3 ways of making your money count during COVID-19...
Life as we know it has been different since the country went into lockdown and it is expected that the way we used to live life is a thing of the past, at least for the foreseeable future.
The unknown is always scary, particularly when it comes to money, so what have been the financial positives of the Coronavirus lockdown? The biggest positives is the fact that we are all spending less money. This might not be good for the economy, but it is for your pocket. There are no pubs or restaurants to go to, no high street shopping trips and for the majority of us no daily travel to work. So if you are spending less money at the moment, what is the best way to use it? Here are a few ideas;
1. Reduce your debt
Reducing debt is always a great idea. Reducing your debt will in turn reduce your outgoings and free up more disposable income. Firstly look at any credit card debt as this is typically the most expensive type of debt. At the time of writing a HSBC credit card shows an annual interest rate of 21% that woudl need to be paid on balances on a credit card. That means for every £100 that you can pay off this would save you £21 per year
in interest! Check the interest rate of your credit card and get that balance reduced. If you do not have a credit card, think about personal loans and mortgages. A penny paid off any debt is a penny saved in our book.
2. Make yourself liquid & top up those savings
Speak to any of the Financial Advisers at our sister company Fortem Financial Management and they will tell you that you should have at least 3 months worth of outgoings in a liquid bank account. So how much have you got? In truth, any money you have in savings is money that you will not need to borrow should you have an emergency and have to pay out on a cost you wasn't expecting, so think of these savings as your 'rainy day fund' or your '999 fund'. If you haven't got savings at the moment, get that savings account topped up.
3. Top up those pensions and investments
If you have reduced your debt and got your savings topped up, think about additional pension contributions or savings into things like an investment ISA. The financial markets have fallen recently which presents a good opportuity for long term growth but as with all financial products, make sure you seek financial advice before commiting to anything.
At some point, the world will return to normal. The daily commute will be back, the big weekends will be back and old spending habits will no doubt return. Make the most of any money you are not spending at the moment and use it wisely.