If your income has been uninterrupted during lockdown, you might think – I’m better off after lockdown, I haven’t spent any money for a month!
That does give you a head start – but not only is there a high chance that you’ll be racing out to do a catch-up spend as soon as you can, (which to an extent is fair enough!) but as we get back to ‘normality’, intentions of doing things differently quickly wane. Just look at how long it took us all to stop scanning in everywhere if you want evidence of how quickly we return to our old ways!
So, plans for post-lockdown binging aside – how do you give yourself a chance to turn your lockdown spending gains, into long-term financial wins?
Review your investments
While we’re restricted in terms of what we can do and where we can go, use the time to check that the places you’ve chosen to invest your money are still working for you. What’s happened to the fees and the performance of that managed fund or KiwiSaver fund you’re in? What about the punt you took on a share you heard might be a good bet? Your investment property might be a different investment prospect now that tax regulations are changing – so now is a good time to reconsider whether you should be holding it for the long-term. Remember, no one will ever care about your money as much as you do – so take the time to make good, well informed decisions.
Set financial goals – on your financial date night
Talk to your partner – and include your kids if you have them – about what you’re actually aiming for as a family, how you plan to get there and what that will require. Make it a regular feature and ensure there’s time to talk about the big picture – the dreams – not just the nuts and bolts of the day-to-day. Get it going in lockdown so it’s part of your routine.
Make a financial plan
As the saying goes, a goal without a plan is just a wish! So, don’t just think about where you’d like to get to – think about what you’re capable of, what’s possible, what your obstacles are, what your opportunities are, and how you’re going to get where you want – or need – to go.
Set yourself up for success
Think beyond your current circumstances where you have time on your hands, and consider what systems you could put in place that would make adhering to your plan and chasing your goals more automatic. Aim to set things up so there’s less willpower required – because when we’re busy, when we’re stretched, our willpower is eroded. So, make it easy on yourself! It could be a separate bills account, or direct debits so you always get the prompt payment discount, or even a parking app so you don’t end up getting stung by parking wardens when a meeting runs over.
Lock in the lockdown gains
If you’ve saved money this lockdown, awesome – now it’s time to lock in those gains. Sure, give yourself a little splurge post lockdown, it’s been hard, and no doubt deserve it. But make sure that doesn’t just go on, and on .. and on. Put that saved money to work. Pay off debt, put it against the mortgage, use it to replenish your ‘buffer’. Whatever you do, make sure it doesn’t just disappear into thin air.
Use it as a spending circuit breaker
It’s likely you’ve spent less on food this past month, so, after a few takeaway treats when you have the opportunity, consider how you can re-set your spending, so you don’t blow the food budget every week. It’s not necessarily about shopping exclusively for specials or cutting out all the delicious things you love – but rather staying in touch with what you actually spend by setting a budget, and perhaps putting that money in a separate account or withdrawing it in cash. Combine that with having one or two fewer takeaways, adopting that ‘fakeaway’ approach more often and going to the supermarket less often and you’ll be surprised how much less you spend. Combine good systems to help you become more conscious of when you’re overspending, with reducing the opportunities to overspend (because every trip to the supermarket is a least $50 right?!) Maybe it’s even about uninstalling Uber Eats for a bit! It doesn’t have to mean living a lockdown-style life forever – but small changes like this do add up.
Use the time to review your fixed costs
Lastly, once you’ve blitzed Netflix and you’re sick of baking sourdough – here are a few ‘to-dos’ to add to your list that could be much more fruitful!
· Review your ‘lazy tax’ – could you get a better deal on power, broadband, insurances? We find people can reduce their fixed costs by about 10-percent when they put their mind to it!
· Check your credit card – 63% of credit card spending incurs interest, don’t let that be you! Either get a debit card instead, or pay off each expense when it’s incurred, that helps you reconnect to the pain of the purchase, while maxing out your 50 days interest free is a recipe for getting too busy and forgetting – and ending up paying interest
· Review any debt you have – could it be repaid faster, restructured to a lower interest rate, or consolidated?
· Review your mortgage structure and when fixed rates are coming up, so you don’t inadvertently end up reverting to a floating rate and paying more.
· Ensure you’ve claimed what you’re entitled to under the Covid-19 Government subsidy schemes.
· Have a look through your bank statements – how much of what you were spending pre-lockdown was intentional or conscious, and how much of it did you not even realise was happening?
· ‘Marie Kondo’ your money – that is, work out what actually brings you joy – so you can ensure that it fits into your budget. That clears the way to eliminate the ‘fritter’- the stuff that doesn’t make you happier, but does make you poorer.
Hannah McQueen is a financial adviser, accountant, personal finance author and the founder of enable.me – financial strategy & coaching.