How to Make Your Lockdown Saving Habits Last:
Much of the news around the economic consequences of Lockdown have focused on the negative. But, there is always a flip side! Many people have actually been able to save far more than usual during these unusual times. Did you know, for example, that data shows UK households, on average, could have saved around £171 per week during Lockdown?! Naturally, that saving contributed to the economic situation as invariably these savings were made as a direct result of pub, restaurant and shop closures. But, as these start to re-open, most people will likely see their outgoings creep back up. So, here’s a list of top tips to help your lockdown saving habits stand the test of time.
Budget, Budget, BUDGET!!! (and stick to it!)
Drawing up a budget is always a good idea irrespective of whether you’re saving up for something particular or not. Take a look at your pre-Lockdown bank statement and highlight which of your outgoings was packing the biggest punch. Some costs, like those of commuting, will be unavoidable. But, you’ll be surprised at just how many were for things you didn’t even miss when you couldn’t get hold of them. What are you buying for the sake of it? Circle those and make them stop!
Face Debt Head-On
If you have loans to pay-off, it’s always a good idea to pay them off as soon as you can. At the moment, interest rates are so low that there is very little point putting money into your savings account (over and above your emergency fund) when you could reduce down any credit card or loan repayments you have.
It is likely that the interest rate on your debts will far exceed that on your savings account. So, it makes sense to pay off as much debt as you can. The reality is that the ‘cost’ of your debt will be rising much faster than the value of your savings – so it’s best to get shot of this first!
Put Your Eggs in Different Baskets
Good saving practice sees people keeping between three-six months worth of income set aside in case of emergency. You should be keeping these in easily accessibly accounts that won’t give you any penalties for withdrawing as and when you want. It’s usually best to keep these apart from your long-term savings, so you’re not tempted to think you have more than you have, or get tempted to dip into your emergency stash.
If putting away three-six months worth of income sounds nigh on impossible, think ‘little and often.’ By putting away a small amount each month, you will fast amass a tidy sum to help you get by in difficult times.
Reflect Before You Buy!
Build in some time to reflect before you buy! We all buy things we don’t really need, but limiting the amount this happens takes practice. So, when you next go to buy something, pause for a moment and ask yourself whether this is something you really do want/need.
An effective technique to cut down on unnecessary purchases is by making yourself wait 24 hours before you part with any cash. That way, you have time to get over the ‘thrill of the buy’ and can think rationally about the practicality.
As always, if you would like to speak to a financial adviser, please do call us on 01243 767 469. Alternatively, you can email us from our contact page, and an adviser will be in touch!
Written by Ian Barnett
Ian is an experienced Chartered Financial Planner as well as being a Fellow of the Personal Finance Society, with over 25 years’ experience in the financial services industry. With a broad range of client experience and expertise, Ian specialises in financial matters from Pre-Retirement Planning to Inheritance Tax Planning and all points in between.