The Courier & Advertiser (Perth and Perthshire Edition)
Striking a balance as lockdown eases
Many people have become savers rather than spenders over the past year, as pandemic restrictions have meant they have cut costs on things like their daily commute and socialising.
But as lockdown restrictions are gradually eased at varying rates, the temptation to fall back into old spending habits may return.
Money app Yolt has already seen signs that some people are dipping into their savings.
It found that, while the amounts people have been saving has generally been rising, in March Yolt users typically withdrew 18% more than they put away.
While we all deserve some fun in the months ahead, you might be keen to keep hold of your newfound saving habits. Here are some tips for holding on to those purse strings...
1. Set realistic budgeting goals
Sally Conway, head of consumer communications at Shawbrook Bank, said: “As restrictions ease, take control by setting a monthly spending limit.
“But make sure you set yourself realistic goals, so you don’t end up breaking the budget entirely.
“Taking the time to assess your current financial situation and considering your priorities for the rest of the year is a great way to get started.
“It’s also important to remember that each month can come with different financial priorities.
“There may be unexpected expenses you might not have considered.”
2. Manage your social calendar
After social diaries have been empty for so long, it may be tempting to try to fill them to their limits.
Ms Conway said: “When we’re tied into social plans, it can be difficult to consider how much we’re spending. This is where budgeting can be really useful. By setting aside a budget for social plans, you can better manage your personal finances.
“If you do end up spending more than expected, you can look to cut costs elsewhere.
“By prioritising the things you enjoy the most, or by suggesting less expensive ideas, you can spend less without missing out.”
3. Can you live without it? There may be subscriptions you cancelled during lockdown that you could do without for good.
Ms Conway said: “Whether it’s discovering the abundance of online workout classes, rather than that monthly gym membership, or unearthing a love of cycling that could be a way of cutting commuting costs, keeping changes like this in place could make a big difference to your future savings.
“Equally, review new entertainment subscriptions you’ve signed up to in lockdown.
“You may find that now you have the option to go out with friends or go back to the gym, you don’t need half the things you signed up for when you were stuck indoors.”
4. Search for deals and offers
If you do plan on doing some shopping, Ms Conway suggested making the most of online discount codes and cashback websites whenever possible.
5. Use the three-day rule
Ms Conway said: “If you see something you really want, step back and save the purchase for three days.
“Make sure you take time to consider your budget before you purchase.
“If you can afford it, and you are still hankering after the product three days later, then it is more likely to be something you really need.”
6. Spend smartly
Pauline van Brakel, chief product officer at Yolt, said: “As lockdown restrictions ease and things start opening up again, it has never been more important for people to be smart with their money, and to strive to find new ways of balancing spending and saving.”
Ms van Brakel suggested reviewing all your expenses – you may even discover some direct debits you had forgotten about, or be able to save on “fixed” costs such as household bills by switching providers.
7. Save regularly
If you’ve got savings to dip into, you won’t have to pay to borrow.
Ms van Brakel suggested earmarking roughly 50% of income for essentials, 30% for discretionary “luxuries” and 20% for savings.
She added: “If you’d like a little more to fall back on, you could even flip your ‘luxuries’ and ‘saving’ splits.
“So you could put 30% into a savings account and leave yourself 20% for treats.
“You can always tweak these amounts to suit your budget – just try to stick to a set amount of savings each month.”