10 Steps Guide for Protecting your Finances from COVID-19
Updated: Feb 4
Hello! This week I wanted to talk about what's on everybody's mind: COVID-19. I know that many of those reading this are worried not just about the health impact of Covid, but the impact on their income. The first thing I wanted to say is that please let us help you in any way we can. We have a community of over 13,000 Bits users across 505 cities in the UK now. Let's help each other. I'm not sure how, but email me your thoughts and I'll see what emerges from it. For this week's newsletter, our team has prepared for you a 10 point guide on things you might want to do to prepare yourself financially for Covid. I hope you find this useful. Best, Fez
1. Preserve cash This is the golden rule to live by over the next few months. Watch what you are spending on, and try to save wherever you can. On the other hand, if you already have savings, then preserve them. Defer major expenses for now. Budgeting apps like Plum and Emma do a great job of helping you track your finances. Download them now if you don't have them already (note: we do not make money for these recommendations!). 2. Switch to a pay as you go travel pass If a shutdown happens in major cities in the UK - as it has in Italy - then your monthly travel pass will be a bit of a waste. Are you looking to renew it? If so, maybe you should consider switching to pay as you go for a while. Why pay for a monthly pass that you may not end up using over the next few months. 3. Build credit This is probably the most important one for people on this mailing list. The worst case scenario is that you run out of money and need to use credit. You need to start building credit now, to make sure it's in good shape for you if you need to borrow. You don't have use Bits - do whatever you think is best. But do it. Access to credit will be vital for you if this economic downturn continues. 4. Watch your subscriptions You'd be surprised at how much of your monthly income gets eaten up by direct debits and monthly subscriptions. Track it. Cancel stuff you don't really need. 5. Don't be afraid to ask for help The FCA has told lenders that they need to work with borrowers who are affected by Covid and need more time to pay back. Use this opportunity to ask for more time to pay back lenders if you need it. If you do need to ask lenders for more time, make sure that they don't charge you 'extra' for it, and specifically ask them how they will give you this extra time. Will they report it as an extension in the term of the contract? Get into the weeds. Ask questions. Don't let lenders take you for a ride - the FCA has them on the metaphorical 'back foot' right now.
6. Stay healthy If you're healthy, you can work. If you aren't, you can't work. Simple. Make sure you follow all the best practices that are now everywhere on the internet: wash your hands, etc. 7. Ask for credit limit increases Do you have a credit card already? With Bits or elsewhere? Are you in good standing on it? Ask for a limit increase. Get that extra cushion. 8. Refinance to a lower rate The Bank of England announced yesterday that it is dropping the base rate. Basically, this means that interest rates on loans should come down. If you have good credit, try to refinance existing loans to a lower rate. This is a good time to do it - if you can. 9. Build credit Did I mention this already? :) I genuinely believe that - after cash - it's the best armoury you can have to defend yourself against an economic downtown. The difference between a good credit score and history and a bad one means thousands of pounds in 'extra' fees. Many of you have lived through the hell of dealing with lenders from Pluto - please don't make that mistake again. Treat your credit as a sort of 'nuclear option'. It's there if you need it, to get a great rate on a loan or card. But really, the goal is to build cash. Cash is king. 10. Read your emails and keep talking to friends These are strange times. Many companies are offering really good deals to help consumers weather Covid. Read your emails. Track the shops you shop from on social media. Don't be surprised if you see some ridiculously good deals on offer. Also: keep talking to your friends. We are in unchartered territories right now. No one's been here before. There is no blueprint for this. Speak to friends. See what they're doing. How are they planning for an economic downtown. Learn from them.