Pauline van Brakel, Chief Product Officer at money app Yolt , comments: “The changes to the furlough scheme due to come into effect tomorrow will make it more expensive for employers to furlough workers, and as a result could understandably cause concern for those still using the scheme. Despite the fact many restrictions have lifted, and things feel like we may be returning to some normality, we know that many continue to receive government support – with the latest figures showing that 3.4 million people 2 are still relying on furlough. It is likely that the full financial impact of the pandemic won’t be felt until government support is fully removed – which could place increasing financial pressure on those who have been using it. Our recent research found that this financial pressure extends beyond just those who have been on furlough, with 14% of UK adults anticipating they will feel worried about being able to afford essential bills over the next 12 months.
“Although the future feels uncertain for many, preparation and planning ahead where possible is wise. This might seem tough for some people, but there are some small, manageable tips that all of us can take to manage our household spending and that may put you in a better place to protect yourself financially:
1. Budget, budget, budget
Take a look at your essential outgoings, (like rent or mortgage payments, energy bills and grocery shopping) and total these up. This will give you the minimum you need to get by each month. When you take that away from your income, you’ll see how much wiggle room you have. It’s a good idea to try to live well within your means, even during less financially challenging times.
2. Spend smart where possible
Review all your expenses and consider making cuts wherever possible – you could discover some direct debits you might have forgotten about and free up funds that way.
You may even be able to save on your ‘fixed’ costs. By using comparison sites (like MoneySuperMarket) you can make sure you’re paying a competitive price on your household bills – switching providers can often result in saving hundreds of pounds.
Yolt have also recently launched an evolved version of their app to help people save whilst they spend – encouraging people to save through features such as earning them cashback on their purchases at selected retailers and rounding purchases up to the nearest pound.
3. Turn your debt to dust
It’s easier said than done, but during challenging times it’s even more important to reduce debt. Although you may not be able to pay everything off in one go, it’s good to prioritise downsizing any financial obligations you have. Because when you’ve got less committed spending, you may find yourself with more free cash each month, which you could then put towards paying off any debt you may have.
Try to pay off the right debt: credit card bills and loans (particularly any high-interest short-term loans) may be the place to start.
4. Grow your nest egg
Although savings rates are at historic lows, it’s still a good idea to have a nest-egg put aside and readily available for a rainy day.
Even if you haven’t got one yet, don’t panic! It’s never too late to start saving. A great way to begin squirreling away is the 50/30/20 split.
· Earmark 50% of your income for essential spending
· Bookmark 30% for luxuries
· Mark 20% for saving
If you’d like a little more to fall back on, you could even flip your “luxuries” and “saving” splits. So you could put 30% into a saving account and leave yourself 20% for treats. This split may not work for you during these unprecedented times. You can always tweak these amounts to suit your budget – just try to stick to a set amount of savings each month.”
1 ) Research was carried out online by Opinium Research amongst 3,007 UK adults between 20 th – 24 th May 2021. The results are weighted to nationally representative criteria.
2)Gov.UK: Coronavirus Job Retention Scheme statistics: 3 June 2021: https://www.gov.uk/government/statistics/coronavirus-job retention-scheme- statistics-3-june-2021/coronavirus-job-retention-scheme-statistics-3-june-2021#main- points