Managing your finances during a crisis

Market volatility and indefinite lockdown have created a financial crisis. Looking after your money has never been more important.

Article updated: 3 April 2020 12:00pm Author: Lucinda Gregory

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Market volatility and indefinite lockdown have created a financial crisis. Looking after your money has never been more important.

In this time of uncertainty, it’s vital to keep an eye on your finances. You might be bringing home less each month than you had been, or you may have seen some previously well-placed investments take a hit. No matter what your specific situation is, it’s a good time to review your financial situation.

Time to review or even start a budget

While it may not seem exciting, budgeting is crucial. Take the time to undertake a thorough review of your outgoings and be ruthless, listing all non-essential expenditures. Look at your household bills – mobile phone, TV, gas & electricity. Are you overpaying? Now is the ideal time to see if you can switch providers for a better deal.

Review your monthly subscriptions

Many of us have annual memberships or monthly subscriptions for things like season tickets and streaming services. Sky Sports has recently announced they will allow customers to pause their subscriptions and many gyms are also doing the same. Get in touch with your service providers and see what they can do for you. If you’re unable to get a refund for unavailable services, you may be able to get an extension to your membership.

Think about your energy costs

With the UK in lockdown, many people are now working from home while their children are either home schooling or chilling out in front of the TV. With heating and appliances on full blast, energy bills are going to increase. Here are some tips to try and keep your costs down:

  • Turn off your TV and lights when no-one’s in the room
  • Switch off radiators in rooms you’re not using
  • Get the kids involved if you have a smart meter and challenge them to keep their usage down

Remember: all of the above is good for the environment, not just your pocket.

Don’t put your head in the sand

If you recognise you may not be able to make regular payments such as your mortgage and council tax, take control of the situation. Mortgage lenders have recently announced they may offer support, though decisions will be made on a case-by-case basis. Similarly, some water companies in England and Wales have put in extra support. Pick up the phone to your providers and be honest. The worst thing you can do is stick your head in the sand and hope it will all go away.

Don’t deal with your worries alone

Money worries can become overwhelming, affecting both your physical and mental health. This is likely to be compounded further due to the current uncertain times we’re living in. If the worry of dealing with your finances becomes too much, there are people and organisations out there who can help. The mental health charity, ‘Mind’ has a ’Money and mental health’ section on its website and Citizens Advice Bureau has lots of information on help with debt.

Investing in the stock market

If you have money invested, you’ve no doubt seen the value of your pots decline over the past few weeks. Global stock markets have seen their sharpest fall since the Great Financial Crisis of 2008 and further volatility continues as concerns grow. It can be difficult in these unprecedented times to assess how to proceed with your finances. When investing in uncertain times, there are some important things to remember:

Re-evaluate your goals and attitude to risk

It’s important to re-evaluate whether your original risk profile and investment goal are still the same. If your portfolio isn’t in line with your current situation, you risk being vulnerable to more losses than you’re comfortable with right now.

Diversify

Minimise your risk of losses by ensuring all your eggs are not in one basket. True diversification, alongside a long term investment goal, will see your risk greatly reduced and is one of your best defences against a volatile market.

Diversification does not simply mean investing in a large number of companies. Ideally you should have a mix of asset classes such as equities, bonds, cash or commodities. A combination of different sectors and geographical regions will further spread your risk.

Invest regularly

The best way to invest and manage your risk in uncertain times is little and often. Investing a large lump sum on one day can expose you to the higher risk of buying when the market is peaking, whereas investing little and often can reduce the average price per share.

Be patient

When investing in the stock market it’s important not to be tempted to sell simply because an asset suddenly loses value. Panic selling in the current period of uncertainty will simply ‘lock in’ your losses. Focus on the long term and not what’s happening today as statistically, volatility reduces dramatically the longer you hold your investments.

Keep Calm & Don’t panic (Mr. Mannering!)

Fear is ingrained in our psyche and can hold great influence over our investment decisions. While a little fear can be healthy, ensuring we evaluate our investment decisions, it’s important not to panic in times of market volatility.

Remember: volatility can be the friend of the unemotional, patient investor, offering the opportunity to buy lucrative shares at bargain prices.

Keep an emergency cash pot

In volatile times such as these it’s very important to have a cash pot, ideally of three month’s salary, for emergencies. You don’t want to be forced to liquidate your investments at the wrong time and having cash for short term needs will allow you to ride the waves of the stock market in uncertain periods.

Stay home, stay safe and wash your hands

The most important thing in these worrying times is the health of you and your loved ones. Though none of us have a crystal ball as to when, history dictates the markets will eventually bounce back and you’ll want to make sure you’re able to reap the rewards. So please follow the government guidelines, and stay home and stay safe.

Find out more about other things to consider in volatile markets conditions.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Lucinda Gregory

Investment Research & Guidance Manager

Lucinda has significant experience working in the fund management industry having previously worked at J.P. Morgan. She currently manages our team of analysts who are leading the company’s sell-side proposition and are responsible for our range of preferred lists.

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