Coronavirus lockdown taught us to spend less… and save more: Five lessons to hold onto for a wealthy future
As lockdown restrictions finally ease and life begins to feel more ‘normal’, a number of financial lessons have been learnt along the way
ONE: It is possible to cut back. Fewer trips to the supermarket have shown many households that they can lower bills by planning meals, only buying essentials and switching to cheaper supermarket own-brands.
Many have also realised just how much they previously spent on non-essential purchases.
Money in the bank: Many people have also realised just how much they previously spent on non-essential purchases
Holly Andrews, of financial broker KIS Finance, says: ‘By being forced to cut out takeaway coffees, meals out and socialising with friends and family, a lot of us have learnt how much we were spending on these luxuries before – and how easy it is to continue to live without them in the future and save money.’
TWO: Pricey gyms are not the only way to stay fit. Anyone who has tuned into Joe Wicks’ PE lessons in recent months will know that keeping in shape does not have to involve expensive gym membership fees.
There are workouts aplenty on YouTube – plus numerous free mobile apps on both iOS and Android phones such as Sworkit and Strava to help spur you on. Cycling is also an easy way to stay fit.
Laura Laidlaw, of financial conglomerate Standard Life Aberdeen, says: ‘If you were previously spending £40 a month or more on your gym membership, you may have since discovered the abundance of free fitness classes online or a new love of running outdoors. Cancelling your membership could see you save hundreds a year.’
THREE: Emergency savings are important. Research by savings marketplace Raisin shows lockdown has prompted consumers to re-evaluate how they save – with one in five saying they will now put more money aside for a rainy day.
Experts recommend saving an emergency fund of at least three months’ wages in an easy access account.
‘If you unexpectedly lose your job or take a drop in income, this will allow you to support yourself for a few months without having to borrow and go into debt,’ says KIS’s Andrews.
FOUR: Spreading your eggs does work. Stock markets have been on a rollercoaster ride since the pandemic hit. But lessons can be learnt here, too.
Laura Suter, of wealth manager AJ Bell, says: ‘The February and March falls in equity markets have been a wake-up call for many investors – namely that they had too much investment risk in their portfolios.’
She adds: ‘A majority of investment funds above water this year are invested in bonds. This highlights the importance of having exposure to a broad spread of assets in your portfolio.’
FIVE: Children do not need expensive days out. Before lockdown, trips to theme parks, wildlife sanctuaries and other big attractions were relied on to keep children entertained. But even though these are now reopening, lockdown has shown that spending big sums on entry costs and days out is not always necessary.
Clare Francis, director of savings and investments at Barclays, says: ‘Many parents have learned a lot in terms of downloading free resources online and getting creative with what’s at home.
‘Our research shows almost a quarter intend to do more free and cheap activities with family and friends to help save money.’ SIX: It pays to switch to a better deal. Working from home has meant energy and broadband usage has soared, with many people realising just how much can be saved by switching supplier.
Figures from home management firm Hoppy show that the number of people switching energy sources via its website nearly doubled in the month after lockdown began.
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