How do I…

Managing money in a crisis

Daniel James, director of client services at Lloyd and Whyte, tells OT  how you can shore up your finances to provide security in the long-term

LM budgeting1

It may sound odd to say that you can prepare your finances before a crisis. After all, how do we know when a crisis will hit?

What the coronavirus (COVID-19) pandemic has taught us is that we can’t predict what life will throw at us. We need to be prepared at all times.

While COVID-19 is a devastating global event, the reality is that we can suffer personal or familial crises at any time. Serious health conditions, grief and job losses can all put us in unexpected financial turmoil. With the furlough scheme closing and redundancy numbers rising, this is likely to be more important now than ever.

Plan for the worst, hope for the best

1. Budgeting and clearing debt

This is back-to-basics stuff, but you need to get your foundations right. Keeping tabs on your monthly outgoings is the easiest way to work out how much you can save. This applies both on a personal and on a practice level.

When it comes to your personal finances, clearing credit card debt and loans as quickly as you can is important before you move to the next step. There is no point having that hanging over your head while you try and save money. You can find a budget calculator on the Lloyd & Whyte website.

2. Having an emergency fund

A rainy-day fund should cover all of your monthly bills for three to six months. You should know how much this is every month. This could be used to cover your mortgage or rent if you lost your job, or for an emergency car repair (for example.)

3. Financial protection

Income protection is designed to give you a regular monthly amount if you’re unable to work due to injury or illness. Life insurance pays a lump sum to your loved ones upon your death and critical illness cover pays out if you’re diagnosed with a serious medical condition (as detailed in your policy terms). All of these things are designed to give you a sense of financial security and should form part of a robust financial plan.

4. Savings and investment planning

Now you can start planning the bigger things you want to achieve in the next five, 10 or 15 years. Savings accounts are suitable for money you need to access in the next seven years, whereas investments are longer term as you will need time to yield a return.

If you’re not sure what you need, speaking to an independent financial adviser (IFA) can help. Lloyd & Whyte can offer complimentary financial reviews with IFAs. 

What do I do now?

Whatever crisis you’re facing, it is likely to be a very emotional time. Money matters can feel like a particularly sensitive topic, so it is important to think rationally.

Don’t panic. Markets go up and down over time, so even if the value of your investments has fallen now is not the time to start moving money around. If you’re sure you do want to make changes to your investments, make sure you discuss it with your IFA.

“Savings accounts are suitable for money you need to access in the next seven years, whereas investments are longer term as you will need time to yield a return”


Focus on what you can control. What emergency fund do you have? How long do you think it will last? How steady is your income? Do you have other sources that you can rely on? Ask yourself all these questions to start with, to give yourself a clearer picture of where you are. Knowledge is power!

Use the time wisely. If you’re keeping track of your outgoings, now is the time to shop around if you think you can save money.

After a crisis

When you’ve lived through a crisis, it’s natural to want to have some fun and enjoy life again. You’ll have a renewed sense of freedom and opportunity. Holidays don’t just feel well overdue, but almost necessary (if you can afford them).

There are certain things that you need to remember even if you’re full of renewed positivity, though. Remember your original plan. There isn’t any reason you can’t tweak your financial plan with some new short-term goals – just don’t forget that your original goals were there for a reason.

Where are the opportunities?

As market cycles peak and trough, inevitably new opportunities for investors arise. Even before the outbreak of COVID-19, there was increasing demand from consumers and pressure groups to change the way we live for the betterment of the world. Socially responsible investing has increased in popularity in recent years, and offers the potential to make the world a better place – without compromising on return.

Review your financial plan, and book a complimentary financial review

Talk to your IFA about reviewing your financial plans, as your priorities are likely to have changed.

This advice is what we would consider best practice, but we understand it may not be possible or applicable in all circumstances. We recommend speaking to an IFA before making any significant decisions about your finances.

Lloyd & Whyte is an AOP affinity partner.

To book a complimentary financial review with Lloyd & Whyte, contact the company online, call 01823 250711, or email [email protected]

Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain.