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Top Tips

How to budget your money during the COVID-19 outbreak


The COVID-19 outbreak has caused several people to lose their jobs or have a reduced income. At Mental Health and Money Advice, we understand the link between financial difficulty and poor mental health. We explain how to budget during the COVID-19 outbreak, so you feel more in control of your finances and mental health.

While the Government has put in several measures to support people during this crisis including providing 80% of employees’ wages, you may face a significant drop in your income, especially if you are self-employed or a freelancer.

Making a plan to manage your money over the coming months will also help you manage your mental health.

You may not be able to control the broader context of COVID-19, but you can manage your reaction to it, and that includes planning. The more you do now to plan will help you feel in more control when you might not be feeling at your best. We have outlined a five-step plan to manage your money and mental health better during the COVID-19 outbreak.

1: Identify your current financial situation

Take time to sit down, note down your current income and outgoings. It may be useful to use online banking or recent bank statements to highlight areas of spending.

From doing this, you will be able to see what you’re receiving each month and what you’re spending.

2: Address any financial emergencies

Rent & Mortgages

Financial services and the Government have considered priority bills such as rent, mortgages and council tax during this crisis. For mortgage-holders, firms such as Lloyds Banking Group, Santander and Bank of Scotland are offering Mortgage Payment Holidays for those affected by COVID-19. This provides some flexibility in repaying your mortgage by stopping payments or reducing them to more manageable levels.

If you are struggling to pay your mortgage, you should immediately contact your mortgage provider to discuss your options as Mortgage Payment Holidays are not suitable for everyone. If you are considering a payment holiday, please read the Money Advice Service’s guide.

For renters with landlords who have a buy-to-let mortgage, you can claim mortgage payment holidays which should ease pressure on you for rent payments at this time. Nonetheless, you should still contact your landlord and keep them updated with your situation.

If you are a social tenant, you should speak to your tenancy support or housing officer for support regarding potential benefit claims or arranging an affordable repayment plan if possible.

For more information, the Money Advice Service has provided a guide on managing your rent payments, including how to approach your landlord.

Council Tax

As for council tax, many Local Authorities across the UK have been provided additional funding for Council Tax Support to help people pay their council tax during the COVID-19 outbreak.

In Northern Ireland, all rate bills are delayed until June 2020 where the 4% early payment discount will still be available for domestic rate bills.

The Northern Irish Government has announced that no new recovery action will be made for domestic and non-domestic debts until the current crisis has passed.

Existing recovery actions will not be cancelled, but activity will be suspended, and you should not be actively pursued until this crisis has ended.

If you were struggling with your council tax and worried about arrears, NIDirect has set up a service providing advice on all benefits, reliefs and supports available in Northern Ireland. Contact them for free on 0800 232 1271.

As council tax is a priority bill, you should endeavour to pay what you can. If you are having difficulty in paying council tax, you should immediately contact your local council and discuss your options. Applications for council tax relief can take time to process.

Severe Mental Impairment

If you suffer from a mental health illness, you may be entitled to council tax exemption where it has been decided by your local authority that you do not need to pay council tax.

This exemption is called “Severe Mental Impairment” (SMI) and applies to those who have severe impairment of intelligence or social functioning, which appears to be permanent.

To be eligible for this exemption, you will need your doctor to sign a medical certificate evidencing that you are severely mentally impaired as well as being in receipt of one of the following benefits:

  • Disability Living Allowance with middle or highest rate care component.
  • Personal Independent Payment receiving standard or enhanced Daily Living Component.
  • Attendance Allowance.
  • Severe Disablement Allowance.
  • Employment Support Allowance.
  • Incapacity benefit.
  • Income Support or Jobseeker’s Allowance with a disability premium.
  • Working Tax Credit with the disability element.

Please note that if you are living alone, you will be entitled to a 100% exemption. However, if you are living with two or more adults who are eligible to pay tax and you are diagnosed with SMI, then you will not receive any discount.

If you live with someone else who has been diagnosed with SMI and no other adults or only live with those disregarded for council tax purposes, then you are treated as living on your own and will receive a single person’s discount of 25%.

Water Bills

If you are struggling with your Water Bills, you should immediately discuss with your water supply company. Further information and support can be found at Citizens Advice.

Gas & Electricity

If you are going to struggle to pay your Gas & Electricity, contact your provider immediately. Most energy firms, including the Big Six energy firms, have set up website pages to keep their customers updated with how they will be supported by those struggling to pay.

Whatever your situation, your supplier may have taken steps to help you manage payments as well as checking if you are on the best tariff. You can also switch providers, even if you are in arrears if you want to take advantage of better tariffs.

If you are on a Prepayment Meter and struggling to top up, either because you are self-isolating or have a reduced income, speak to your energy provider immediately. You should receive help which may include having credit added to your meter or credit being sent out in the post.

Energy firms have agreed to halt any disconnections of energy during this crisis, and you will receive support if you are struggling with your energy bills.

Those in vulnerable groups, including people with mental health issues, can be placed on the Priority Services Register. This is a free service provided by suppliers and network operators for customers in need.

Ofgem has also provided information for energy consumers who may be affected by the coronavirus.


One of the leading causes of concern for many people is ensuring their families have sufficient food supplies. The Trussell Trust is putting processes in place to ensure that everyone who needs help, volunteering or making a donation can do so safely.

You can search for your local Trussell Trust foodbank if you require an emergency food parcel. Each foodbank in regional areas is an independent charity run by your local community, and each will be affected differently.

The Trussell Trust is working hard to provide vital food supplies to those most in need and is working with the Independent Food Aid Network to work together during this crisis.

