Many people have become savers rather than spenders over the past year, as pandemic restrictions have meant they’ve 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 now already. It found that, while the amounts people have been saving has generally been increasing, 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 onto those purse strings…
1. Set realistic budgeting goals
Sally Conway head of consumer communications at Shawbrook Bank says: “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,” Conway adds.
“It’s also important to remember that each month can come with different financial priorities. Often the same budget won’t work for every month, and there may be unexpected expenses you might not have considered.”
2. Manage your social calendar
Young black man in wheelchair with laptop, smiling at the camera
After social diaries have been empty for so long, it may be tempting to try and fill them to their limits. But Conway says: “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.
“You can also manage your time. 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. Conway says: “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 might 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, Conway suggests making the most of online discount codes and cashback websites whenever possible.
5. Use the three-day rule
Conway says: “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 and will value over the long-term.
“Impulse buying often follows a pattern,” she adds. “For example, if you find you are always searching on your favourite site on a Sunday evening to ease Monday blues and often end up buying a new item, then try and recognise this and stop yourself from succumbing to the habit by removing the temptation.”
6. Spend smartly
Pauline van Brakel, chief product officer at Yolt, says: “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.”
She suggests reviewing all your expenses – you may even discover some direct debits you may have forgotten about and you might 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. Van Brakel suggests earmarking roughly 50% of income for essentials, 30% for discretionary ‘luxuries’ and 20% for savings.
She says: “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 saving 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.”
