Emma-Lou Montgomery, associate director at Fidelity International says…
…Sort out your discretionary spending & identify where you can save
“Make sure you take a long, hard look at any spending that isn’t essential, and compare these spending habits ‘pre’ and ‘post-lockdown’ to work out what you want to continue saving money on in the future. Installing a money savings app onto your phone will also give you real time information about your financial habits, so you will immediately become more aware and see where you’re doing well, and where you may be slipping into old patterns. It’s really important not to let money seep through your fingers on things like overdue subscriptions or unused memberships, so look at what you may want to cut back on going forward. Part of this review can also include digging up your household bills: why not try and use the time to research and explore where you could save money? You’ll also significantly cut your food bill if you reduce unnecessary items and opt for more supermarket own brands.”
Dr Peter Brooks, head of behavioural science at Barclays says…
…Give your finances a health check & pay yourself on payday
“It’s worth getting into the habit of moving money straight into a separate savings pot every time you are paid so it’s a proactive decision, rather than a tentative end of the month goal. If you’ve taken the money out of your everyday account, you’ll also remove the temptation to dip into it – out of sight is out of mind. Another great exercise is to take a look at your bank account and assess what you’ve been able to spend and save money on during this time, and what changes you can realistically stick to. Identifying what you could credibly do without and moving that cash over to your savings account will help build up that pot of money quicker than you think.”
Rico Cachucho, partner at Hoxton Capital Management says…
…Set incremental goals & consider investing
“Aim to have at least three to six months’ salary saved in your savings account as a start. This will be your emergency fund. Once you’ve built this fund, you should look to start investing. This is where you will look to get your money to work harder for you over a defined period of time. Consider carefully what specific financial goals you have in the future and agree some short, medium- and long-term objectives. Once you have these, design a robust plan of how you intend on getting there. It’s important to be realistic in terms of investments – by that, we mean amounts you can commit to and the expected rates of return over the prescribed time frames. Often, buying a well-diversified investment fund that is low cost (something like an exchange traded fund) can prove very favourable over time. Use tax efficient financial planning solutions like pensions, ISAs and other tax efficient savings solutions. A financial adviser can guide your decisions if you feel you need more support.”
Ross Duncton, managing director & head of marketing and direct at BMO says…
…Don’t panic & use what you have
“According to research, more than 45% of millennials plan to continue to invest the same amount of money this year, while a further 21% are planning to invest more money. Those of us that invest should try to avoid the temptation of checking investment performance daily during this crisis. Investing is for the long term and it’s important to remember this and not act impulsively. As the well-known saying goes, it is best to think about time in the market rather than timing the market when it comes to investing. Also, it’s important to recognise that significant number of us are juggling working from home and childcare. For that reason, it’s certainly been tempting to place big Amazon orders and stock up on supplies activities to keep everyone entertained. Try to be economical and take looking round the house first. For example, emptying the recycling box for craft making materials and spending time teaching children how to bake are cheaper alternatives. Not only will this save a small fortune, but it also allows you to build long-lasting memories together.
Financial psychologist Kim Stephenson says…
…Stop focusing on material things & evaluate what you really need
“We’re conditioned to want things right now, rather than putting money away to protect what we’ve already got. Therefore, we often feel the urge to spend whatever spare money we have, rather than saving. However, this can lead to feelings of guilt and regret when we later realise money has been wasted on one-off purchases. Saving allows us to protect what we value. It also helps us be grateful for what we’ve already got and focuses our minds on the things we want to achieve. Ask yourself what you would do with limited money. Would you spend it on whatever you fancied, whether it was needed or something you really wanted, or spend it first on needs, then on the things you want? If you can learn to do the second option, you’re on the right track. Avoid placing your focus on material wants will enable you to make better informed spending decisions in future.”
For more information on learning to save money, read this from the Money Advice Service.
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