Many Australians emerged from lengthy lockdowns with more savings in the bank. With the social, summer season upon us, it’s a good opportunity to make a new financial plan.
The recent COVID restrictions left many of us with little choice but to save on things such as eating out, commuting to work, and holidays overseas. Some economists have predicted that household savings accumulated during lockdowns will fuel a post-lockdown spending spree, with a big return to consumer spending. It is hoped this will could drive Australia’s economic rebound.
Lessons from the pandemic
However, if the pandemic has taught us anything, it’s that we can’t be sure what lies ahead. Tried-and-true financial advice holds more than ever – build up your emergency savings fund, make a budget, and have a financial plan that makes space for the unexpected.
This may be why a survey by the Financial Planning Association of Australia found that amongst the biggest changes made in response to the pandemic, the number one change people reported was to ‘be more frugal about my lifestyle choices’ (44.7% in 2021 vs 30.8% in 2020).
Make a financial plan
If you decreased your spending and increased your saving during COVID restrictions, now is the perfect time to check in on your financial health and make a long-term plan before you do too much summer splurging.
With more opportunities to spend available again, temptation may be rife. But it’s worth considering what any extra savings could do to boost your financial future. Could you pay down your mortgage faster? Make additional contributions to your superannuation? Maybe you’d like to save some funds to be put toward your children or grandchildren’s higher education costs? Think about what your biggest life priorities are and where any extra cash could best be directed.
Time to ask yourself a few questions:
- Did you save extra money during lockdown and, if so, how much and where did that saving mostly come from?
- Are these savings sustainable long-term? Were there things you learned you can happily get by without?
- List your top financial goals. Could these savings be put toward them?
Lockdown savings habits to keep
We all have different priorities when it comes to what we value spending on the most. Some of us were desperate to get back to the gym, others the pub. But maintaining these lockdown habits could boost your savings long-term.
- Home cooking – Many people discovered that they quite enjoyed cooking at home or didn’t need to get takeaway quite as often, something that’s healthy for your body as well as your bank account.
- Low cost workouts – Did you discover some new at-home workout videos or find that you loved running outdoors? Maybe you spent more time walking the dog than working out? Consider putting that monthly gym membership or yoga class pass toward a savings goal instead.
- Less shopping – Maybe you, like many, did more online shopping during lockdown but you probably saved on spontaneous spending in-store. Make a budget for spending on things like new clothes and see if you can direct that cash elsewhere.
Opening a separate bank account and setting up an automatic deposit monthly can make it easier to save. If you can, name the account by goal. It will help you stay motivated to see your funds growing and your dream getting closer.
In these uncertain times we can’t be sure what the future holds. Taking charge of your finances is one way you can shore up some extra security for whatever lies ahead.
We’d love to help you with your financial plan for a secure future. Call us anytime on (02) 8268 2900 for an obligation-free chat.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.