JEFF PRESTRIDGE: Hard times, but time to sort your finances

13 May 2020

The coronavirus has had a huge impact on how we live, so now is a good time to get on top of your finances

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How the world has changed since I last put pen to paper for Moneywise — changes that will have a profound impact on how we live and value those who we so sorely undervalued previously. For example, our country’s health workers — be they nurses, doctors or support staff such as cleaners and porters — as well and those who care for the frail and elderly.

I count myself among the luckier ones. My health has remained good, unlike some of my colleagues.

Financially, I’ve taken a painful salary cut to ensure my employer (DMGT plc) gets through the current economic maelstrom, but at least I am still working. Many of my friends are either now unemployed, furloughed or left wondering whether the business they poured heart and soul into will survive.

Of course, the health of the country’s population remains paramount, but at best their financial future and that of millions of people remains uncertain. At worst, it is rather precarious, despite the splendid efforts of the Government to provide a satisfactory financial underpin to most households impacted by coronavirus. Economic turmoil is inescapable, as is recession. 

Working from home has been a challenge for me, with new technology to get to grips with and new ways of communicating with fellow workers (Zoom and Slack). But it has its benefits. No commuting, fewer time-consuming meetings, and the chance to walk, run or cycle most days.

I have even managed to trawl through TV series I never had the time to watch – the likes of A Bit Of A Do, starring among others David Jason and Gwen Taylor, and Outnumbered (which still makes me howl with laughter).

I have even begun to take a greater interest in our birdlife, marvelling at friendly robins who blissfully ignore all social distancing guidelines and young thrushes making their first tentative flights after being pushed out of their nest.

The current economic imbroglio has also forced me to do something that I often write about – but through lack of time rarely put into practice.

That is, conduct an audit of my personal finances.

With my income reduced, I have reviewed all my outgoings, ensuring all my expenditure is necessary. It is not quite the equivalent of financial purgatory (we all need a bit of fun in our lives), but I’ve ensured I am getting value for money on the home insurance and energy front.

A series of memberships to cinemas and galleries have been left to lapse on the grounds that I was not using them enough.

I have also tried to keep my cash war chest (a tax-friendly Cash Isa) topped up, reduced salary notwithstanding. I am not that bothered about earning peanuts in terms of interest. I am more interested in having a rock-solid financial buffer in place.

As for investing, I took the decision early on in lockdown not to look at the value of my online Stocks and Shares Isa. I have stuck almost religiously to my guns, not selling anything and crystallising any losses. Indeed, I have done a little topping up, occasionally investing small amounts in broadly diversified investment trusts with a global or UK remit. Of course, my investment actions could be considered foolish, but I am confident that over the next five years, they will look more inspired than the actions of a mad money journalist in lockdown.

Yes, share dividends have taken a huge hit as UK and Global Plc have pulled in the financial reins – a disappointment to both income seekers and those who like to reinvest their dividends to enhance their wealth portfolios. But most of the trusts I invest in have income reserves compiled over many years. Reserves that should, in the short term, help mitigate some of the company dividend cuts already announced – or about to happen.

I urge you to visit the website of the Association of Investment Companies (Theaic.co.uk) and read the section on ‘dividend heroes’ – a slightly over-the-top description given current circumstances, but these trusts do have a way of delivering income through thick and thin.

For those struggling financially, please do not bury your head in the sand. Speak to your bank or building society. Speak to the likes of Citizens Advice and the Money and Pensions Service. There is plenty of good financial help out there. If you know of friends or neighbours finding things difficult, point them in the right direction.

Until next month, I wish you all the very best. Better times, I hope, are around the corner.