Managing your finances now COVID-19 restrictions have lifted
As the global economic fallout of the pandemic continues, it’s likely that your personal finances have also been affected during these “unprecedented times”, too.
Whether your job was impacted through furlough, or you managed to save by cutting outgoings, many of us developed some good money-saving habits during lockdown that may be hard to maintain now that restrictions are lifting. After all, just because we are out of this lockdown, we do not know what the future may hold – making financial security more important.
Here are some of the ways to keep up the good habits, abandon the bad and introduce positive new ones as the world begins to open.
Good habits to keep
With the absence of eating out, entertainment, travel and so many other things, you may have been able to actively save (or save substantially more) for the first time. Think carefully before reintroducing these expenses back into your life, considering carefully what you can forgo or manage yourself, that you previously paid for. Perhaps running around the park can continue to replace a full gym membership? Or working from home can keep saving you the cost of commuting?
Maintaining a contingency fund
If nothing else, the last year or so has taught us just how unpredictable life can be. We have spoken before about how having an emergency fund can provide you with security and peace of mind in times of upheaval, so make sure to follow our steps for assessing how much you need to start saving and keeping it topped up.
Paying off or keeping down debt
According to Experian, consumers’ average credit card balance dropped by 14% from 2019 to 2020, meaning we were borrowing less. This next year will be about making sure to not let high-interest balances creep up again now that restrictions are lifting.
Bad habits to stop
Being too cautious
This is not a bad habit per se, but although maintaining savings is incredibly important, keeping too much of your money in savings accounts that accrue little interest may rob you of the opportunities for long-term growth that investments can offer. That is where diversifying can come in, spreading investments across asset classes, and redirecting extra cash to long-term investments. One way to do this is to speak to a Chartered Financial Adviser who can offer guidance and explain the benefits and risks of any potential investments.
Internet shopping is an incredibly convenient way to get what we need without ever leaving the house. However, it is also made so easy, we can often lose track of just how much we’re spending on impulse purchases – and all those Amazon orders can add up. Consider staying within a pre-determined budget for little luxuries or unplanned purchases to keep outgoings down as other costs (such as commuting or childcare) come back into the mix.
New habits (if you are not already doing them)
It may seem like a basic place to start, but knowing how much you have coming in, how much going out, and how much you need to save are the foundations of financial security. Creating a new budget that accommodates a post-pandemic lifestyle and accounts for new expenditures will mean nothing comes as a nasty shock once the world opens and returns to some semblance of normality.
Assess your financial goals
These will be personal for you but can include checking in on your retirement fund, certain returns from investments, and making sure your life insurance and will are up to date. Putting in an appointment with your Financial Adviser can be a great place to start.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.
gpfm are an independent financial planning company dedicated to the provision of personal, professional, and objective-driven advice for our clients. We have been awarded the Chartered Financial Planners title by the Chartered Insurance Institute for offering high quality, independent and informed advice that meets the needs of our clients.