Many people are spending less at the moment due to staying at home, but if you’re keen to curb your outgoings even further, see our top tips here
Perhaps you’ve had a change in your financial situation, or you’re just trying to better manage your money. Whether you’re working right now or not, these easy-to-follow tips should help limit your outgoings and give you more leftover at the end of the month.
Luckily, self-isolating by its very nature should lessen our everyday expenses such as travel costs and nipping to a restaurant, shopping centre or bar. And while it's undeniably a tough time, could you salvage some good from this situation? It could be a perfect opportunity to establish some solid spending habits to make you better with your finances moving forward.
These tips are there to help you spend less during self-isolation, but the techniques work just as well during normal life.
Set up a budget
If you view every purchase in separately, it's easy to slip into a pattern of overspending. The odd £10 here and there on magazines and snacks for a long train journey, £40 on a bargain in the sales; suddenly these extras can add up.
Budgeting should restrict this as much as possible. If you work out exactly how much you need to spend each month on specific things (food and drink, utility bills, entertainment etc.), then you should view each purchase in these areas with this inline.
Then you can make a straightforward financial decision, such as ordering a takeaway on a Friday night, based on your previous spending. If you're over, you'll know to cut back, but if you've done well, you can treat yourself, safe in the knowledge you're still within budget.
Put all extra cash in a savings account
If you find you have extra cash in your current account, try moving it to an easy access savings account. You'll still be able to get the money quickly, but moving it will make it harder to spend - especially if you regularly check your balance before making a purchase.
Cut back on food and drink overspending
It's easy to reach for the snacks if you’re stuck inside all day, as well as drink more alcohol in the evenings. Both are surefire ways of spending more, especially if you're prone to an online shopping splurge when you've had a tipple.
You can use your time to cook large meals in bulk to keep costs down, freezing the leftovers or eating the next day. Check out 10 ways to eat well on a budget for some inspiration on healthy eating on the cheap.
Work out how much it costs you in work time
It's often harder to spend money when you think about how long it's taken you to earn it. What's your hourly rate? Even if you're salaried an annual figure, you should be able to work out a rough value by multiplying your weekly hours by 52 and then dividing your salary by that number.
Say it's £15, if you want to buy something for £100 that's slightly less than seven hours work, so almost a full working day. Is what you're buying worth it?
Have some days where you spend absolutely nothing
Every day you spend money. The gas and electricity you use at home, the food you eat, it all consumes money you have to pay - but the transactions themselves take place on another day. So could you have days where you don't actually spend any cash?
If you allocate one day a week where there's no spending at all, you should slowly cut out impulse buys. And it can end up being more than one day, starting as Tuesday before being Tuesday and Thursday, and then eventually alternating between a day of spending and a day of none.
It sounds simple, but could you move money you are about to spend into a savings pot instead? Say you have spied something you want to buy while browsing online. If you transfer the money you would have spent into a savings account, then wait until the following day to see if you still really want it.
If you can say no, do it, and you'll notice the total of your savings getting bigger and bigger. This will get progressively more and more inspiring; the more considerable sum saved, the easier it is to keep topping that up and appreciate the benefits of being thrifty.
Cut costs on home improvements
Technically, improving your house is spending money, but can you use the time inside in a creative and, more importantly, cheap fashion?
Upcycling old furniture you were planning to replace is one way. And could you use an old wooden pallet to make a garden bench? There's probably an abundance of ideas of updating your home on the cheap while you are self-isolating. Make a note of all the work you need doing and google to see if there is a cost-effective way of doing it yourself.
Go through all your direct debits
When going through statements, check what you're spending, and find anything you could cancel (i.e. you're not tied into a contract). Then ask yourself two questions. First, do you need it? If the answer is yes, then can you find a cheaper alternative?
Only keep the stuff you need that you can't find cheaper elsewhere. Everything else is expendable expenditure; so get rid.
And is there anything you can save money on by paying direct debit?
While you're at it, are you paying everything you can by direct debit? Certain bills can be cheaper paid this way, from council tax to your gas. It also means you will never miss a payment (just make sure there's always enough money in there to cover the outgoings). Just be mindful that paying by monthly direct debit does make some bills more expensive.
Start using saving apps
Apps are great ways of helping you save and better understand your money. You can use a tool like Money Dashboard to analyse your spending as a whole or a savings bot like Plum to keep money set aside. Check out apps that can help you get out of debt for further ideas.
Make a list of what you need - for everything
Making shopping lists for groceries is common practice, but do you do it for everything? Making lists can slow your spending on most things, particularly if you have tendencies to spend in one area.
Say you're a compulsive clothes buyer, work out what items you do need (say a white t-shirt) then you'll only be tempted by that one item. Spend money on your home furnishings? Make note of what rooms do need more and chronicle it all in a list. You should then think more rationally about your spending, and chances are most things you don't need at all.
If while in lockdown these purchases aren't possible, making these lists can be a good way of working out what you do need and then adding these to budgets. If, for example, you fancy improving the look of your patio, you can work out the exact cost and how long you will need to budget to make it happen.
Improve the efficiency of your home
If you're inside day-in, day-out, you'll be using more gas and electricity than before. Check if any radiators need bleeding, pick up some more efficient light bulbs on your next food shopping trip and make sure you shut all your doors.
Be competitive about saving cash
Who do you spend money with? Whether it's your partner, your kids or your friends, you can start making saving money a competition between you all which brings a bit of fun into slowing the expenditure.
If you regularly meet up with friends, plan a new post-COVID-19 meet up with a strict budget, and set forfeits for those who break the rules. Could you take it in turns to do a date night with your partner within a set budget?
And also ask kids to make savings on things like day outs. You could allocate a set amount to Sundays for example, and involve them in the decision-making process. Anything you collectively do below budget you could agree to split the savings or put towards a big day out in the future.
All these are easy to do now the vast majority of public places are shut. Still, you can set the plans into place now and get used to the cheaper activities of staying in and watching TV, cooking large meals and walking (while observing social distancing) in public places.
Try the 50-30-20 rule
Once you've sorted out your budget, try to stick to this basic money rule. 50% of your monthly income should go on essentials (bills, transport and food shopping), 30% for non-essentials (like shopping and socialising) and the remaining 20% can go into savings.
While we're self-isolating, you may find that more of your income is needed to cover the 50%, or that you spend less than 30% on non-essentials. Don't worry too much about sticking to these as a hard and fast way of living. Just try to maintain it as best you can, and get your savings as high as possible.
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