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. Country wide, savers have stashed away a record £157bn as many day-to-day expenses disappeared.
Now restrictions have eased – with restaurants, pubs and non-essential 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:
Draw up a monthly budget (and stick to it!)
Have a look at your pre-lockdown bank statement and find which expenditures were making the biggest dent. Some – like the cost of your commute – will be unavoidable, but others – such as your weekly lunch out on a Friday – could be reduced.
Smartphone apps like Monzo or Mint can help you get a better overview of your spending. These are a great way to keep you on track with your savings goals.
Sort out your debts
At the moment, interest rates are so low that there is little point putting money into savings accounts if you have credit cards 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 debts as you can. Essentially the ‘cost’ of your debt will be rising much faster than the value of your savings, so it’s best to get rid of this first.
Build up a range of savings pots
As a rule, you should try to keep between three and six months’ worth of income set aside for emergencies. These should be in easily accessible accounts that don’t penalise you for withdrawing. We recommend that you keep these separate from your long-term savings.
You could work towards this figure by setting up a direct debit to transfer money into a savings account as near to pay day as possible.
Pause before you buy
All of us are prone to buying something we don’t really need from time to time. While there’s nothing wrong with these kinds of purchases sometimes, if they 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 between finding something you want to buy and handing over cash.
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.