Posted on: 26 February 2021
COVID-19 has polarised the nation’s financial wellbeing. Some have been able to save more, while others have seen their income drop. If you have managed to put some money aside, read on for tips on how to keep up good habits post-lockdown.
1. What am I saving for?
First, work out how much cash you need to achieve your goal. It’s useful to have a figure to aim at and this will help you stay on track. Common goals are:
- Paying off debts
- An emergency fund
- Owning your own home
- Starting a family
- Saving for retirement
- A big purchase - a holiday or new car
2. How much can I afford to save?
Now you know what your goal is, you need to look at how your income and expenses measure up and work out what you can afford to put aside every month. Our article Budgeting for Beginners is a good place to start.
Once you know exactly where your money goes, you can save money on fixed expenses (where possible) and cut back on discretionary spending. Work out how much you can realistically reduce your spending every month and build a timescale towards your goal.
3. What do I really value?
Due to lockdown restrictions, people with disposable income have typically reduced their spend on shopping, going out, and holidays. Some have been surprised by the amount they’ve saved just by avoiding everyday purchases which seem small but soon add up – for example takeaway coffees or lunches.
Of course, online shopping is still available and we all buy on impulse from time to time! But we can all try to be mindful about our purchases. Ask yourself: do I really need it? Can I get it cheaper elsewhere? If in doubt, leave it for a week or so and see if you still want it.
4. Can my employer help?
Make life easier for yourself by setting up automatic saving. Lots of employers have workplace saving schemes where your chosen amount is saved out of your pay packet every month before it hits your bank account. Depending on the scheme, you can get tax breaks or even a cash bonus for saving. Talk to your employer to see what they offer and how it could work for you.
5. Can I make it more fun with a savings challenge?
There are lots of great ideas out there for getting into saving which can be adapted to all income levels. The 1p Challenge is one of the most popular saving challenges there is – probably given the suggested magic of turning 1p into £667.95 in a year.
The premise is simple: you start by saving 1p, and then the next day you save what you saved before, plus 1p. So day 1 = 1p, day 2 = 2p, day 3 = 3p and so on, all the way up to day 365 which is £3.65. While the increments are small, the savings are incredibly satisfying. Thanks to the challenge's popularity, you can find free planners online to help you keep track, too.