If the pandemic has taught us anything, it’s that we never know what is around the corner. Many of us will face financial challenges, usually because our income drops, or we have to take time off work. If you are recovering from an illness or injury, or your hours have been reduced as part of a cost-cutting measure, this guide contains useful information to help you bridge the gaps.
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Benefits and financial support
The first thing to do if you’ve had to take leave due to illness or an accident is to see if you are eligible for financial benefits or support. You may be able to claim payments to tide you over or help you out. You could also seek advice from nonprofits and charitable organizations if you’re struggling with issues, such as clearing debts or covering bills as a result of your income dropping substantially. There are ways to manage debts and steps you can take to prevent them from spiraling out of control. Many organizations offer free advice over the phone and video online chat services. If you think you may be entitled to financial assistance, research online and find out what you need to do to access your payment.
If you are taking time out and you have a job, check the terms of your employment contract. You may be entitled to continue claiming your normal wage for a period and this may be followed by a reduced payment. Employers vary in terms of the conditions, so read your contract carefully.
Legal advice
Accidents happen, but sometimes, they are avoidable. If you have been injured at work, or you had an accident in a public place due to somebody else’s negligence, you may wish to consider contacting a legal firm to see if you have a case for workers comp or slip, trip and fall compensation. If you were not at fault for the incident, you could make a claim. If your case is successful, you could use your compensation payout to cover medical or rehabilitation costs and ease financial pressure if you have bills and a mortgage to pay. It is worth noting that if you have lost income or had to stop working as a result of the incident, this will be taken into consideration when deciding whether to approve the claim and calculating the value of the compensation payment.
Budgeting and reducing spending
If money is tight and the future looks uncertain, it’s wise to try to reduce spending and draw up a monthly budget. Analyze your most recent statements and go through your transactions and standing orders. Highlight areas where you can make cutbacks. If you have subscriptions or memberships you don’t use, for example, cancel these payments. You can also use your budget to set spending limits on groceries, going out and buying non-essential items. Shop around for the best deals to lower monthly spending and think about whether you need to buy items and products before adding them to your cart. Try to save as much as possible. If you tend to get tempted to splash out, transfer money to a savings account each month and put a limit on your credit card.
If you’re not used to budgeting, it’s very easy to get started. You can use apps, a spreadsheet or a notepad. Create three columns and add your income, your regular payments and one-off charges for that specific month. Once you have all the figures, you can calculate your disposable income and decide how much you want to spend or save. Adjust and update your budget as you go and try to use exact figures, rather than estimates.
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Alternative ways to earn money
If you’re not able to work, or your hours have been cut, it may be possible to use alternative sources of income to help you increase your earnings. There are jobs you can do from home if you’re not able to get out and about and you can also explore casual, part-time money-making opportunities. Examples include taking part in surveys, creating online courses, blogging and buying and selling online. You might also be able to utilize your skills and interests to set up a side hustle. From baking and making cards and gifts to tutoring and freelance consulting, there are endless options to consider. If you are looking into a different kind of work, it’s wise to check the terms of your employment first to make sure that you’re not breaking any rules.
Borrowing
Many people choose to borrow money when their income falls and they have payments to cover. Borrowing can be beneficial, but there are risks attached. It’s crucial to make sure that you can afford the repayments and check the terms and conditions carefully before you take out a loan or put money on a credit card. Some loans have very high interest rates. Try to avoid these products, as you may find it difficult to keep up with the repayments. If you need a small amount of money to tide you over until your next payday, it may be better to ask a close friend or a relative for a loan rather than to apply to a lender. If you do take this route, make sure there is a clear deadline and don’t promise anything you can’t deliver. It’s best to be open and honest about how long it will take you to pay the money back.
If you are in a situation where you are borrowing more money, or you are using credit cards more, seek advice. Debts can spiral very quickly when high-interest loans and cards are involved.
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Staying in the black is difficult enough without having to worry about taking time off work or having your hours cut. If you are trying to bridge gaps, find out if you are eligible for support, read the terms of your employment contract and try to reduce spending. Seek legal advice if you think you might be eligible for compensation and consider other ways to boost your income. Borrowing may be an option, but it can be risky. Make sure you can afford the repayments and you understand the terms and conditions before applying for a loan.
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