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Saving in a lockdown

How to boost your balance behind closed doors

Times are tough right now. But while you’re isolating, at least your bank balance could be escalating with these 11 smart savings tips.

One thing about an enforced lockdown is it can give you more time to take a look at your personal finances. And when you do that, you might find that you wish you had a bit more stashed away for rainy days or long-term plans.

The good news is that you could be able to turn the time stuck behind closed doors to your advantage. Whether you’re looking for ways to maximise your saving strategies, or just looking to find some extra cash to put away each month, our top tips could help set you on your way.

1. Save your pre-lockdown spending

Life used to be so much fun, didn’t it? Restaurants, bars, nightclubs, cinema trips, date nights – the list goes on. But one thing with a lockdown is all that spending gets locked down too. So instead of finding other ways to splurge now, why not spend it on your future self?

Check your statement and add up what you would usually spend in a month on entertainment, deduct some to account for any areas where your spending is increasing, and put the rest away somewhere else, such as a savings account. This keeps it separate from your spending account and helps you to avoid the temptation to spend it on things you don’t really need. You won’t miss it if it’s money you would have spent anyway, and it’s a great way to boost your savings.

2. Be debt smart

If you’re one of the lucky ones, a spending slowdown may be leading to your bank balance increasing without you having to think too much about it. But putting in some thought about longer-term prosperity could make you a double winner.

If you have the cash to spare, overpaying on your mortgage or other debts could cut overall interest costs and the length of time you have to make payments for, benefiting your bank balance in the long-term. Check the terms of your agreements to see if you can overpay.

We know that not everybody is in such a position though, and if you are struggling to make payments or you need to find ways to cut your outgoings during this period, you may be eligible for a range of financial support options including mortgage, loan and credit card repayment holidays.* Remember, interest may still be charged during the repayment holiday and as interest continues to be charged, your overall balance will grow and it may take longer to pay it off. Make sure you check out what you are eligible for.

*Payment holidays are subject to individual eligibility criteria and terms and conditions.

3. Save with your eyes open

Whether you’re trying to finance your future or just build a pot for some extra luxuries, you’ll want to make sure that your savings are working as hard as they can. So go into it with your eyes open. One option is opening up an Individual Savings Account (an ISA). You can save up to £20,000 in an ISA this tax year, which ends on 5 April 2021, and any interest or returns you earn on money in an ISA is tax-free. You need to bear in mind that tax rules like these can change in the future and their effects on you will depend on your individual circumstances.

With most savings accounts, including cash ISAs, you can often get a better deal if you are prepared to tie your cash up for longer, or make no more than a certain number of withdrawals during a set period. But, especially during uncertain times like these, you should give considerable thought to when you may need to access the cash. Once you’re sure of the kind of commitments you are happy to make, you can find the best deal for you.

If you’ve already got enough savings to cover any unexpected emergencies, you might want to consider investing in the stock market with an Investment ISA. When it comes to investing there is risk involved though, as the value of your money can fall as well as rise. However, over longer terms such as a minimum of five years, stock markets have tended to produce better returns than cash, although you do have to bear in mind that the past performance of investments is not a reliable indicator of their future performance.

So if you have money you can afford to put away for five years or more and are sure that you won’t need it no matter how your personal financial situation unfolds, it could be worth the risk.

You can help reduce the overall risk you’re taking by investing in a fund rather than buying the shares of an individual company. With a fund your money is spread out and invested in the shares of multiple companies, so your investment return isn’t dependent on the performance of a single share price.*

*Remember, it’s important to fully understand what you’re investing in, so please make sure you do your own research and, in particular, investigate the fund’s key details on the fund factpage linked from the fund name. Make sure you read the Key Investor Information Document (KIID) found there when making your decision on investing. There is also a fund factsheet that you might find useful. If you’re not sure about anything, please seek professional advice.

The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.

4. Don’t let boredom break you

Oh, the temptation! You’re sitting around at home all day and it seems that everything you’ve ever wanted is just calling to you through your phone. It can’t hurt to take a look, can it? Well, yes it can.

Boredom can drain savings, fast. It’s hard to fight back against, but if you can’t resist scrolling then at least make sure you ask yourself whether you really want it before you click add to cart. And if you’re trying to cut back on spending, ask yourself if you actually need it. If you don’t want to be reminded of what you’re not buying, then delete the cookies in your browser history on a regular basis so that companies can’t track what you’re looking at and entice you with adverts.

5. Check refunds on trips and events

Very few people saw lockdown coming – least of all event organisers. Take some time to scour through your emails and diary to see what you were scheduled to do before retreating behind closed doors. It may be that you are owned several refunds, or have the option of claiming one instead of attending a rescheduled event.

6. Bag a bargain

If it is need, rather than want, that is driving your shopping then now is a good time to get tactical. It may seem counterintuitive to encourage spending as a way to save money, but by timing purchases that you have to make carefully you can make significant saving. Many companies are holding sales to get rid of stock, so if you’re planning to make an expensive purchase in the future – and if you can afford to make it now instead – why not see what deals are available? You could even go direct to the seller to see what they might be willing offer you?

7. Cool your energy spend

Now is a good time to take a closer look at your utilities bills. You may find keeping yourself warm all day, charging your devices with your own power and running your appliances more often than usual is causing these to rocket. You can use now as a training ground for being a more environmentally minded (and prudent) citizen by switching off lights and plugs, powering down devices, closing windows and doors and generally being mindful of energy spend. Once you’ve altered your behaviours there may also be some easy savings to make on your bills. According to Ofgem, the average household can save up to £305 a year by switching to a better energy deal, so check out a range of comparison sites and see what is possible.

8. Make a break or strike a deal

You’ve probably heard by now that it’s a good idea to cancel monthly memberships or regular payments for things that you are no longer able to use – whether that’s your local gym or your monthly travelcard. If you’re still lagging behind on this, get to it straight away.

But there are times when it may be more appropriate to haggle. If you’re paying for a subscription for something that is no longer offering you the same value, then now is that time. Can you negotiate a partial refund for now or a reduction on future costs?

9. Get rewarded for your time

It’s much easier to save if you have more money coming in. If you have spare time on your hands, could you put it to good use and bring in some extra cash with it? There are several ways to do it. Consider whether you would be prepared to take part in focus groups, which can pay hard cash in exchange for your opinions. Could you bring a little extra in by completing surveys and focus groups online?

10. Make your own

If you’re still wasting money on ready-meals then it’s time to hit YouTube for some cookery lessons. You can save money and learn a rewarding new skills. This is especially the case if you buy own-brand ingredients, which are usually much cheaper than well-known brands. Once you start cooking from recipes, you can also start planning your shops forensically to get maximum bang for buck – including freezing any leftovers for another meal on a different day. In fact, if you build a costed meal plan that takes into account what’s going off when in the fridge, you could also cut down on food waste.

11. Build your own gym kit

Home gym equipment is expensive at the best of times – but it has become especially pricey due to lock-down demand to stay fit. Instead of forking out to get heavy kit delivered, get creative. Find your own ways of making exercise equipment that could do the job instead, although before you start using it remember that it is important to take precautions to help prevent causing an injury to yourself or others.

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