Coping financially after furlough

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Coping financially after furlough
Everyone knows someone who's been furloughed.

Whether it has happened to you or your family and friends already – or your colleagues and managers are talking about it, it’s likely you have become aware of the phrase “furlough” since  the Coronavirus crisis began.

So we want to help you understand a bit more about what furloughing means and give you some tips on how to react if this happens to you.

Furlough 101

The Oxford Dictionary defines furloughing as “a period of time during which workers are told not to come to work, usually because there is not enough money to pay them”.  

What this means for working people is, the UK Government will help bosses by giving them a grant for furloughed staff, so that they can continue to pay them 80% of eligible furloughed staff’s wages – up to £2,500 (before tax) per month per person. Companies can apply for this grant via the Coronavirus Job Retention Scheme.

If you’ve been furloughed, by law, your employer is not allowed to ask you to work or to conduct any voluntary work if it benefits their business.  The move has brought hope for some employees, as the scheme frees them up to look for other work (unless their existing employment contract prevents them from doing so), whilst still receiving their furlough wages.

Maximising your lockdown income  

Furloughed higher earners will see the greatest reduction in their take-home pay, because of the £2,500 per month gross wage cap. Those who normally earn £30,000 per year or less are essentially taking a 20% cut in regular take-home pay for being on leave – albeit in lockdown – for at least three weeks, which is the minimum time employers are required to furlough people for. 

20% may not sound like a great loss, considering that you aren’t being asked to work as normal. But in real terms, if you earn £30,000 and you do not have any student loan or pension deductions to take into account, you will be losing roughly £400 per month after tax. For many, a large chunk. 

So here are some budgeting tips and tools that could help cover the shortfall:

  • Cancelling all non-essential Direct Debits, Standing Orders and Continuous Payment Authority monthly card bills such as Spotify, gym and cinema (especially since these places are closed at the time of writing) and digital newspaper subscriptions.
  • Changing the way we shop and eat may be one of the easiest ways to save. Padding meals out with frozen fruit and vegetables can make us feel fuller due to the increased fibre on our plate, meaning we can eat less of the most expensive items like meat and cheese. Cook from scratch, avoid takeaways and consider adding filling homemade soups to your menu rotation.
  • If welcoming a new lodger into your home to make ends meet is essential and you do have the space, consider using websites such as Spare Room to advertise. The Government permits house moves during lockdown if they are essential but bear in mind that you might end up having to self-isolate within the same home.
  • Check the websites or contact every single company that you pay on a regular basis to find out whether or not they are offering payment holidays. TV Licensing and British Gas are among organisations that have offered to help struggling customers by pausing bills or adding credit to top-up gas and electricity meters. Many mortgage providers, housing associations and car and furniture financiers are offering these payment holidays, which allow customers to put bills on hold without their credit being affected, accruing interest or facing collections action. If your landlord receives a mortgage holiday, there is every chance that you are able to negotiate or pause your rent. Even if they don’t agree to do so, in March, the Government banned the processing of new evictions for three months which buys renters time. MOT due dates were also extended for three months. 

A new career

As well as streamlining what you have coming in,  there are still ways to earn more money in this climate. 

Supermarkets and takeaway delivery services are understandably recruiting for shop floor staff and drivers to help with the growing demand as people rush to buy supplies and order food. 

Paul Hudson, who has worked in learning and development since 2011 for companies such as BAE Systems shared with LinkedIn connections that he had “Joined the green army” after landing a new retail job at Asda.

Employers including Visa, PayPal and IBM are still actively recruiting at all levels of seniority and have also pledged not to lay off existing employees because of COVID-19. It is worth checking the careers pages of larger brands and recruitment agencies of all sizes and applying for the roles they are advertising, if you are on furlough and allowed to pursue a job elsewhere under the normal conditions of your employment contract. 

Offering your skills on a freelance or ‘gig’ basis could land you some extra money. If you have experience in pretty much anything useful, from graphic or web design, voiceover recording, typing, proofreading, DIY, or wardrobe organisation then sign-up to become a ‘seller’ or a ‘tasker’ with gig agencies like Fiverr and TaskRabbit, who match you up with companies or individuals looking for someone to complete a one-off or short-term project. 

Where to go for help – besides

Find specific guidance on your situation by visiting the Government’s official web pages on the Coronavirus Job Retention Scheme

To find out if you can access state benefits or increased Tax Credits, read the official advice, even if you think you won’t qualify. 

Housing charity Shelter have put together a COVID-19 portal to offer help for those who need it during these difficult times. 

MyEva can help you to work out what your budgeting priorities should be, next steps for all your goals and how they might have to shift because of what life will throw at us. Click here to find out more about MyEva, available through great employers!      

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