Don’t get me wrong, there are plenty of things that suck about social distancing - not seeing friends, not being able to give your mum a big squeeze and having to motivate yourself to work out at home rather than at your usual gym class.
But there are some positives as well, like doing your bit to keep everyone safe, being able to binge watch all of your favourite series on Netflix, spending time cooking new recipes, not feeling guilty about midday naps.. the list goes on.
But one of the biggest benefits I’ve found is I’m finally getting around to doing some of those boring personal admin tasks I’ve been putting off, and top of my list was getting my finances in order.
Whatever situation you’re in - working your normal hours from home, maybe your hours have been cut or, like so many, you’ve lost your job - now could be the right time to take stock of your finances. If you’re still working, you’ll probably find you’re able to give your savings a boost over the next few months since you won’t be going for those midweek drinks, eating out at the weekend or buying a weekly train ticket.
So, even though your travel plans are currently on hold, now is a great time to boost your savings for future trips. With these seven steps, you’ll find savvy ways to turn a crisis into an opportunity to save for the future.
1. Track what you spend
The first step to any savings plan is to look at what you’re currently spending, this will help you identify where you’re overspending and where you can cut back. Most of us have a banking app which breaks down our monthly spending into categories like travel, entertainment and dining.
But, download a savings spreadsheet, like this one from StephMyLife and make this even more detailed. Go back over the last month and track everything in the allocated fixed and variable categories (household, entertainment, personal, transport) to get a clear picture of where your money is really going.
2. Keep it realistic
We’re all guilty of setting unrealistic goals in many areas of our lives – vowing to lose 10kgs in a week or deciding on Sunday night that we’ll only eat lettuce for the next 30 days. And, inevitably, this unrealistic goal setting ends in failure.
Setting a savings goal is no different, by making it realistic and making a series of small shifts over time, rather than one huge immediate change, you’re much more likely to succeed. And, if you fall off the wagon, don’t sweat it, just reset and carry on the next day.
So, instead of no takeaways at all, plan for one a week, put in a budget for WFH snacks or a budget to buy your favourite food and bottle of wine to set up a midweek date night - even if it’s a date for one!
3. Clear your debts first
If you have credit card debt, start to clear this first, especially if you’re paying interest. If you’re paying more interest on your debts than you are earning in savings, you are losing money.
However, in these uncertain times, aim to build up at least 3 to 6 months living expenses in an emergency fund. So, if you have credit card debts and no savings, you should first set up a balance transfer to an interest-free credit card while you build up your emergency fund. Then pay off your debt, and then start to save for the future.
4. Decide what you’re saving for
You’ll be more likely to stay on track with your savings if you have a tangible goal. Do you want $5,000 for your next holiday? Are you saving for a house deposit? Is all of this staying at home making you want to travel the world full-time when this is over? Whatever it is, having one eye on the prize will make you think twice about ordering your third takeaway of the week.
5. Set up different savings accounts
Unfortunately for us, the days of high-interest savings accounts are over. However, to make the most of your money, ensure you have the best savings account you can find. This will depend on your country, the amount you already have saved and how much access you want to have to your money.
To avoid the temptation to dip into your extra cash, open a savings account which is separate to your everyday account. The harder you make it to access your money, the less likely you are to dip into it.
Within your current account or your savings account, you can also set up sub-accounts with smaller savings goals like one for treats, so that when you reach a saving goal you can reward yourself with a spa day (when we’re free) or with something you’ve wanted for your home.
6. Reduce your bills
In the next few months you’ll probably find that some of your bills will be reduced (like your gym membership which should now be frozen or cancelled) but some may go up, like electricity, if you’re working from home. But is there anything else you’re paying out for each month that you could save on? The more you can reduce your fixed monthly fixed bills, the higher your potential savings amount will be.
For example, do you really Netflix, Stan, HayU and Prime? Do you pay for iCloud storage that you don’t need? Do you have subscriptions to apps that you no longer use? Or, can you shop around and get a better deal on your household bills?
7. Step up your side hustle
While it’s probably not a good time to find a second job, there are some other ways you could boost your income in the next couple of months. Now that you’re spending more time than ever at home, have you noticed anything hanging around that you never use or wear? Sell it on eBay, Gumtree, Depop or Etsy.
If you have a car or bicycle, you could sign up to deliver food with Deliveroo, Menulog, UberEats or even your local restaurant. We’ll all be ordering in for the next few months, so these companies will need as many delivery people as possible!
Seven ways to save money during social distancing while still enjoy life as much as possible during this tough time. Once you start to see those dollars adding up and you feel closer to your goal, you’ll feel motivated to keep going even when you’re free to spend all your money on cocktails again!