Six financial fears affecting us all right now

With many of us experiencing income shocks right now, our money worries have, understandably, escalated.

Nearly a third of people in the UK have already seen their household incomes hit by the coronavirus pandemic, consulting company Kantar recently found, while a separate survey from Hargreaves Lansdown revealed a quarter (26%) of people in full-time work are worried about losing their job.

It also found that a fifth of people aged 35 to 54 are worried about not being able to pay their debts or bills. And around one in 10 (11%) are worried about spending all their savings, rising to one in five (19%) 18 to 34-year-olds.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says: "There's so much we can't control at the moment, but we can protect ourselves from financial disaster with the right preparations and planning. There are some simple steps we can all take to put ourselves in the best possible position if our worst fears become a reality."

Here are some common financial fears for households highlighted by Coles - and her suggestions for tackling them...

1. Losing your job

It makes sense to plan for what happens if you lose your income. Try to build up as much of a savings safety net as possible while you're still working, so you have something to fall back on.

An online benefits calculator will help you work out what you'd be entitled to, so you know what you're preparing for. And some firms may still be hiring, so consider keeping an eye open for other jobs, or at least updating your CV so you're prepared.

2. Paying the bills

Many people have seen their income fall in recent weeks.

The faster you take action, the better. This should start with a budget, so you can see how much of your spending needs cutting. Cut out luxuries, shop around for cheaper essentials, and see where you stand.

If that still leaves you unable to cover bills, talk to everyone you owe money to. Firms such as mortgage and credit card companies are offering flexibility, so they should work with you to find a solution.

But that doesn't mean you should take up all the payment holidays on offer, because you will be putting off debts you have to repay later. Consider just how much you need to cut and the best way to do it.

3. Tumbling investments

Stock market falls mean investments have been declining in value - including pension funds.

If you're investing for the longer term and have a diverse portfolio, the best approach might be to sit tight and focus on your end goal.

However, if you're drawing from your pension, you need to be aware of where you stand. You may not be able to draw the same sums from your pension without having a disproportionate impact on the cash you have available later in your retirement. So, it's worth understanding whether you need to cut your costs in order to draw less from your pension at the moment.

4. Spending all your savings

The situation right now is exactly what emergency savings pots are designed for. It's still vital to cut your costs, so you work through savings as slowly as possible, but you shouldn't feel guilty if you need to use some of them.

Once the crisis has passed and your income has returned, it will be vital to build up savings as quickly as possible, but for now, try not to feel bad. Many providers are allowing people to access fixed savings pots early without penalties - so check what yours says.

5. Not being able to buy what you need

The good news is that after the initial shock, supermarket stocks have been getting back to normal.

If you can't get to the shops, your neighbours may be able to help. Many communities have also set up local hubs, with people living nearby offering to collect shopping and prescriptions. You may receive a leaflet through the door, or you could check with social media groups.

6. Working from home

Many people working from home will have faced various teething problems, which may have been overcome by upgrading to faster broadband or finding desk space.

For some, the biggest challenge is that children are also home, needing hands-on care. It may be worth seeing if you can change your working hours to manage childcare more easily.

HOW TO... BEAT THE BILLS

Spring usually means a fresh start, a new financial year and turning over a new leaf. But for many households this year, the focus is on getting through the coronavirus pandemic, helping friends, family and neighbours, and adapting to the changes in society.

Despite what's going on in the wider world, that doesn't necessarily stop the bills landing on the doormat or in email inboxes though. While there are some bills you can't change the size of, there may be some room for manoeuvre with others. Here are some tips from Martyn James, a consumer rights expert at website Resolver.co.uk...

Council tax

The help available may depend on where you live. If you're struggling to pay, check with your local authority.

Make sure you're claiming any council tax reductions you may be entitled to, for example, if you live alone. People on a low income or who claim benefits may be able to apply for a council tax reduction. More information is available at gov.uk/apply-council-tax-reduction. You could also try to claim money back if you think you have been overcharged previously.

Energy

With warmer weather here, we often forget that this is a good time of year to switch energy providers. Winter is when our energy consumption is normally highest, so take a meter reading and give it to your current provider, so you know exactly what you owe. This also gives you time to dispute anything if you're not being billed correctly.

From speaking to Resolver's users, the choice of providers and the complexity of energy tariffs can put people off switching. But you could be throwing away hundreds of pounds a year - so think of what you could do with that cash, and set aside time to look at your options. MoneySavingExpert.com's Cheap Energy Club could help.

Other outgoings

If you're struggling financially, don't suffer in silence. Seek help now. Speak to the businesses you owe money to and ask them to come up with plans to help you get some breathing space. Charities such as StepChange Debt Charity can help if it's got really difficult. And Resolver can help you make a complaint if the business isn't playing ball. Resolver is providing updates, tips and advice to help people through the coronavirus crisis at resolver.co.uk.

POUNDNOTES

Financial fact: Savings deals are vanishing from the market at the fastest rate seen in records going back to 2007, according to financial information website Moneyfacts.co.uk. April saw a fall of 180 savings options month-on-month - the biggest decline Moneyfacts has on its records starting in February 2007.

£4 MILLION OF GRANTS WILL BE OPEN FOR APPLICATIONS FROM SUMMER

Nationwide Building Society said it is unlocking £7 million to support charities across the UK during the coronavirus outbreak.

Around £3 million of funding is being released to around 100 charities and organisations. A further £4 million of grants will be open for applications for charities across the UK in the summer and will be awarded later in 2020.

Nationwide will be providing individual grants of up to £50,000 per project. More information can be found at nationwidecommunitygrants.co.uk.

ONE IN THREE HOUSEHOLDS SAW INCOME FROM EMPLOYMENT FALL IN APRIL

Around one in three reported a drop-off in their employment income in April, according to an index. The IHS Markit UK Household Finance Index (HFI) - which measures overall perceptions of financial wellbeing in the working age population - plummeted to 34.9 in April, its lowest reading since November 2011. Readings above 50 indicate that people think their situation is improving and ones below this level suggest it is getting worse.

NS&I DROPS PLANS TO MAKE SOME PRODUCTS LESS GENEROUS

Savings giant NS&I has ditched some plans to make products less generous, including previously announced changes to Premium Bonds. The Treasury-backed provider, which offers a range of savings and investments products to 25 million customers, said the cancellations to its planned rate reductions will help support savers during the coronavirus pandemic. Variable interest rate changes announced on February 17 have been cancelled - however, previously announced cuts to fixed-term products were still due to go ahead from May 1.