the very least, should be to balance the in and out columns.

Getting help

There are several ways to get help if you have money issues.

The government are supporting a three-month mortgage holiday for homeowners. You can apply up to 31st October 2020. Speak to your mortgage lender straight away if you are having difficulty with your payments (most lenders ask that you do this online).

If you are renting, you must make any agreement with your landlord. For a three-month period, in any case, tenants are protected from eviction. The Ministry of Housing published this useful guide in June. Tenants in social housing are protected from eviction during C-19. Some local councils will allow you to defer your council-tax payments. Speak to your council before cancelling any payments. You can find your council here.

If you are in receipt of a qualifying state benefit, you may be eligible for Support for Mortgage Interest (SMI).

Shelter offers a lot of online help about hardship that you can find here.

Credit cards and personal loans are also covered under C-19. Around 900,000 people have already applied for help regarding credit cards, and 600,000 regarding personal loans. At the time of writing the application deadline is 9th July.

The Financial Conduct Authority (FCA) has brought in measures if you have a car/van/motorbike on finance (HP or PCP). These include a three-month payment holiday, or other suitable help, and no repossession if you are affected by C-19 related issues.

Banks are offering the first £500 of an overdraft interest free for the first three months.

If things still look bad once you’ve explored all your options, a knowledge of the appropriate laws will help.

Debt collectors

Bailiffs: high-court enforcement officers and debt collectors have the same objective, namely retrieving a debt. They can visit your home, but there are differences between the powers debt collectors and HCEOs have when it comes to taking goods and entering your home.

A high-court enforcement officer is appointed by the courts and collects debts for them. They do have powers to enter your home. A debt collector is employed by a private company. Private debt collectors can only enter with your permission, and must leave when told to do so.

Don’t be panicked and check your legal rights before any crisis point arrives.

What about Furlough (Coronavirus Job Retention Scheme)?

There are about 8.7 million people on furlough, which is a quarter of the UK workforce. The scheme is due to end on 31st October. Being on furlough is a bit like gardening leave – no requirement to work, but still being paid (80% up to £2,500 a month).

When the sun is shining, pay is coming in, and you don’t have to go to work, life feels great.

But when furloughing does end, will you still have a job? There is no guarantee that your employer’s business will thrive and survive.

Now more than ever, you can hope for the best but you should also prepare for the worst. Save as much money as you can. Prepare your budget. Check your loan providers just in case. Get your ducks neatly lined up. Check out alternative employment opportunities. Consider retraining and acquiring new skills. Then, if disaster strikes, you are ready to face the consequences.

And if things turn out well, you will have a much better appreciation of money control.

Financial markets and your pension and investments

If you have an investment portfolio, or are saving into your pension and ISA, recent market volatility may have jangled your nerves. As if worries about C-19 weren’t enough, financial anxiety is added to the mix. Stress comes with its own related problems, and it doesn’t make for good decision making.

As you have read in this article, you have power and control over some of your spending habits. But you don’t have any power or influence over the global economy. So why worry about it?

Easy to say, no doubt, but money is an emotive subject.

The official date of the UK lockdown was Monday 23rd March. Taking the FTSE100 Index as a simple proxy (most investors have a globally diversified portfolio) consider some data.

On the 2nd January 2020, the FTSE100 was at 7,604. On the 8th June it is at 6,492, a fall in round numbers of -15%. Admittedly, this represents a recovery from the -34% collapse before 23rd March. So what about looking at other years for some perspective?






















-15% so far


That’s 11 negative calendar years in a 30-year period (and 2020 could still end positively). The fact that markets can fall as well as rise should no longer surprise anyone.

Sudden market falls at a key time in your life are truly inconvenient. But the fall only becomes a loss if you cash in. If you are a young worker and saving monthly into your pension or ISA, these up and down variations can work in your favour. Because every few years there is, in effect, a big sale on offer. You get to buy more with your money.


The FTSE100 Index referred to here reflects the performance of 100 companies. If you invest exclusively in these big firms, you’re effectively putting all your eggs in one basket, which is called concentration risk. It is prudent to have wider diversification, where your investments are spread across, say, 5,000+ holdings on a global basis in different asset classes (successful companies, global commercial property, high-quality government bonds and gilt-edge securities).

Getting professional help

Life can be difficult at times. A pandemic, job insecurity, debt issues and market volatility regarding your investments. That’s a lot to worry about.

If you’re not a money expert (and most people aren’t by definition) it makes good sense to seek independent and impartial advice. This can clarify your financial situation and take away some of your worries. What’s more, a good financial partner can help you resist the temptation to make knee-jerk, emotional decisions that may end up costing you money.

In the same way that you wouldn’t use an unregulated or unqualified doctor or dentist, try and seek out the very best financial advice. This means impartial, independent and Chartered or Certified firms who can advise you on a fair-fee basis.

If you would like some help to avoid a money meltdown, contact help@capital.co.uk

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