In recent months, the coronavirus pandemic has brought a wave of change into all our lives, and you may be feeling a little overwhelmed about what’s right for you and your money right now. While there’s no one-size-fits-all approach, here are some things to consider when it comes to your savings plan, based on your current circumstances.
If you already have a solid emergency fund in place (three to six months of living expenses) and feel secure in your job, then you may be in a unique position to step up your saving. Maybe you’re able to save more thanks to lockdown-enforced lifestyle changes – staying inside, cooking more, and spending less on going out.
Why not allocate a certain amount of money each week that you would normally spend on eating out or on social activities, and instead put that into your savings?
Now may be the time to be diligent about putting money in your emergency fund. To work out how much you may need to set aside, add up:
Next, multiply that number by the number of months you want to save for (as a rule of thumb, this should be from three to six months).
If you need to cut back on other unnecessary expenses to bulk up your emergency fund, now may be the time. Although social distancing has its challenges, it also means many of us are saving on normal expenses like daily coffee runs, gym memberships, dining out, and other entertainment. Redistributing any money that you’d normally be spending into your savings can be an easy way to give them a boost.
Once you feel confident about the money that’s in your emergency fund, consider focusing your attention on saving for retirement.
Losing your job in the middle of a pandemic can be incredibly stressful, but there are things you can do to help ease the financial strain.
If you’re still in employment, you could think about building up your cash savings as quickly as possible. Consider cutting back on your spending and try to focus on getting three to six months of expenses saved while you’re still earning a salary.
If you’ve spent years saving for your retirement, the current climate can seem scary. But it pays to be prepared before you’re ready to retire, so if that day is getting close for you, it could be a good time to start thinking about the choices you’ll need to make.