Can I save money during a Recession?
The first point to make here is that most money experts agree that savvy financial planning begins with having a 3-6 month cushion in the bank to cover the unforeseen; such as pandemics that bring the economy to a halt, and the country to its knees.
If this is not you, it's never too late to start skimming off the cream from the top of the payslip and putting it to one side (ideally stored in a high interest savings account, not stuffed in the mattress!).
This pandemic has meant that household outings have never been lower: we are not spending on public transport, cinemas, restaurants, bars...
The entertainment column in your budget spreadsheet is at an all-time low, and so it should be feasible to start saving.
Saving while in debt
Many of us are in debt. The financial world likes us to have debt, so that we can show how great we are at repaying this debt. This is how they know they can trust us with larger financial products such as mortgages and loans.
Debt management is a whole other topic but it is worth noting that it's possible to start saving, even when it feels like our credit cards are spinning out of control.
Top Tip: Debt Snowballing
As the saying goes, take one debt at a time! You must, of course, pay off the minimum each month to avoid horrific penalties, but identify which of your debts is the smallest and aim to pay it off as quickly as possible. The psychological effect of reducing the number of debts is a real boost in your savings plan. The move onto the next smallest, and so on.
Avoid Impulse Purchases
If, like me, not being able to hit the high street has meant an increased habit for shopping online, then a top tip on not ending up with three power drills and seven pairs of slippers is essential. The rule of thumb: cool your heels for 48 hours before paying your cart.
You'll be amazed at how many purchases you can cancel and how much you can save. Put that money into a separate account, and your savings programme has begun!
The downside about saving during the recession? Interest rates have dropped - good news for borrowers, but not so much for savers. You'll be hard pressed to find an interest rate higher than 0.10% depending on withdrawal access, and certain countries in Europe have seen their bank charge savers for the joy of depositing their money.
If we have learned anything from this pandemic and recession, it is this: Savings provide a buffer between your household quality of life and the uncertainty of the job market.
This is the proverbial rainy day. May it be short-lived.