The worldwide pandemic has been a very turbulent time and confusing for many people, especially when it comes to their finances! Things still aren’t completely normal, in fact everything still seems to be changing every day. So how can you handle your finances to get the best out of them when you’re not sure what’s going to happen day to day? We spoke to Emma from The Broke Generation to give us some tips on what we can do to save the pennies during this odd time.
For many, going into the first lockdown with shops, bars and restaurants shut meant that they could save a fair whack straight away – as no one could do anything!
Lucy, 27 said: “I saved quite a lot during the first part of lockdown, now we’re a little bit freer, it feels like the dam has burst and I can’t stop spending on going out and on rubbish!”
So how can she curb her habit? Emma says that this is a really common problem and “a bit like not being able to stop indulging in food and drink after a holiday, we struggle to rein in our spending habits too.”
She says that the key is to take the pressure off and start fresh: “Go back to basics, and make small steps back to your pre-spending-spree habits instead of going cold turkey all at once! It might be a case of saying ok, no shopping this week, or it might be tracking your spending each day to connect you back to your habits. Different things work for different people, but really nutting out a new path forward rather than trying to undo what’s already been done will make all the difference.”
Get A Better Handle On Your Finances
The pandemic has certainly highlighted a lot of financial gaps in our lives, so thinking about changes you can make is definitely important. Emma suggests sitting down and having a review of your current position: What have you got, what do you owe, what’s coming in (and has that changed). From there, look at where your money is going, and whether that still aligns with the person you are post-pandemic.
“Ask yourself, knowing what I know now, knowing how much things can change, is this how I want to live my financial life? That might prompt you to make some tweaks or think about doing so in future,” Emma said. “I also think we should be paying big attention to any savings we have right now, and looking at how that actually looks in the context of an emergency. How secure did you feel when Covid hit?” She suggests looking at your savings and working out how many weeks or months it would last you if that was the only money you had to rely on as it can really help you quantify where your next money move will be, and whether you need to top up those savings a bit to really prepare for any future impact.
Cutting Back On Non-Essentials
So during this strange time, what if you’ve got a big purchase you’d like to make, for example a house. Should you be cutting back on non-essentials, such as a Netflix account? Emma says that both spending and buying property are very personal things, and what you should and shouldn’t be buying really depend on your own circumstances.
Emma suggests thinking about whether you’re getting all the mileage from your Netflix subscription right now and if you are, keep it. But if there are things you’re not getting the use out of now because of the way life has shifted, definitely consider a cull. When it comes to house prices, Emma says it might simply be a case of starting the conversation: “If prices are going to drop, then potentially yes, it could be a good time to look – but only if that aligns with your other financial and lifestyle goals as well. Maybe speak to a mortgage broker and see how much you could borrow, and start thinking about whether that’s something you’d like to pursue in the next 12 months. At the very least it gives you a good insight into where you’re at financially.”
And Emma’s thoughts in terms of finding the best deals and accounts? “Research, research research. Rates and offers change all the time, and there are sometimes switching bonuses or incentives to get better features or rates,” she said. “Also don’t forget your annual ISA allowance of tax free savings – if you’ve been stashing cash during Covid, now could be the time to optimise your allowances.”
It’s important not to let money intimidate you – but what if you worry about it rather than getting on with things? “As the old saying goes, knowledge is power,”Emma said. “Take that plunge and get comfortable with a state of awareness about where you’re at. Once you know where you are, you can make changes that enhance your financial confidence. Take control by looking at your finances and either setting a budget or setting up a new savings plan or maybe moving to an account with a better rate or more features. When you get comfortable with taking the lead on your money, your confidence can grow from there.”
Catch up with Emma via her website for more great tips!