How to turn ‘social distancing’ into a win for your wallet

It’s quite hard to find the silver lining to the current Covid-19 outbreak. The number of cases is rising, the economy is already registering a significant impact and we’re only really a few weeks into the UK’s coronavirus story.

But there is one potential benefit. If more employers agree to allow their staff to work from home then we could see a significant culture shift that, in the long term, benefits workers by reducing the hours (and cash) they spend commuting and helps them achieve a better home and work balance.

If you’re working from home or quarantining yourself because of coronavirus, then you may have more free time than usual. Using that time to sort through bills, savings and even pensions means it’s not wasted.

“Anyone run ragged by everyday life could be forgiven for thinking self-isolation has its attractions,” says Sarah Coles, personal finance analyst at Hargreaves Lansdown.

“But once you’ve spent a few days in your PJs and watched a box set or two, the joys of a fortnight at home can start to pale. When you’re several days in, and have even considered sorting the cutlery drawer, it’s worth remembering the odd financial jobs you’ve been putting off.

“Not only can you get them out of the way – but you could leave yourself hundreds of pounds better off too.”

So here are some quick wins you can take to boost your financial situation so that when this is all over, both you and your finances are fighting fit.

Sort your bills

Most of us have so many bills and subscriptions coming in and out that it’s hard to think about more than one at a time, but spending some time going over them can pay substantial rewards.

Give yourself an hour to look at what payments are leaving your account and double check whether you a) need them at all or b) could get that service cheaper elsewhere.

Laura Suter, personal finance analyst at the investment platform AJ Bell, has worked out that people can potentially save thousands a year by shopping around, cutting their bills and cancelling unused subscriptions.

For example, switching energy supplier can typically save £300 or more, while Citizens Advice says the average UK person wastes £640 a year on unwanted subscriptions.

“Everyone would like an extra £5,000 [on their] salary and you can generate that yourself fairly painlessly,” says Suter.

“If you’re someone who doesn’t regularly shop around each time a contract needs renewing, offer period ends or savings rate matures, you could be paying way over the odds for basic bills like broadband, energy, mobile phones and your mortgage.

“This is particularly the case when you include other areas, such as your TV package, your gym membership or other subscriptions you have.”

Boost or start some savings

Once you have cut down on your bills and spending, it’s about ensuring you have sufficient savings to handle a future crisis, especially if the economy takes time to recover from the impact of coronavirus.

A recent survey carried out by Nationwide suggests that around 12 million adults don’t have a savings account, while almost half of people who do save £100 or less a month. Almost a quarter of people have no savings at all.

Now is a great time to fix that.

OK, a period of self-isolation may not be the ideal time to actually start saving, especially if you’re one of the many self-employed workers who may not be getting paid for the enforced time off. However, you can take steps now that will make it easier to save when the current storm has passed.

For example, drawing up a budget so you know how much is coming in and going out each month and can manage your discretionary spending more effectively. That will help you budget for savings and also ensure you don’t run out of money in the final week of each month.

You could look at ways that tech could help you do more. For example, there are some apps and challenger banks that make it easier to move money into savings by rounding up your day-to-day spending and putting the extra into a dedicated account. There are even some that use algorithms to work out what you can afford to save and move it for you.

And if you’re already a saver then now is the time to check you’re on the right rate. Coles adds: “There’s no denying that rates are pretty low across the board, but if your cash is languishing in an easy access account with a high street giant paying 0.25 per cent or less, you can get up to eight times the interest by switching to a newer bank and tying your money up for longer.”

Sort (and sell) your junk

Becky O’Connor, personal finance specialist at Royal London, says this is the perfect time to make some space and even some money.

She says: “You’ve finally got some spare time to dig out that old box of toys from the loft and unworn ski gear in your wardrobe.

“Take pictures of unwanted items and sell them on second hand sites like eBay, FaceBay, Shpock or Gumtree. Specialist sites sometimes fetch higher prices. Old electronics and games cluttering your living room can be sold on websites such as zapper.co.uk.”

Move your mortgage

High up on the list of boring jobs it’s easy to put off is changing mortgage provider. It’s dull, it can take time, it requires you to dig out paperwork that you’ve probably left in a pile under another pile.

But if you are out of a specific deal and languishing on your lender’s standard variable rate then spending some time switching can pay a serious dividend.

Coles says: “If you haven’t moved your mortgage in a while, and you’re on the standard variable rate, this is a brilliant opportunity to cash in on rock-bottom rates.

“You can use the time to search for a better deal online, or call a mortgage broker for some long-distance advice. You could save over £1,000 a year.”

Prioritise some pension planning

Now is not the time to make any sudden decisions about your current pension arrangements. The global economy is reacting to the coronavirus fallout and it’s sensible to keep a clear head and think carefully.

But if you’ve not really thought about your pension planning and provision then now could be a good time to do just that.

If you are in a workplace pension scheme then ask for more information or look through your paperwork to find out what you are paying and whether your employer would contribute more if you also paid more in.

Michelle Gribbin, chief investment officer at Profile Pensions, recommends understanding your pension provision by asking certain basic but key questions like: “Who holds it and what type of scheme do you have? How much is paid in each month and by who and how much will each pot generate in retirement? These are all good questions to start with.”

If you want to better understand your current pension situation and your options then a good place to start is The Pensions Advisory Service, which can offer guides, webchat and even help via the phone.