The onset of the Covid-19 emergency has upended our lives and resulted in many people suffering significant reductions in income. These are unprecedented times and to compound matters, nobody can predict when it will pass and our daily lives begin to return to a state of normality.
With so many considerations, health, social, economic, financial well-being is also a major one for tens or hundreds of thousands of people across Ireland. This number can only be expected to grow as the Covid-19 emergency escalates. One thing is for certain, the entire period will be extremely unpredictable for all.
While this is an extremely stressful period, it is inevitable that various financial transactions are factored and planned for. Financial stress can have a serious impact of physical and mental wellbeing so you should look to reduce financial stress where you can. To achieve this, it is vital that a broad system of prioritising the most important financial considerations be put in place. In this article, we deal with how one can put a process in place that can reduce and eliminate financial stress.
Evaluate the situation – as soon as you realise you are in a financial emergency; it is vital you take some time to carefully assess your immediate situation. While Covid-19 represents a threat to each and every one of us, getting into a panic and becoming stressed will resolve nothing. Yes, a little panic can push us all to take action, what needs to be avoided is becoming so stressed, we become frozen by fear. It is vital that you are able to make clear decisions and avoid making mistakes that might cause increased hardship later.
Prioritise your expenses – a household has many expenses but some are more important than others. If you have lost income through redundancy or reduction in hours, it is important to list out your most important bills and take care of them first. To a large degree, some spending habits are now automatically off-limits under the Covid-19 emergency, including restaurants, cafés and bars. But there are other expenses that may be still being taken from your current account through direct debits that you will need to review without delay including online subscriptions.
Contact your lenders – all lenders are very aware of the seriousness of the Covid-19 emergency and the enormous financial well-being impact it will have. If you have suffered a significant drop in income, it is absolutely vital you contact your lender immediately. Starting a conversation and informing them of your financial situation is critical. Don’t make a decision to stop paying a mortgage payment, personal loan or PCP payment without first making contact. When you have definitive information in respect to a change in work conditions (dates for reduction in working hours or temporary redundancy), make contact and inform them, your lender may be able to offer you a number of payment options.
Find extra money - we actively encourage our members to have several months day-to-day living expenses saved by way of an emergency fund. However, these are extraordinary times and some people may not have the cash reserves. If you have access to credit and loans, use them as a last resource but don’t be afraid to use them. For example, if you have a credit card balance, switch to making minimum payments. Also, if possible, even look to switch credit card provider if you can get an interest-free period. You can check out the best deals on credit cards, including possible switching options at the Competition and Consumer Protection Commission (www.ccpc.ie) or on Bonkers (www.bonkers.ie). Switching for a 0% balance for an introductory period is the same as free money for that period. So, look to take advantage of what offers are available. As we keep saying, these are extraordinary times so lenders are generally looking to do all they can to ease the financial stress.
If you have some investments or even access to retirement fund tax-free options use them. While this is not an ideal time, it is a time to survive. If you are over 50 and have a private pension, it is possible to access some tax free funds of up to 25% of the current value (up to a max of €200K) from a Buy Out Bond or in cases where you are leaving service. In such situations, talk to your employer or pension administrator. There are also some tax-free pension options available to those with private pension funds where they are being made redundant so it is important to get specific advice from your pension adviser. You can also check out the Pensions Authority (www.pensionauthority.ie) or Citizens Information (www.citizensinformation.ie).
If you plan to talk to friends and family for financial support, do so with caution. Some people may have some financial cushions and may be able to provide temporary assistance, others may not so don’t take a refusal negatively, it could mean that people may not have the ability to offer financial support.
Take advantage of available supports – regardless of whether you are employed or self-employed, you are entitled to a range of financial supports, including job seekers allowance. If you lost a job, you may be entitled to a repayment of income tax so it is important you become familiar with these may relate to your immediate situation.
* People with no work or reduced hours - new COVID-19 Pandemic Unemployment Payment.
Your employer may decide to close their business for this period and send you home. This is called a temporary lay-off. If your employer cannot pay for this period, you can apply for a special new COVID-19 Pandemic Unemployment Payment.
This new payment will be available to all employees and the self-employed who have lost employment due to a downturn in economic activity caused by the COVID-19 pandemic. The payment has a simple one–page application form and will be paid for a period of 6 weeks at a flat rate payment of €203 per week for jobseekers. It is designed to quickly deliver a social welfare payment to the unemployed and provide income security during this 6-week period.
You can get the application form on gov.ie (pdf). You need to post the form to PO BOX 12896, Dublin 1.
If your employer reduces your hours to 3 days or less per week from your normal full-time hours, you can apply for a payment called Short Time Work Support which is a form of Jobseeker’s Benefit.
Find out more about lay-off and short-time working
To learn more, there are three primary State services where you now need to familiarise yourself with:
Revenue – www.revenue.ie
Citizens Information – www.citizensinformation.ie
The Citizens Information website is an excellent service offering a wealth of consumer information that spans many Government services. From it, users are often directed on a range of options available to them. In the meantime, protect yourself and your family. Be careful and be safe!