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No income and no savings

Yesterday I posted the graphic above on my Facebook and Instagram channels. The quadrants represent four possible situations you could be in right now with your finances.

  1. Income and savings
  2. Income but no savings
  3. No income but savings
  4. No income or savings

I’m starting this short mini series tackling each of these quadrants in turn.

The aim is to help you to navigate financial uncertainty at this time, based on your personal situation.

Wherever you sit in the quadrant today, it’s useful during this turbulent time to be aware of the guidance for the quadrants you could potentially move in to if your circumstances change, and start thinking ahead.

I’m starting today with this short guide on what to do if you now have no income and you have no savings to fall back on as these are the most vulnerable group.

no income and no savings

Reassess ALL your costs

If you have no income and no savings, you need to get your expenditure down to the minimum which is essential.

It is vital that you prioritise reassessing all of your expenditure, take stock of what you have and start to be as resourceful as possible with what you have around you.

Any expenses which are not critical, stop as soon as practical.

What are your critical expenses?

If this time has taught us one thing, it is how little we need to actually survive. How many things in life are truly essential? We all need a roof over our head, food, warmth and companionship. Beyond that, many things are wants rather than needs.

Those which are critical – mortgage/rent, groceries, utilities – pick up the phone to your provider and ask what options are available to you. Ask if you can reduce your bill or defer payments to a later time.

Ideas here:

  • If you are a couple who don’t live together, can you move in to one place and reduce rent costs?
  • I have heard that our local council is allowing April and May council tax to be deferred to Feb and March 2021 which are the months when no tax is paid if you choose to spread it over 10 months.
  • Take advantage of the mortgage holiday scheme and payment holidays with any loan or credit card providers.
  • Speak with your landlord to put together a plan for deferring your rent.
  • Be creative with meal planning, and make sure you are using what you already have.

Prepare a new spending plan

Once you have all this information on what your new immediate costs are, you can prepare a new spending plan to see how much money you need to cover your costs.

I’m not a fan of the word budget as regular readers will know. At a time where it can feel that you are being squeezed from all sides, feeling restricted is not helpful.

Instead, develop a spending plan for how you intend to spend money on essentials. You may want to do this for a few months as some expenses which can be deferred will have to be paid at some point. Having this foresight gives you better information for planning, rather than just living in the moment.

Clarify what funds you have available

How much money do you have in the bank right now?

Using your spending plan above, how long will this last? Whilst the result might make you feel panic, burying your head in the sand in not going to get any results. It’s important to face your situation head on. The knowledge you gain by doing this exercise allows you to prioritise what actions to take next.

Apply for government support

Getting money coming in to support your basic living costs has to be your priority.

The government has announced a raft of support measures. Prioritise understanding what is available to you and making time to apply.

It isn’t black and white for many people which is causing confusion and anxiety. One easy trick to move away from those unwanted feelings is to focus on what you can control.

Choose one action to take at a time and focus just on that one thing.

Avoid turning to social media to answer your questions. It isn’t a good use of your time and is not guaranteed to give you the right answers.

I know there are long delays on the phone lines and reports that banks are not playing in accordance with the government’s guidelines, but persevere. You need to have applied in order to be in queue for this support.

Can you borrow from family?

Government support isn’t going to result in an immediate cash injection in to your bank unfortunately. There will be a time lag between application and receipt of any available funds.

What alternatives do you have to get hold of some money? Can you borrow from a family member? Often we don’t truly understand other people’s financial situations as we are conditioned not to talk about money; it’s still one of the greatest taboos of our society.

Now is the time to talk money.

The only way to find out if someone else has the ability to support you during this time is to ask. There is no shame.

New opportunities

What opportunities do you have to create a new income?

There are thousands of positive stories flying around of people using this time to pivot their businesses online, or starting up online businesses doing something that they always wished they had time for. I’m not saying that there is a magic wand, but find the silver lining and look for opportunities to create a different source of income.

Credit as a last resort

Long time readers will know that I would never advocate using debt to support your costs of living. However, we are not in normal times.

You may find applying for new credit difficult right now with many lenders withdrawing 0% transfers. If you think you are going to need to rely on this option, look in to it before the options available shrink.

If you have exhausted every other option for keeping yourself afloat, use credit only as a last resort.

Remember, this will pass.  Remember you are not alone in this situation.

If you are feeling panic and overwhelm, do not make important financial decisions while in this state. Do not react in fear. Wait until you can make a more considered choice around your actions.

My emails are always open if you need to talk to someone : [email protected]