Maximise your income

Check benefit entitlements

Find out more information on benefits and Government measures in response to COVID-19 such as Statutory Sick Pay, Universal Credit and Employment & Support Allowance.

It is essential to check your entitlements to benefits and other support systems to help with your budget planning. Many benefits take time to claim, and there is likely to be increased numbers of claimants. The sooner you start claiming entitled benefits, the better:

Check insurance policies

You may have insurance policies which cover your income or mortgage payments. These include:

  • Payment Protection Insurance.
  • Mortgage Payment Protection Insurance.
  • Critical Illness, Accident and Unemployment Insurance.

These insurances can be offered with your life insurance policy or mortgage. Therefore, you may not realise you have coverage available. Many policies will have a set period before payments are made out of the policy.

If you have accessed your affordability passport or have access to your bank statements, this may highlight insurance being paid out and you should contact your insurance provider for more information on making a claim.

Access savings if possible

While many may not have savings in which to fall back on, some may have fixed term or notice savings accounts.

Many banks and building societies are offering people access to these accounts with no penalties being incurred. You should contact your bank or building society directly to discuss further if you have a savings account and need to access your money.

4: Create an emergency budget

Once you have assessed your initial situation and dealt with your most pressing issues, you should start an emergency budget to cover potential changes in the coming months.

This is especially important if you are worried about your income and spending. You may have to make tough decisions and cut back on non-essential costs to ensure you have enough money over the next few weeks.

Setting up a budget is the first step to managing your money. It may not be fun and will require effort on your part, but it will allow you to plan and understand your spending.

Read our managing money tips, and try our free budget management tool.

If you need support in managing your outgoings and sticking to your budget, you could try the Jam-Jar method which divides your money into separate pots for different expenses. This will help you ensure there is enough money to pay your bills.

You can use physical jars, envelopes or even specific bank accounts which offer Jam-Jar accounts. You may have to pay for these accounts although some credit unions offer them for free.

While most people use cash instead of card payments to help control their spending, many shops are discouraging the use of cash and requesting contactless or debit card payments.

Some bank accounts offer the facility of a “Prepaid Card”. This allows you to add money on to them and you can spend them as usual up to the limit of the pre-loaded amount. Once you have spent the money on the card, you cannot spend any more.

They are similar to Pay As You Go mobile phones and allow you to control your spending. For more information as well as comparison on different Prepaid Card options, check out Money Saving Experts information.

Consider your mental health and money situation

Your mental health can affect your ability to manage money in different ways. By understanding these patterns can help you feel in more control and potentially find solutions.

Keeping a spending diary can help. You should track:

  • Your mood when you made a purchase.
  • How much you spent.
  • What you bought.
  • Why you bought the item.

Worrying about money will affect your mental health, even if you aren’t living with a mental health condition.

5: Deal with your Debts

After dealing with your essential bills and working out your budget, you should now deal with any other debts you may have.

Start by making a list of your debts by using your bank statements. If you are unsure of your debts, you can obtain a free credit report trial at Experian.

From your emergency budget, you should be able to see how much you have leftover for your creditors. If you are likely to struggle to pay for essential bills, you should not make any payments to your debts.

You should contact your creditors before it becomes a problem. Most will be understanding. You can use the Money Advice Service’s Debt Locator Tool to find free debt advice services.

One of the most common debts is vehicles on Personal Contract Purchase agreements. If you are going to struggle to make these payments, please contact your car finance company as soon as you can.

Many will offer to extend the costs of the contracts by lowering monthly payments or coming to an alternative arrangement. Find out more information on reducing car finance costs.

Borrowing Money

At the moment, nine million people in the UK have borrowed money or used credit to pay for an essential bill such as council tax or rent.

If you are considering borrowing money to tide you over, we only advise doing this as a last resort. However, it is likely many more people will have to borrow money or use credit to pay for essential bills over the coming months.

In which case, it is best to shop around and choose the right type of credit or loan for your situation to ensure you don’t pay more than you need to.

You can use such sites as Money Savings Expert or Compare the Market to compare different financial products and deals.

Remember to pay attention to the following:

  • Interest Rates and Annual Percentage Rate (APR) – the lower, the better.
  • The total amount repayable and whether you can afford the repayments.
  • Cost and penalties for missed or late payments.
  • Cost per week or month as this can vary.


You may have to use your overdraft with your bank account. Recent rule changes introduced by the Financial Conduct Authority now mean that whether your overdraft is arranged or unarranged, you will not be expected to pay more.

However, this can mean people with arranged overdrafts may find it more expensive if you plan to use it. Read more about these increased costs and the new rules.

High-Cost Credit

If you do not have a good Credit Rating, you may have to borrow money at a higher cost and such High-Cost Credit Options could be expensive and you should think carefully before using these options. These include logbook loans, doorstep loans or Payday loans.

Money Advice Service has several guides on these forms of credit which include tips on their potential pitfalls:

Loan Sharks and Scams

You should avoid loan sharks. These people are illegal money lenders who target people who are desperate and unable to access mainstream credit. You can learn how to spot a loan shark by following the Money Advice Service’s guide.

As for scams, fraudsters have already used this pandemic to scam people out of their money. This includes email scammers claiming to be researching for the World Health Organisations or looking for investment in stocks and shares which have fallen in recent weeks.

Other scams include emails claiming to be from the Government offering financial support as well as HMRC offering tax rebates. The number of scams is likely to increase with Action Fraud reporting thousands of people losing considerable sums.

Therefore, we must be vigilant during these times and double-check that emails and calls are from legitimate sources. You should never give out personal information, including bank account details and your PIN.

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