Various life events can affect your finances. Your income may change unexpectedly due to unemployment, a divorce or an illness, for example. You may also be aware of changes in your income well beforehand, like in the case of maternity leave, military service, studies or retirement.
When your income decreases
Take care of the most essential expenses. It is important that you pay for your living expenses, food, medicines and telephone costs.
Try to reduce consumption. Consider what costs you can reduce and what costs you no longer need.
Adjust your withholding tax rate. If your income changes, for instance if you are laid off, it is a good idea to check your tax percentage. Make sure that your tax deductions correspond to your changed situation and that you have taken advantage of the deductions you are entitled to. For example, if you are working from home, you may have lower commuting expenses to take into account in taxation, but, correspondingly, you may have the right to a home office deduction.
Identify your access to different payment arrangements well beforehand. Identify whether you can reduce instalments, extend the payment period or have instalment-free periods.
Plan your finances. Write down your monthly income and expenses, and keep track of your use of money. By being aware of your financial situation, you can avoid overspending.
Find out your rights to social security. You may be entitled to housing allowance and income support. If you fall ill, you may have access to a sickness allowance. Submit your applications as soon as possible. If the payment of benefits is delayed, you can seek help from the Social Insurance Institution’s basic security and/or your municipality’s social welfare office. You can use the calculators on Kela’s website to find out whether you are eligible for the benefit (calculators are available only in Finnish and Swedish).
Carefully consider whether taking out a loan helps you in your situation. If you are thinking of taking out a loan, consider whether or not you will be able to repay it. If your finances are tight, consider whether a new loan will ease your financial situation or if you can find a solution by cutting costs. You can also try to work out a new payment plan for your existing loans and reduce your expenses that way. Paying a debt with another debt rarely improves the situation.
If you cannot pay a bill or debt, ask for more payment time before the due date. You can also agree on a new payment plan. Calculate the monthly instalment you are able to pay before agreeing on a new payment plan. You can request a loan repayment holiday from the lender. During the repayment holiday, you will have to pay the loan’s interest and expenses.
If you know that your income will decrease, be prepared for future changes. Estimate your future level of income, and try to adapt your consumption and payment obligations accordingly. If necessary, try to save money for a rainy day. If you are in debt, identify your access to payment arrangements or loan restructuring well beforehand.
Your finances will remain in balance if your expenses do not exceed your income. Take a look at how much money you will need for housing and other living costs . (Guarantee Foundation, in Finnish)
Calculate how much money you will need for living costs such as rent, water, electricity, home insurance, food, healthcare, local transport and phone.
Calculate your income and use calculators such as those provided by Kela to see if you are eligible for any benefits.
Figure out what kinds of things you need to buy for your home and how you will finance them. Decide which items you need most and buy them first. Try to save money for purchases in advance. Compare prices and check if you could buy furniture second hand.
Be careful not to use too many instalment payment plans for your purchases. Always check the effective annual interest rate (or annual percentage rate of charge (APRC)) of the instalment payment plan, the charges, repayment period and amount of monthly instalment before signing any loan or credit agreement. Calculate whether you will have enough money to make the repayments.
Find out what the reasonable rent level is for your local area and who the local rental housing providers are.
Plan how to finance the rental security deposit and moving costs. Save money for these well in advance. In some cases, Kela may help you with moving costs.
Always make sure you pay your housing costs first. Unpaid rents will lead to eviction, a payment default entry and difficulties in getting a home in the future.
Insure your home. Home insurance will safeguard your financial situation in case of problems such as water damage.
If you receive benefits or allowances from Kela, remember to report any changes in your circumstances to Kela in due time to avoid having to pay back any benefit or allowance.
The daily allowance during military service is small. Check if you are eligible for conscript’s allowance from Kela.
Think well in advance what you will be able to afford during your military service and try to save money before you begin service.
Draw up a budget and calculate what you will have money for.
Unsubscribe from any services you will not need during your military service.
Avoid taking any loans. Financing your living costs with a loan may lead to problems.
If you do have loans, contact the lender well in advance and negotiate on the payments for the duration of your military service. Try to reach an agreement on monthly amounts that you will be able to pay.
Most people finance their studies with various benefits, such as the study grant or adult education allowance. Find out which benefits you are eligible for.
The student loan is intended to cover your living costs during your studies, and you will have to repay the loan.
The student loan is issued by a bank and guaranteed by Kela.
Plan how you will use your student loan. For example, you can transfer the loan sum to another bank account and only put the amount available for each month in the current account for your day-to-day banking. This way you will have enough money until the end of each term.
If you work during your studies, keep an eye on the income limit set for financial aid for students. If you voluntarily repay any excess amount of financial aid you have received, you can save months of financial aid as well as avoid having to pay the increase on the recoverable amount.
If you have a payment default entry or your student loan is in debt collection, contact Kela.
Find out well in advance how much earnings-related and/or national pension you will receive when you retire. You may also be entitled to a guaranteed pension, which will supplement your pension cover if your pension is low.
Use the tax percentage calculator or contact the Tax Administration to find out how much tax you will need to pay on your pension. The tax rate for pensions is higher than the rate for the same amount of wages or salary. You will not need to pay any unemployment or pension insurance contributions on pensions.
Find out if you are eligible for the housing allowance for pensioners.
Estimate your income and living costs during your retirement years. You should note that having more free time can mean that you will also need more money.
If you have any debt, negotiate well in advance with the creditors on any changes needed so that your pension will cover the repayments.
