While the economic consequences of lockdown saw many households struggle, others have been able to save far more than usual. Data suggests that UK households could have been saving an average of around £171 per week during lockdown, with pubs, restaurants and high street shops closed and fewer spending opportunities. Country wide, savers have stashed away a record £157bn as many day-to-day expenses disappeared. Now restrictions have eased and restaurants, pubs and shops open again, most will see their outgoings creep back up. As you start to spend again, here are our top tips on making your lockdown saving habits last for the long run:
Plan and Stick To A Monthly Budget
Look through a pre-lockdown bank statement and find which expenditures were making the biggest dent. Some will be unavoidable, like the cost of your commute if you’re returning to the office. However, you could cut back by taking lunch to work rather than buying meal deals daily. Apps like Monzo or Mint can help you get a better overview of your spending and are a great way to keep you on track with your savings goals.
Organise Your Debts
Interest rates are currently at so low that there is little point putting money into savings accounts if you have credit card debt or loans to pay off. Since the interest rate on your debts will be higher than that on your savings accounts, it makes sense to pay off as much of your debt as you can instead. Essentially, the cost of your debt will be rising much faster than the value of your savings, so it’s best to clear this first.
Build Up Savings Pots
If possible, try to keep between three and six months’ worth of income set aside for emergencies, such as unexpected redundancy. These should be in easily accessible accounts that don’t penalise you for withdrawing and we recommend that you keep these separate from your long-term savings. A good way to work towards this figure is by setting up a direct debit to transfer any money you can afford to spare into a savings account every pay day.
Think Before You Buy
Most of us are prone to buying things we don’t really need from time to time. If these impulse purchases become too frequent, they can start to harm your bank balance. An effective technique to cut down on unnecessary purchases is to wait 24 hours before buying to give yourself time to reflect on whether you really want a product. Another way to save is to make it harder for yourself to spend your money. You could remove your automatically saved card details from your computer or unsubscribe from promotional emails, meaning you’ll be less tempted to make impulsive purchases.
Have you tried any new saving tricks during lockdown? Will your habits be changing in future?