As the furlough scheme begins to wind down, ahead of its 30 September end date, the Bank of England are predicting a small rise in unemployment as employers must decide whether to take back furloughed workers or make them redundant. This is expected to be particularly prevalent in the international travel industry, as recent research shows holiday bookings have collapsed by 83%. However, with job vacancies at record highs, there is hope for those who may be faced with job loss.

Personal finance experts at Claro Money discuss what you should do to prepare for the potential impacts of furlough ending, such as job loss or a reduction in income, and how to effectively plan your finances for the future.

Sarah Brill, Financial Coach at Claro Money said:

“Whilst many of us have returned to some form of normality, the value of being prepared and having a financial contingency plan for this shouldn’t be underestimated. Budgeting in advance, trying to reduce unnecessary outgoings, and using comparison sites for securing the best deals on household bills is the best place to start.

“Using a savings account to put money aside each month will mitigate the effects of sudden job loss and cushion the impact of a drop in income. Our recent research revealed that 1 in 5 UK adults have no financial cushion whatsoever and couldn’t pay the bills for a month if they lost their jobs, highlighting the need for personal finance best practice across the nation.

“When establishing how much money to save each month, do consider how much money you realistically need to cover your outgoings. Whilst it’s important to put aside enough to contribute effectively to your savings each month, you don’t want to do so at the detriment of covering existing expenses. If you are unsure how to establish the right amount for your monthly savings, then look towards professional financial guidance, such as Claro Money.”

“Once the furlough scheme comes to an end, the worst-case scenario for many is that they will be working fewer hours than before Covid-19 or will have been made redundant. If you are anticipating being on a lower income after furlough, then go through your budget line by line to see where potential savings could be made. Take note of any specific dates that are relevant to you, such as payment holidays coming to an end or bill payments and speak to your providers about this, as well as new plans or discounts available.

“Those that are uncertain about the future of their job, should look for other roles they may be suitable for in preparation. It is also a good idea to update your CV in advance to put yourself in the best possible position to find alternative employment, should you face losing your job. While there is still some degree of economic uncertainty, the public should be reassured about the number of new jobs available – job vacancies have hit a record high of 1 million for the first time on record, so there are plenty of employers looking to hire.

“As well as a sensible approach to personal finance further help is available. Many people may have never considered using government help, however if faced with an unexpected situation at the end of the furlough scheme everyone is entitled to seek out additional benefits. This includes services such as Council Tax Reduction, Housing Benefit, or Income Support Allowance, that can provide relief to those in difficult financial circumstances.

“Likewise, remember that you are not going through this alone – millions of people across the country have experienced being on furlough and will be impacted by the end of this scheme. If you feel comfortable doing so, speak to your friends, colleagues, and family about their experiences and the impact that the end of the furlough scheme is having on them. Not only can this help from an emotional perspective, the people you speak to may also have some good tips or financial insight that is relevant to your situation.”