Wednesday, March 18, 2020

Savings warning: 'First step' to reduce 'financial shock' risk during coronavirus pandemic

The coronavirus outbreak has seen 2,626 cases being confirmed in the UK, as of 9am on March 18, Public Health England has said. In addition to the health aspects of the outbreak, the pandemic is affecting – or could affect – many when it comes to personal finances.

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For some, unfortunately, the pandemic could see some struggle to make ends meet.

Worryingly, research from Aldermore Bank, shared exclusively with Express.co.uk, has found that almost half of 55 to 64 year olds (43 percent) have no savings set aside for major life events – such as bereavement, illness, legal trouble, or periods of unemployment.

Earlier this week, Sara Willcocks, Head of Communications at Turn2us, spoke to Express.co.uk about options people may have if they’re struggling with the economic impact.

“There is financial support available to people struggling with money due to COVID-19,” Ms Willcocks said.

“People can claim benefits like Universal Credit or ESA from the government, or alternatively they could get Statutory Sick Pay from their employer.

“There are also millions of pounds available in grants from charities which you don’t have to pay back.

“Charitable funds exist to support people in the face of life changing events like this.

“We urge anyone who is affected financially by the coronavirus outbreak to visit the Turn2us website and find out what benefits they are entitled to and what grants they are eligible for.”

Elsewhere this week, Gordon Andrews, Quilter financial planning expert, has commented on the importance of cash savings.

Mr Andrews said: “Unfortunately, the impact of this virus is likely to have a lasting financial impact on households across the UK.

“It seems inevitable that some employers will come under pressure and job security may become a concern for people. And there will be worries for people about the financial impact if they or a family member were to contract the virus and suffer complications.”

So, is there a way in which people can prepare for an unprecedented financial setback?

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“Preparing for a financial shock like this is extremely difficult, particularly when combined with the obvious concerns about our own health and the consequences of this pandemic on wider society,” the financial planning expert explained.

“However, there are steps that can be taken and those that have some defences in place will at least have reassurance that from a financial perspective they’re braced for what could be a bumpy ride ahead.

“It is absolutely crucial to have a cash savings buffer in place.

“Without some cash readily available, families can be extremely vulnerable to a financial shock and will struggle severely if they were to lose their job, or confront an unexpected bill.

“Research from the UK’s national Money & Pensions Service shows that 71 percent of UK adults get an unexpected bill each year, and an estimated 11.5 million people have less than £100 in cash savings to fall back on.”

Mr Andrews went on to suggest actions which a person may be able to take in order to cope during this time.

“The first step is to calculate your monthly outgoings on essential items like bills, mortgage payments and food,” he said.

“Use those calculations to work out your costs for three to four months and try to keep that much in easily accessible cash savings at all times.

“If you don’t already have those savings in place, try to build on any cash reserves you do have.

“This can provide a crucial buffer against a financial shock, preventing the need to turn to short term borrowing, such as credit cards, to meet day to day expenses.”

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