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How to cope with losing income because of coronavirus

Lydia Smith
Writer, Yahoo Finance UK
Self employed and freelance workers have been hit hardest by the coronavirus pandemic. (Getty)

Millions of people around the world are facing redundancy, job insecurity and income loss as a result of the COVID-19 pandemic. In the UK, one in 20 people have lost a job because of coronavirus, according to a YouGov poll, while almost one in 10 have seen their hours reduced.

The Universal Credit system has been completely overwhelmed with nearly a million applications in the last fortnight. Under normal circumstances, there are around 100,000 applicants in any given two-week period. 

In the US, unemployment insurance claims have soared past 3 million – a record high number that still doesn’t include the self-employed and freelancers, who aren’t eligible for unemployment insurance in several states.

Losing a job can have a significant psychological impact for multiple reasons, including the loss of income, security and status, as well as the anxiety of not being able to pay rent, a mortgage or provide for your family.

Why income loss goes further than financial stress

"While we know that, for most people in the Western society, an increase in income doesn’t contribute much to our overall happiness, a loss of income can be pretty devastating,” says Nick Powdthavee, a professor of behavioural science at Warwick Business School who has researched happiness and wellbeing.

"One explanation for this is loss aversion. For most people, a loss of £100 hurts twice as much as what a gain of £100 could buy us in terms of happiness.”

Read more: Can your boss stop you from working from home — and what are your rights? 

Another explanation is that losses tend to capture our attention much easier than gains, Powdthavee explains. “When we lose our income, it is easy to imagine that we’ll be spending a lot of our time thinking about it,” he says. “On the other hand, we tend not to spend a lot of time thinking about a pay rise two or three days after having received it. Given that our attention tends to linger more on income loss, we are less likely to adapt to it very quickly.”

Our jobs and careers can also be part of our identity and self-confidence and losing them unexpectedly impacts on our self-worth, adds Alexis Powell-Howard, managing director of Fortis Therapy and Training, a psychotherapist and TEDx speaker.

“We lose, too, our role and our income and feel unable to provide for ourselves and family,  which can be upsetting and a powerless place to be,” she says. “When suddenly losing our income, we can feel out of control and panicked, especially in the current COVID-19 circumstances.

Powell-Howard adds it can trigger anxiety, feeling helpless, fearful and vulnerable. “We can respond in ‘survival mode’ as we may feel under threat, meaning we become anxious, and the words ‘what if’ can become the two words that lead our head to catastrophic thinking – fearing the worst possible outcome,” she explains.

How to cope with income loss

When faced with redundancy or a loss of work, it is easy to feel paralysed with fear and anxiety and lose sight of the reality of the situation. Rather than imagining the worst, it’s important to logically work out what income you actually need to survive, Powell-Howard says.

“If you are struggling to do this, ask someone to help you – your brain may not be working in the usual way if you are feeling stressed and anxious,” she says. “Look to any government support that is available and make your new ‘role’, and purpose, about managing what you need for you, your family and commitments.

“Find out about taking a mortgage holiday, speak to your landlord – try not to step away from the problem and use worry as your strategy, but instead step towards it, work out practically what you need and who can help you.”

It may be that you need to find temporary employment within businesses that are still hiring, so you can afford to live or give yourself time to form a long-term plan. "It would be worth trying to calculate how much money we actually need each day to be happy,” says Powdthavee. “Can we cut back on things that, by and large, don’t contribute much to our overall well-being? Do we really need to have that premium quality coffee everyday? How much do we save from not having to commute to work everyday?”

Read more: Why we need to support all self-employed people

People around the world are facing huge life changes and struggles, so you aren’t alone.

“It’s worth remembering that we are living through times with many businesses going under so losing one’s job is no reflection on one’s ability or skills,” adds Hilda Burke, psychotherapist, couples counsellor and author of The Phone Addiction Workbook. “Many people are taking jobs that normally they would consider themselves overqualified for out of financial necessity. Others are finding creative ways to market themselves or their business to ensure that they’ll survive financially during this difficult period.”