As we emerge from lockdown and our towns & cities begin to open back up, you might have found that your financial situation looks quite different now than it was at the start of the year. With previous spending categories such as transport and entertainment substantially reduced, and utility bills and groceries undoubtedly on the rise, it’s more important than ever to stay on top of your finances as they change considerably in the coming months.
As we look towards entering the “recovery” phase of lockdown and our lives start to look a little more like they used to, use these tips and tricks to help manage your money.
1. Be intentional with your spending
As lockdown measures are eased, and shops and restaurants open their shutters for the first time in months, it might be tempting to relax your spending habits too. Before doing this, take a moment to review your budget and make sure your spending is affordable for whatever your income looks like right now. Think about what spending categories will be re-entering your budget as lockdown is lifted such as transport, childcare and eating out. As restrictions are lifted your budget may change in a material way month to month – so make sure to review it regularly. To visit our Financial Wellbeing hub and download our free Financial Wellbeing guide, including a budget planner template, click here.
By knowing exactly what your financial situation is, you are empowered to spend intentionally and with confidence. Where budgets allow, we’d encourage you to support local and spend money in small businesses as they begin the process of getting back on their feet.
2. Prioritise your expenses
Everyone’s earning and spending situation will look a little bit different, and some expenses are more important than others.
Whether your income was impacted during lockdown or you received a payment break on a mortgage or a loan, it’s important to work out what your essential bills are; how much they cost and ensure you have a plan in place to be able to pay these once they are due again.
Reviewing your bank account statement is a great place to start to see where your money has been going, any direct debit payments you have set up and standing orders too. Use this as an opportunity to question any expenses that may not be a priority right now if your finances are stretched.
3. Keep up-to-date with when repayments are due
With many customers choosing to avail of the payment breaks offered by lenders to get some financial breathing space, it’s important to remember that these breaks are temporary, short-term solutions. For many, these payments will be due again during the summer months so it’s important to be prepared for when they are.
Review your communications from your lender to understand when your regular payments begin again and the impact of the break on them. Is your monthly payment going to increase, or term extended? Factor in what this means for your household budget going forward if your monthly payment is likely to rise.
If you’re worried that you may not be able to afford the regular payment once your break ends, it’s best to engage with your lender in advance to work out what your options are.
4. Free up extra money where you can
It’s a good rule of thumb to have three to six months essential monthly expenses saved in a rainy day fund to protect your financial wellbeing. Coming out of lockdown and having faced these exceptional times, many people will have needed to dip into their emergency funds.
If you’ve seen your savings reduced during this time and are in a position to do so, work towards building your emergency fund back up to support you if you need it again in the future.
If your income has been affected by the lockdown and you are unable to actively save right now, look to reduce your costs where you can. By reviewing your bank account statement you will see where your money has been being spent, look to see if there is anything that was more of a ‘want’ than a ‘need’ with the goal of reducing that spending next month, and look to pause or cancel subscription services that you’re not using right now. If you are able to free up any money this way, put the money towards building your savings up to support your financial resilience.
For more information on how to improve your financial wellbeing, visit the Bank of Ireland UK Financial Wellbeing hub available to support colleagues, customers and the wider community. The hub includes a library of articles to help build financial resilience and protect financial wellbeing, as well as a suite of free resources for kids aged 11 and under to build financial knowledge from a young age.