As we head into October, it has been a year that few of us could have predicted.

Following the coronavirus outbreak and subsequent UK-wide lockdown, the government has introduced countless measures designed to keep Britons in their homes and their jobs.

This autumn, some of these schemes – furlough, mortgage holidays – are winding down or are being replaced. It’s crucial that you keep track of your finances even during stable times, but even more important during periods of change.

Now is a great time to take stock – of what you are entitled to, of current deadlines, and of the implications of the financial decisions you have already made.

Here are three ways to avoid a financial shock this Halloween.

1. Check-in with your pension

One of the effects of the government’s Job Retention (or ‘furlough’) Scheme might’ve been smaller pension contributions going into your workplace pension. You might even have opted out entirely.

If you didn’t opt-out you would have continued to make contributions even when furloughed, albeit based on only 80% of your pay. The scheme paid 80% of wages up to £2,500 a month, so if you earn more than £30,000 a year, your pension contributions could have fallen significantly.

The furlough scheme ends in October when the Chancellor replaces it with the Job Support Scheme. Under this initiative, if you work at least 33% of your ‘normal’ full-time hours, you will receive at least 77% of your pay.

Understand the impact of these schemes on your contributions now and you still have plenty of time to redress the balance.

Making reduced pension contributions – or making none at all – could have a significant impact on the value of your pension savings at retirement.

If you can afford to top up your pension do so. And if you opted out, remember to opt back in as soon as you are able.

Speak to us if you’re unsure about any aspect of your pension provision, including the level of contribution you are or should be making.

2. Check-in with your mortgage

Around two million homeowners took a coronavirus mortgage holiday this year. If you were one of them, there are a few important things to remember to avoid a potential future scare.

• Larger repayments

A mortgage holiday isn’t ‘free money’. You will need to pay it back and your mortgage repayments will increase once the holiday is over.

The sooner you start thinking about budgeting for larger repayments the better.

• Future borrowing

Also remember that although a mortgage holiday won’t have affected your credit record, it might still impact your ability to get credit in the future.

This is because lenders consider a wide range of factors when making lending decisions. Even during the pandemic, a lender could view a mortgage holiday unfavourably.

• Stamp Duty holiday

Finally, if you’re looking to take advantage of the Stamp Duty holiday in place until 31 March 2021, be aware that some lenders won’t be considering furloughed workers.

When the housing market reopened back in May, the only caveat applicable to furloughed workers was that their 80% furloughed income would be used to make the decision. Since September however, and beginning with TSB and Virgin Money, some big lenders won’t consider furloughed income at all.

3. Could you withstand any further financial shocks?

A recent Money Marketing report suggests that Britons are ‘worryingly exposed’ to a financial shock. Do you have the necessary provisions and products in place to ensure that you and your family will be looked after should the unexpected happen?

• An emergency fund

A financial shock, such as unexpected outgoings or a sudden redundancy, could make keeping up with rent or mortgage payments tricky.

Putting an emergency fund aside, of between three and six months’ worth of household living expenses, should help you ease the financial gap. Covering income or unexpected costs without the need for a loan can make a massive difference once the shock has passed.

If you don’t yet have an emergency fund don’t panic. You don’t need to build it up in one go. Put an affordable amount by each month and you’ll have peace of mind that it is there if you need it.

• Income Protection

If an accident or illness prevents you from doing your job would you be able to keep up with mortgage repayments? If not, what are the implications for you and your dependents?

Income Protection pays a part of your income if you are unable to work and will continue to pay until you return to work (or until you retire, die, or reach the end of the term).

Speak to us if you’d like to cover yourself against an unexpected loss of income in the future. We can help find the right cover for you.

• Critical Illness Cover

Critical Illness cover pays out if you are diagnosed with certain conditions such as a stroke, heart attack, or some cancers. Unlike Income Protection, Critical Illness Cover is likely to pay out a one-off lump sum only.

The money could be used to cover the cost of treatment or home adaptations.

• Life insurance

Life insurance pays a lump sum on your death (Whole of Life) or your death within a specified term (Term Assurance).

Use Term Assurance to coincide with the end of mortgage repayments or a child’s education, for example. You’ll have the peace of mind that your loved ones will be protected and provided for.

Remember that once the term is over, you no longer have cover.

Whole of Life Cover, on the other hand, guarantees a payout – if your premiums are kept up to date. Providers will agree to a premium amount for a certain number of years and then review the premium amounts regularly.

Because a Whole of Life plan will payout at some point, they can get expensive and the premiums could increase significantly the longer you keep the policy.

Get in touch

It can be scary to think about what the future may bring but preparing against these types of shocks now could give you enormous peace of mind, this Halloween and beyond.

If you’d like to discuss any aspect of protecting yourself against a future shock, get in touch. Please email enquiries@futureplanningwm.co.uk or call 01793 575553.

Please note:

Life Assurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.