With lockdown in full force, people are finding they’re not spending as much as usual on travel, eating out, or shopping. With that in mind, it seems now could be the best time to have a look at your finances and work out the best ways to manage your money now and post lockdown. We’ve come up with some tips that have helped our money management and may help you come out of lockdown better off and ready to take control of your finances.
Find a good savings account
Even if you can’t afford to save a lot, it’s helpful to have a savings account to encourage you to save and have a separate pot from your spending account. Most high street and online banks offer a year-long account into which you can pay a minimum of £1 and a maximum of £200-£250 a month and these accounts usually offer around 2% interest, which is pretty good these days. These accounts can also be really good if you have something short term you want to save up for like a holiday. Saving can be difficult to start doing but once you’ve got an account and got started, it becomes second nature.
Pay yourself first with a standing order
Standing orders are generally underappreciated by young people but if you can afford to commit to them, they can be the best way of guaranteeing you’re paying yourself first by adding to your savings account regularly. Have a look at how much you can afford to save and set that up to come out of your bank account on a set day each month. For example, if you get paid at the end of the month, you could set your standing order to come out on payday or on the first of the month, that way your savings are sorted and you can spend the rest of your earnings as you wish.
Use your credit card well
Most people have a credit card, but how well you use it can have a big impact on your finances. If you use it well, credit cards provide a great way to build your credit score and give you a safety net for any urgent expenses. However, if you use them badly they can create a spiral of debt that could leave you reliant on other short term finance options.
A good rule of thumb for credit cards is to use them because you want to, not because you need to. Try to only put things on a credit card that you know you can afford, that way you’re building your credit score but only accumulating a bill you know you can easily pay off. Most importantly, NEVER miss a payment. Set up a standing order or direct debit to ensure your monthly charges are covered.
In the days of unlimited contactless and Apple Pay, cash seems somewhat old fashioned, but studies have shown that having money in your wallet that you can see depleting has a psychological impact on the amount you spend. This could be a particularly helpful tip for people who find themselves getting a little contactless-happy with their card, buying little bits and bobs throughout the day that aren’t essential but add up. If you’re guilty of spending a little too much on your lunch or on a night out, drawing out cash at the beginning of the working week or at the beginning of the night can act as a budget for that occasion to help keep a check on your tendency to splurge.
Try Out Savings Apps
Over the last couple of years, lots of apps to help with saving have come onto the market. These apps all vary somewhat but common features include allowing you to round up your purchases to the nearest pound to save the change, encouraging you to set saving goals and analysing your spending patterns to see where you could be making savings. Savings apps could be great if you make a lot of unnecessary purchases but don’t want to give up your morning coffee or post-work drinks entirely, as saving the change really adds up. They can also be really helpful if you struggle to motivate yourself to save as you can see better where your money is going, making them a great thing to have in your money managing arsenal.
Probably one of the simplest methods of saving and yet the toughest. If you’re serious about improving your money management, you have to get into the habit of adding up your expenses and spending less on unnecessary purchases. Do you really need a new outfit every time you go out? Do you need to buy lunch at work every day? Could you save on snacks, coffees, drinks? Have a look at where your money goes and see what you can cut out of your regular spending habits.
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Words by: Louisa Merrick – White
The UK's first Career & Lifestyle Magazine for women in the Creative and Media industries.