How to take back control of your finances after COVID

·5-min read
Financial awareness, especially in the face of a pandemic, is key. Photo: Getty
Financial awareness, especially in the face of a pandemic, is key. Photo: Getty

People can "take back control" of their finances in the face of COVID, the chief executive of a money guidance service has said.

Money and Pensions Service (MaPS) chief executive Caroline Siakiewicz said Monday's launch of Couch to Financial Fitness, inspired by Couch to 5K, will help the nation get back on track after the financial hit of the last year. 

It it available on the MoneyHelper website (formerly Money Advice Service, The Pensions Advisory Service and Pension Wise) – a new single destination providing free money and pensions guidance with government backing. 

Within hours of launch, Siakiewicz said there were "hundreds" of people using it, and 49 million people have used the advice on the MoneyHelper site over the past year. 

The chief executive said: "We've heard about the huge numbers of people who are struggling financially post-pandemic – 20 million people are saying their finances are in a worse state than they were before the pandemic started, which is a significant number.

"For me, it's about getting the message out there that you can take back control, and you can actually really start to get yourself financially fit by taking small steps.

"We are looking for it to make a difference."

The four-week programme – 'money essentials' – consists of activities to help people with budgeting, bills, cutting costs, and saving, which people can work through at their own pace. 

It is followed by a five-week extension – 'money milestones' – explaining issues around borrowing, mortgages, the financial costs of starting a family and saving for retirement, for those who want more in depth and specific guidance in those areas.

Watch: Should I pay off debt or save money during the coronavirus pandemic?

Josie, a 27-year-old single mother of two from Plymouth, took part in trials for the programme before launch, said it helped her learn "how to manage and organise my finances".

Josie was made redundant during the pandemic and relied on buy-now-pay-later schemes to provide a "good life" for her children.

"The programme put me face-to-face with debts I’d brushed aside over the years," she said. (Josie declined to giver her full name). "Thankfully, MoneyHelper put me in touch with a free debt advisor to get the emergency support I needed. Now I’m able to save at least something every month, and hopefully, in just over 18 months, I should be debt-free.

"Being more financially savvy has made me feel a lot better and I’m now feeling a lot more confident and positive about my future.”

Siakiewicz added: "Throughout the programme, there's various hand-off points. So if people start to identify that they need help now, then they can link through to advice or guidance at that point in time. We can hand people off to advisors who will actually help them straight away."

There has been more of a push to save during the pandemic, as people have faced uncertainty with government and employer furlough at times. Some have been forced to borrow, for lack of a safety net, and Siakiewicz warned of the importance of making sure certain products are right for each person.

"The important thing about any borrowing product is that people understand the terms and conditions", the chief executive said. "There is no such thing as a bad product. It's actually, is it the most appropriate product for what you need?"

On buy-now-pay-later (BNPL) schemes, she added: "There aren't the same level of affordability checks for people that you would get if you were going through a different kind of product. The other thing about that is that sometimes actually people don't know that they are clicking on the buy-now-pay-later."

Regularly reviewing your budget is important to keep track of your spending against your income. Photo: Getty
Regularly reviewing your budget is important to keep track of your spending against your income. Photo: Getty

Ctizens Advice found that of the estimated 14 million people who have used BNPL over the last year:

  • 26% have regretted using a BNPL product

  • 39% used it without realising

  • 42% didn't fully understand at least one part of what they were signing up for

  • 41% have struggled with making a repayment

Siakiewicz said: "There's something for me about transparency and clarity, making sure that people understand what they are doing.

"Understanding the impact and the implications of using certain products is really important so that people make that informed choice."

She highlighted the importance of regularly reviewing budgets, which are "dynamic" due to the changes in income and expenditure over the course of a lifetime. 

"Getting into the habit of saving is a really important part of being financially fit, because when things do change, you've at got a bit of a buffer. 11.5 million people across the UK don't even have £100 right now", Siakiewicz added.

MaPS has released a 10-year Strategy for Financial Wellbeing, with further delivery plans to be announced later this year.

Siakiewicz believes in understanding finances from a young age. MaPS sponsored Talk Learn Do, a programme to help parents teach their children about money management.

"Parents can play a really vital role in helping their children understand the choices around money, and just involving them in what you might buy from the shops, pocket money is also a useful tool," she added.

She noted that it would take "a significant amount to time" to see the true long term impact of the pandemic on national debt and personal finances, but added that "Help is there. The sooner you talk to someone about your financial situation, the easier it will be to get that help and turn things around. 63% of people who have had debt advice start to repay them within three to six months. You can find a way forward."

Watch: How to save money on a low income

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