When we packed up our desks in March, few of us thought it would be the last time we’d see our office for months. Even fewer thought it’d be the last time we’d see our office, ever.
But, with the pandemic, has come an unfortunate loss of jobs.
Job security is a phrase that not many can now confidently use, and as a result, financial security is becoming even less certain.
To make matters worse, there’s now talk of a global recession. Which has led us to think… What has the Coronavirus taught us about money, and what can we do now to put us in the best position for a recession?
1. Start An Emergency Fund
An emergency fund is an amount of money that’s been set aside specifically for the use in an emergency.
Previously, reasons for having an emergency fund have been described as things like your car breaking down. Needing new appliances. Or even needing emergency dental work. But now, the focus is a lot more on covering yourself in the case of job loss.
A recent report from YouGov showed that “Two-thirds of furloughed workers are either fairly (38%) or very (27%) worried about losing their job”. So we can see why emergency funds are getting some attention.
There’s no right or wrong amount to have in an emergency fund. But financial advisors suggest you should have 3-6 months worth of expenses. This money should be kept in an easy to access location, where there’s no chance of losing your money.
When we broached this subject with the users on our community page, we saw similar views.
“My current goal is 6 months salary saved just in case. I have always kept a little aside just in case. But Covid-19 despite not affecting the company I work for, got me worrying about “what if” suddenly I wasn’t able to work or was furloughed”
Starting an emergency fund is just one thing Coronavirus has taught us about money. If you’d like to read more about starting an emergency fund, read our article here.
2. Review Your Spending
With over 9M people furloughed in the UK, many people are now living in the UK on a reduced wage. It’s, therefore, no surprise that people are completing a financial health check.
People are sitting with their finances, and prioritising what they should now be spending their money on. Taking time to budget, track their spending, and complete “no-spend” days have been critical in helping people decide which areas of their spending are now most essential.
A report from Raisin, about lockdown spending habits, found that a third of people questioned said they “now wouldn’t spend as much on things they didn’t need in the future”.
When we asked people on Twitter how lockdown had changed their spending habits we found a similar response. TV subscriptions and online shopping were amongst the first areas to be cut. Those that had stopped commuting, told us how they’d purchased a bike – to keep costs down when returning to work. When we asked if people had missed spending money on takeaway coffees, 65% of people said they hadn’t.
These small spends can make a surprisingly big difference to your yearly outgoings. Even if the monthly cost is low.
We know that reviewing your bills isn’t the most fun thing to do, but we also know it can save you money. That’s why we have a feature on the Emma app which highlights how much you’re spending on bills and subscriptions. We’ll even help you switch to a cheaper plan.
If you haven’t already, download the Emma app and once all your accounts are connected visit the “save money” tab.
3. Be Cautious Of The Loans You Take Out
Loans come in many different forms, and often there is a whole range of reasons why you may need to take one out. Whether it’s to cover a big financial purchase, or to cover debt, you should always be a lil’ cautious about the loans you take out.
With the impact of coronavirus, it’s more important than ever to think about what will happen if you can no longer afford your repayments. Consider whether it’s better to wait until you can buy something in full, rather than using loans to pay for it.
If you don’t have the luxury of waiting, make sure you have a backup plan that will let you repay in full, in time.
4. Prepare Your Will
Our final point is a little more gloomy but is an important one. As people are unfortunately faced with more mortality, there has been a rise in the number of people seeking out wills advice.
This piece of life admin is one that people often put off. But is an essential part of managing your money. Without a will, there is no guarantee that your money, possessions or investments will be passed onto the people you want.
But, writing wills isn’t actually as complicated as it may seem. Companies like Farewill can help you write a legal will in as little as 15 minutes.
If you have the Emma app, one of the rewards we offer is 20% off will creation with Farewill. Simply open the app to find out the discount code, and enter it into Farewill’s checkout to redeem the offer.
The pandemic has certainly turned lives upside down, but there are things we can learn from it. I for one, think the Coronavirus has taught us a lot about money! By following these four money lessons, we can make sure that our money is in the best possible position.