Financial Matters
With David Frederick FCCA | Marcus Bishop Associates | marcus-bishop.com
Three Stay –At-Home Financial Activities The current state of uncertainty has been challenging for some homestayers, whilst others are battling with what to do - a residual group have already checked out, according to the conversations over the past month. Whatever your position, there will be periods when windows of time opportunities arise and the risk of boredom begins to float in the mind. To help reduce this risk of boredom and from discussion with homestayers, three stay-at-home activities are provided below: 1) Short-term planning 2) Personal financial review 3) Self-assessment 2019-20 preparation These activities are set within the backdrop of uncertainty and a look forward to beyond business as usual, post stay-at-home policy. The uncertainty and the arrival of the word, ‘furlough’ in our lexicon, continues to place unplanned pressure on household finances, irrespective of our starting point. The past month has seen businesses engaged in plans for their short term (the next three months). This short term planning can also be extended to individuals and serves as the first of our three stay-at-home activities.
Short Term Planning The end date of this stay-at-home policy may be unknown but what is known for certain is that the policy has led to varying degrees of financial cost, pain and agony. Many households, have experienced notable changes in their cash inflows and outflows. Hence now is the time to understand and seize control of your financial position. The recommended method is the preparation of a cash flow forecast for the next three months. Some individuals already do this, so they can advance to the second activity. However, if your personal finances are still in limbo, it is not too late to start. Preparation of a personal cash flow forecast only requires two tasks. Firstly, for each of the following three months identify your expected 22 | SE21 - May 2020
monthly cash inflow and their sources. Then repeat the same task for your expected monthly cash outflows. Combining your monthly cash inflows and cash outflows will produce your monthly net cash balance. In other words how much cash you have in your pocket! When planning for cash out flows, it is imperative to resist the temptation to plan as though life is the pre stay-at-home period.
Personal financial review Stay-at-home is an unusual period and your financial review calls for unusual behaviour. The unusual behaviour required is to challenge every item of expected cash outflow. At this point copies of bank and credit card statements for the past three months may prove helpful. Every item of cash outflow should be subject to the ‘is it essential test?’ This period is not the time for procrastination or sentimentality. Procrastination can seriously damage your financial health. The application of such a stringent financial review should result in your awareness of every planned item of cash outflow. Now is the time to lockdown on your personal finances and retain control. Once control has been taken and focus has been on identifying the essentials, it may be possible to consider some non-essential (treats) expenditure, subject to sufficient net cash flow.
Self-Assessment The fiscal year 2019-20 ended on 5th April and that signals the birth of self-assessment 201920 season. In recent weeks, the self-employed have learnt the importance of filing their selfassessment tax returns. These open windows of time opportunities during stay-at-home presents golden opportunities for taxpayers to fully assemble all their records to complete their 2019-20 self-assessment. Such an early start, is even more important for all taxpayers taking advantage of the option to defer their 31st July first payment for 2019-20. One week into the new financial year and our first tax return had already been completed, despite stay-at-home. During the uncertainty of our stay-at-home policy, be mindful that once time has been spent it cannot be refunded like cash.
