The coronavirus pandemic has put a huge income squeeze on many people – so much so that think-tank the Resolution Foundation says it’s been the worst immediate financial shock suffered by working-age households in decades.
But separate research from travel money specialists Caxton suggests that despite having less money in many cases, 39% of people say they are making a deliberate effort to save more money at the moment, rising to 59% of 18 to 25-year-olds.
As the lockdown loosens, though, it may become more tempting to return to old spending habits. Laura Laidlaw, head of customer communications at Standard Life, has some tips for those looking to keep their savings plans on track.
1. Switch the date you save to the start of the month or just after payday
When it comes to good savings habits, putting a little money aside often is often considered to be one of the best approaches. Aiming to save a small amount every month creates a routine and this will help you manage your overall outgoings too.
Firstly, calculate what you can realistically afford to put aside each month. If you have been saving more than you usually do during the lockdown, think about what you can do to keep this habit going in the months ahead.
Once you know what you can afford to save, consider setting up a direct debit to squirrel most of this away into a savings account at the very start of each month or when you first get paid.
This will take the money out of temptation’s way. Leaving money sitting in your current account until the end of the month could increase the risk of it being spent on discretionary items you don’t really need.
If it’s not sitting around in a current account, the likelihood of unnecessary spending will be massively reduced.
2. Switch up providers regularly
Sift through your monthly statements and see if there are any big monthly payments and direct debits such as your mortgage or energy bills, that you might be able to cut back on.
Some may be non-negotiable, but some quick online price comparisons on mortgage rates or energy suppliers could leave you hundreds of pounds a year better off.
It’s likely that you’ll find some direct debits or regular payments that you might not be using. Consider cancelling those and converting the money into savings.
3. Consider switching some new habits you have formed during the lockdown for good
When we first went into lockdown several months ago, people may have decided to cancel unnecessary direct debits in the short term. But for some people, it might make sense to carry this on even after life moves closer to “normal”.
For example, after discovering the abundance of free fitness classes online, will you really need to go back to spending hundreds of pounds a year on the gym? Converting this spending into savings could make a big difference for your financial fitness instead.
And what about the daily coffee run? If you have managed the last few months drinking home-brewed coffee, this will have added up to significant savings.
4. Switch impulse buying for careful consideration
Boredom or the need for a short-term emotional boost may tempt people to splurge on impulse buys.
But try to think carefully before making any purchases – particularly if it’s expensive. At the very least, sleep on it. It might seem less appealing in the morning.
If you have your heart set on a certain purchase, check out the competition and compare prices.
5. Switch eating out and buying takeaways to home cooking
Many people have spent more time trying out new recipes and improving their cooking skills during the lockdown. You may have discovered how much you enjoy cooking and perfected a certain dish.
To limit spend on food shops, try to stick to shopping once a week to reduce the risk of unnecessary purchases. Planning your meals is also a good way to avoid waste and make the most of what you already have in your cupboards.