Early on in the pandemic, there was talk of it being an equaliser, of us being “in it togetherâ€, with so many people limiting travel, skipping the commute, working from home, and staying in where we might usually be out and about.
But financially, lockdown has emphasised wealth inequality. Psychologist Joan Harvey from the University of Newcastle believes that we fall into at least 10 different consumer groups in terms of how our personal finances have been affected by the pandemic, and pinpoints two groups in particular who will be thinking hard about outgoings – and going out – as life begins to open up.
First are people who had financial troubles before the pandemic, but have spent less during lockdown and, in his words, “might be quite relieved and may sustain a lower level of spending†even as we get out social lives back.
And secondly, there are those who cut down costs because of lockdown job insecurity and the looming threat of reduced income. “They may well limit the amount of spending they’re going to go back and do,†says Dr Harvey.
If you feel like you’re in either of these groups and are keen to maintain or develop better money habits, despite the temptation of restaurants, pubs, shops and our social diary, here are some ways to approach the weeks ahead.
Try to be selective, socially
It can be difficult turning down social invites, either because we are craving company and good times or because we feel pressure to attend. But one good way to cut back on socialising is to learn how to politely say no, sometimes.
“Start by looking for two opportunities this week to say no to small things in your life,†suggests Aziz Gazipura, confidence coach, to HuffPost UK.
“Just like hitting the gym, the first few weeks might be hard and you may feel resistance to doing it… But once you’ve done it a few times, you’ll discover you’ve just accessed a new level of freedom.â€
Not automatically returning a schedule of three or four times out a week will drastically decrease your weekly spend, and may even allow you to save.
Keep things to a pint or two
We know, it’s familiar advice, and not the most fun decision you’ve ever made, but having one or two drinks rather than three or four makes sense for many reasons. Firstly, it’s going to save money. Secondly, many of us have come to rely on alcohol as a crutch in Covid times, and that’s not necessarily helpful.
“Lots of people don’t properly recognise just how much they’re drinking,†Professor Winstock of the Global Drug Survey told HuffPost in lockdown of his pandemic findings.
“The thing that shocked me most of all was how quickly increased drinking had led to worse physical and mental health. You think it takes months and years of regular heavy drinking to make a difference to how you feel – these findings go, no, this is not many months and years, this is like a month or two.â€
Think of your health first, and you might just save some money too. It sounds easy, and we know it isn’t, but it’s worth bearing in mind.
Track your spending with an app
And no we don’t mean the takeaway app that’s been swallowing your savings in lockdown and knows your regular order down to the last poppadum.
There are so many ways to track spending and save these days, from the Chip app, which suggests amounts to squirrel away based on your spending habits to Tandem, which automatically rounds up transactions to the nearest pound and saves the change.
App-only bank Starling does the same, while Monzo isn’t just a millennial favourite for its fluoro bank card, but for its clever category-based tracker.
Start saving a little, but regularly
You’ll need a current account with a bank to open a separate savings account, but typically the latter offer better interest rates, meaning your money makes more, well, money while it’s sitting in the bank.
“One factor to bear in mind is that you will be much more restricted on the amounts you pay into a regular savings account,†reminds Shaw. “Maximum monthly deposits are typically around £250.â€
But if this type of savings plan suits you, the rigid structures some savings accounts offer may actually help. “Savings accounts allow you to pick a period of time, from one to five years, depending on how long you’d like to tie up, or put away, your savings,†explains Shaw. “Rates will vary, so be sure to pick an option that’s best for you and your savings plan.â€
Consider opening an ISA
“For those that want to keep their money saved away, there are options,†says Gareth Shaw, head of money content at consumer spending specialists Which?
“One is to open an individual savings account (or ISA), which allows you to save tax-free into a cash savings or investment account. [These] are offered by banks, building societies, insurers, asset managers and National Savings and Investment.â€
There are many types of ISA savings accounts available, so Shaw recommends shopping around, as each will offer something slightly different. “Do your research on which best suits your saving needs,†he urges.
And if you are lucky enough to have saved…
Perhaps it’s time to look into professional advisors. This option won’t be for everyone, says Shaw – but if you were lucky enough to have save more money than you expected during the pandemic, an advisor can help you invest in stocks and shares, where you may be able to increase your savings more quickly.
Investing is a gamble so it’s important to tread carefully. For more information on how to invest carefully, check this guide by specialists, Money Saving Expert.
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