How to live on 80% of your usual income
The government’s coronavirus job retention scheme, which paid 80% of the wages of around 9.5 million people back in March is back.
A recap on the furlough scheme
Anyone working in a full-time job, or on a PAYE basis on October 30th can be furloughed. This includes those people on zero-hour contracts or those working flexibly. The government will go back to paying 80% of wages up to a maximum of £2,5000 per month like it did back in March. If you are placed on furlough then you will still be paid by your employer and will still pay taxes from your income, but you are not able to continue working for your employer.
Managing your money on furlough
If you’ve found yourself living on much less money because you’ve had a pay cut, you’re on furlough or you’ve lost your job entirely, it might be useful to rethink your budget.
Our tips will help everyone, whether you’ve been on reduced income since March or are on furlough for the first time, we’re here for you. At 80% of your normal wage, coronavirus could be making a huge impact on your money and it might mean rethinking your finances in a pretty big way so you can stay financially secure throughout lockdown. Here’s what you can do.
Work out how much is coming in
If you’re on furlough, it means your employer will pay you 80% of your regular wages through the Coronavirus Job Rentention Scheme, up to £2,500 a month. Your employer will still pay you at the end of the month and you’ll still receive your normal payslip. Don’t forget even though you’re on furlough you will still pay your taxes. We’ve explained everything about furlough here.
If you’ve taken a pay cut but are still employed you can either find your total monthly income in our last payslip or if you haven’t yet been paid your furloughed income. You could use this salary calculator to work out 80% of your normal monthly income.
Work out how much is going out
To help you come up with the best budget possible, it’s important to gain an accurate reflection of what’s going out of your account.
Make a note of your income from the start of lockdown, then you can split your outgoings into essential payments and extras. Bills, mortgage payment, rent and food would come under essential payments. Whereas extras would be anything else that isn’t essential but you might like.
Once you have your expenses you can compare that to the income you worked out in the previous step. Then subtract your expenses from your total monthly income to find out if your income covers them and if you have any additional money. If you are left with a positive amount that’s great, you might want to use it to work towards your financial goals. You could start by paying off debt or building up an emergency fund savings account, which can act as a buffer during this uncertain time.
If when you minus your expenses from your income you are left with a negative number, you might have to rethink your budget for your reduced income.
Ways you can save money during coronavirus
With a little extra time on your hands, you might be able to rethink your food shopping list, opting for things a little cheaper but nonetheless delicious. With increased time spent at home, it might be the perfect time to cut back on those online shopping orders and hopefully, if you’re not one of our amazing key workers, you’ll be saving on travel. Now might be the time to cut back on some of those subscriptions you don’t use too.
Find what government support you are entitled too
There is an array of support out there for people suffering financial difficulty due to coronavirus, from mortgage payment holidays to accessing cash in fixed-rate accounts or Lifetime ISA’s. We’ve built a guide to your finances during coronavirus which covers all the ways you can get support from the government now.
Ultimately, this period of change is all about taking it easy on yourself and being kind. If you can work out places you can cut back on things that help your overall budget and therefore remove some financial pressure, you’ll be onto a winner.