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Covid one year on: What you can do if you’ve been struggling

Money is tight for millions of people due to coronavirus, but there are ways to tackle your financial worries and claw your way back into control.

More than a quarter of people in the UK have suffered a drop in income since the start of the pandemic, while a similar number have seen their household outgoings increase, according to research by insurer Royal London. The self-employed, renters and those on lower income have been particularly hard hit.

Faced with falling income and rising bills, many of us have been forced to raid savings and rack up debt. Furlough schemes and repayment holidays have provided a financial lifeline, but these measures will not last for ever.

If you are feeling overwhelmed, follow these steps to get back on a firmer financial footing.

Cut costs

Start by working out where your money disappears.

Trawl through your bank and card statements, or log into online banking, to identify all your direct debits, subscriptions and regular payments.

Think ‘ditch or switch’ - cancel where possible, and if you can’t, look for a better deal.

You could save loads by switching suppliers for household bills such as gas, electricity, landline, mortgage, mobile, broadband and insurance, without affecting your lifestyle in the least. Compare the Market can help with this.

Ditch services and any subscriptions that you no longer want or need, such as the gym you don’t use or the magazine you don’t read.

Then consider tougher decisions, such as paring down TV services, pausing savings and stopping charitable donations.

If it feels hard, remember it needn’t be forever, just until you’ve got your head above water.

Elsewhere, food is one of the biggest bills for many families. Slash bills by planning meals, shopping at a lower cost supermarket, switching to own-brand and value ranges and ditching takeaways.

Next, start a spending diary and strip out non-essential spending where possible. Question every purchase:

  • Do you really need it now?
  • What could you use instead?
  • Any way you could get it for free or for less, for example by borrowing or via a website like Freecycle?

One of the few silver linings to lockdown is that there’s limited chance to spend money on socialising, travelling, eating out and entertainment.

More than a quarter of people in the UK have suffered a drop in income since the start of the pandemic

Deal with debt

Expensive debts can really drag your income down – and the pandemic hasn’t helped reduce the amount of borrowing as figures from Royal London show that 14% of consumers have taken on more debt since Covid-19 turned the world upside down.

If you are drowning in debt, aim to tackle each one in turn, starting with the most expensive interest rates.

Switching debt to an interest-free credit card, if your credit score is strong enough, could buy the breathing space to clear the balance, without extra interest mounting up. Use a credit card eligibility checker like this one to find out what credit cards you are eligible for without harming your credit score.

If you still have any savings, earning next to nothing in interest, consider using them to pay down debt.

That may feel painful but remember every debt you clear frees up cash to repay the rest, before you can start rebuilding your savings.

Take advantage of tax breaks and benefits

Claim any money you can.

For example, if your boss has required you to work from home during the pandemic, even for just one day, you can claim £1.20 a week in tax relief for the whole 2020/21 tax year.

If you’re married or in a civil partnership, check out the Marriage Allowance. If one of you is a basic-rate taxpayer, and the other doesn’t earn enough to pay income tax, it is worth up to £250 for the current tax year. You can even backdate claims up to four years, and potentially claim up to £1,188.

Make sure you also claim any benefits and grants to which you are entitled, including Universal Credit if your income has tanked.

Start saving

It may be hard to imagine being able to set aside any spare cash, if there is already too much month for your money.

But Covid-19 has certainly proved the need for rainy day savings to cope with storms ahead. Experts advise keeping building up three to six months expenses in an emergency fund. If that seems unachievable, remember even £1,000 or £100 can help when times are tight. Consider using an automatic savings app to help squirrel away small sums each week.

Increase income

Costs can only be cut so far, so think of ways to increase income too?

If you are spending more time at home, find stuff to sell using sites such as eBay, Facebook selling pages, Gumtree, Vinted or Depop. A lot of us have clothes we haven’t worn hiding at the back of a cupboard that could be someone else’s dream buy. Zap barcodes and sell books, music, DVDs, tech and computer games via Money Magpie or Ziffit.

If you do shop for any essentials online, it’s possible to get some money back on your spending, using free cashback websites such as Quidco and TopCashback.

Seek help

If you struggle to cover your bills and debt payments each month, get help.

Talk to your bill providers and lenders to see if it’s possible to decrease or delay payments. Consider seeking debt advice for free from a charity such as StepChange or National Debtline. If you are self-employed, Business Debtline could also help.

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.

The information in this article does not constitute financial advice. Before making any financial decisions always do your research or speak to a financial adviser if you’re unsure.

Any tax information is our understanding of current UK taxation law which might change, the amount of tax relief you receive will depend on your personal circumstances.

3 things to do
right now


Download a money management app which analyses your spending.


To avoid the urge to impulse shop, cut the cord and mass unsubscribe from company emails with a service like Unlistr. With less temptation, you'll save a fortune without even realising it.


Cut your food bills by reducing the amount of wastage. Stick one of your weekly food shop receipts on your fridge. As you throw food away, take a pen and cross it off the receipt. The next time that you go to the supermarket, you will be able to see what food you have wasted – and what’s left is a list of the only food you need to buy.

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