Almost half of Brits (47%) have managed to save £300 in the past month, according to new research from LinkedIn. But are you saving or spending more money than usual during lockdown? And how can you budget effectively during the coronavirus crisis? Here, an expert shares her advice for making the most of your cash during this time.
Back in “normal” times, I would put myself through the grim monthly ritual of going through my bank statement to check the status of my outgoings and incomings. This would always follow the same pattern; horror at how much money had left my account, followed by anger at myself for constantly frittering my earnings on stuff I don’t need.
But this month, the ritual wasn’t quite as grim as usual. I’m in the incredibly privileged position of still having a job and a place to live during the pandemic, and lockdown means I’ve cut the majority of my outgoings without even having to try. I’m working from home, which means my commute from my bedroom to the kitchen is free, and my budget lunch of beans on toast costs a fraction of anything I could buy in Pret.
I’m doing a lot more cooking and planning my meals in advance, so I’m saving money on supermarket trips, and while I miss going for dinners and drinks in restaurants and bars with friends, I definitely don’t miss splitting the costly bills.
I’m not alone in managing to save some money during this time – new research from LinkedIn has found that 47% of Brits have saved an average of £300 extra in the past month. The research also showed that 18-34 year olds are the most likely age group to be saving money, with 25% of people planning to put the extra cash in a bank account for when it’s needed, and 24% planning to spend it on a holiday.
I think the pandemic will probably change my relationship with money going forwards, too. Saving so much has made me reassess the way I spend my salary in general. I never bothered with meal planning before the pandemic as I liked having the option of a spontaneous dinner out or takeaway, but I can see in black and white just how much cash this was costing me. Ditto my daily trips to Pret.
My approach to entertainment has changed too. For example, I love going to the cinema, but I’m not sure it’s worth the £18 price tag when there are so many films on Netflix. And when it comes to buying clothes, I haven’t so much as looked on the ASOS website for over a month.
In short, I’ve managed to save quite a bit of money during lockdown, and I’m not the only one. A new YouGov poll found that 61% of us are spending less money than before, which could be a glimmer of good news amongst all the bad.
Stylist’s Megan Murray has also managed to make some savings during the lockdown. “I’m absolutely terrible with money, and specifically saving. I just don’t have that thing in my brain that says ‘don’t buy that, you don’t have the money’,” she says. “I like shiny things, and if there’s any possible way I can wangle it so that I can buy something pretty, I will. If I’m at a restaurant and there’s a dish I like but it’s pricey, I’ll spend the last of my bank account to have it. So lockdown has been BRILLIANT for me and my bank account.
“I’m not overly excited about buying nice clothes because there’s nowhere to wear them and I can’t go out to socialise, so my outgoings have decreased massively. I’m also saving £500 a month on my train fare, which I’ve put directly into savings, along with another couple hundred from my wages.”
Of course, not everyone is saving money during this time, or in the position to be able to do so.
“I’ve got credit card debt and an overdraft, and lockdown seemed like an opportunity to pay those off,” Stylist’s Hollie Richardson says. “I don’t need to pay for the holidays I had planned, I’m not spending a fiver at Pret everyday and there’s no longer that temptation of London’s finest overpriced cocktails.
“But fast-forward a month since I first started isolating, and I’m in the exact same financial position I was in before this happened. I’m living on my own at the moment, so I made a decision to be super kind to myself to help get through this awful time – and yes, that involves spending money. Most of it has gone towards food and booze, because I am consuming a lot of food and drink right now (including one indulgent takeaway a week). I’ve signed up to more entertainment and fitness subscriptions, too. And I’ve donated to various charities and organisations who need financial support more than ever.
“I know this is irresponsible as we head towards a recession. But honestly, if this pandemic is teaching us anything, it’s to take each day as it comes and do what the hell you need to do to get through it.”
All your money questions, answered
Are you looking for advice on how to budget during the crisis, or do you want to know the best ways to invest your savings during this time of uncertainty? Here, financial expert Nat Rich answers all of our biggest questions about money during this time. Nat is a speaker and entrepreneur who is currently helping people navigate their finances during the pandemic through her twice weekly live webinars, Un-F##k Your Money.
Is it normal to be spending just as much money as usual during the pandemic?
Nothing is normal right now because we’ve never been in this situation before on a global scale. Our spending habits are not the same and many of us are spending less because we can no longer go out and spend in the same way as we did before, such as eating out, getting take away coffees, paying for high priced gyms and classes as well as buying lots of clothes or spending money at the pub, the nightclub or on our regular beauty treatments.
So yes, we are changing what we spend our money on and finding that we have more of it at the end of the month, but the problem is that nobody knows when the economy will turn around or take a turn for the worse.
There is no ‘normal’ and everyone is in a different situation, but if you are spending the same as before, there is no need for this. You may just be spending for emotional reasons, which we have all done at some point. But now is actually a great opportunity to cut all your costs and start saving some money.
Do you have any budgeting tips for the pandemic?
Cancelling all the things you don’t need or use enough is a great place to start. Building a custom made cashflow forecast sheet will work wonders for tracking finances too. It helps you see the difference of what is coming into your account compared to what is going out and helps you stay afloat and plan for the months ahead. Keeping your spending to a limit will greatly help.
Using simple tools such as the Yolt app can help you see your money movements in all your accounts in one. Also, keeping up with Martin Lewis from Money Saving Expert could help you make some serious savings.
Do you have any practical advice about making the most of our savings during this time?
The best thing is to diversify your savings. This means to break them down and spread them out into multiple places.
If you take a look at what happened to Northern Rock in 2007, there comes a time when even the main banks we have come to know and love are not 100% safe during a global depression. This means that at any time they too could crash and restrictions would be placed on all accounts prohibiting money from being withdrawn in certain amounts, if at all. This also happened in Greece in 2015 when all the banks closed on a Sunday without prior warning.
Open another bank account and split your savings between both a new challenger bank such as Tide, Revolut or Wirex and an older, more traditional bank such as Coutts, Barclays or Metro. This way you have one foot in the old financial system and one foot in the new system. It’s all about maintaining a balance.
Accounts with challenger banks are super quick and easy to set up – the process will only take a few minutes. They can be ready to go almost instantly and will be a good place to transfer your savings to. Some of these accounts also allow you to trade into gold, crypto currencies or stocks and shares. But take advice from your financial advisor before making any investments. Play it small and safe at this time, if at all.
Is there anything in particular we should be doing with our finances during the pandemic?
Yes, quite simply, SAVE YOUR MONEY. We’re in this for the long haul. The global recession of 2007/08 lasted 18 months. The Great Depression in 1929 in America lasted for years. Both were bad and had huge consequences around the world, but right now we have something much bigger on our hands called global dislocation of finance. None of us have ever lived through this or experienced it, and even those experts we often look to for guidance can’t tell us how long we will be in this unstable financial position.
If you understand money, finance and investments, you know that now is a time to save your money, sell what you don’t need or use, and sit tight.
On the bright side, there has never been a better time to learn about money, the financial system and investments. Trust me, it’s not all about maths and spreadsheets – it’s about strategy and the game. It can be fun and rewarding to truly understand what it means to be wealthy. Knowledge is power but wisdom allows you to use that power in the right way, and the time of opportunity is upon us.
You can start your learning journey with Nat Rich’s Un-F##k Your Money live webinar. Find out more by visiting her website here.
This piece was originally published on 20 April 2020
Images: Getty, Unsplash