Just in case we hadn’t been through enough in 2020, the UK is set to be hit with a recession the likes of which we’ve probably never seen before. Experts have suggested that we’re likely to be the worst hit country in Europe and the OECD (Organisation for Economic Co-operation and Development) has predicted some daunting outcomes. Many of us are already feeling anxious about our finances and as the economy is either set to contract by 11.5 per cent after the first wave of the pandemic, or by 14 per cent if the virus returns later in the year, it’s difficult to feel optimistic.
One reason why the UK is in particular trouble is our reliance on the service sector — an important part of our economy that has been hit hard during the Covid-19 pandemic. As it currently stands, the service industry is beginning to get back on its feet, with many pubs and restaurants set to reopen from the 4th of July. After being in lockdown for so long, most of us are desperate to get out again to enjoy a beer in a bar and catch up with friends and families over a meal out (it’s been a while!) But with our personal finances to worry about, how can we balance this return to reality with our need to budget in the face of a financial nightmare?
Saving during a recession isn’t necessarily about ‘not spending’ or ‘not doing things’, we’ve certainly had enough of that during lockdown! Instead, it’s a great time to rethink our finances, live more frugally, and figure out how we can enjoy ourselves while on a budget. With around one third of UK adults in full-time employment saying that they’re anxious about their finances, there’s never been a better time to save some precious pennies. Here are some top tips that will keep your wallet full and your spirits high.
Diversify your income
As the old saying goes, “don’t put all of your eggs in one basket”. We’re living through unpredictable times, and hardly any jobs or industries feel 100 per cent safe at the moment. Saying this, no one expects you to take on a whole new job! Instead, start thinking creatively about how you could make a little extra outside of your nine-to-five.
If you live with a partner who works in a different field, you’ve already started a diverse household income. But if you’re looking for some extra ideas, why not start up a side hustle, consider selling some of your own things on selling sites such as Depop, or pick up some freelance work every now and again.
Eat out for less
We all want to play our parts in helping the service industry get back on its feet — especially after being deprived of it for so long! However, it can be difficult to scrape together money for a meal out at the best of times, well, when you’re paying full price that is! Look out for restaurant discounts and loyalty schemes to save some precious pennies.
Businesses will be keen to attract as many loyal customers as possible after all of this, so there’s sure to be a multitude of deals and discounts to snap up if you keep your eyes open!
Consider budgeting and downsizing
Instead of pinching pennies, think of it as ‘selective spending’. You’ll still want to be able to enjoy yourself but making conscious spending choices will save you some money where you least expect. For example, consider trading in your car for a more fuel-efficient vehicle — even if this seems like a big cost upfront, it will save you money in the long term. Downsizing your house or flat is another option, as well as reconsidering your mobile plan and those other monthly subscriptions that you might not be utilising as much as you thought you would.
Build up your emergency pot
When preparing for a recession, saving an emergency fund is key! If you feel financially secure at the moment, but you’re worried about the future, there’s no time like the present to start setting a bit of money aside each week or each month. Be logical about this, what percentage of your wage do you feel like you could probably keep back? Even if it’s a small amount, make it a regular practice to move some money into your emergency pot each time your pay cheque comes in.
We’re certainly facing an era of uncertainty, and no one can fully predict what the next few months and years may bring. If you think ahead however, and start saving today, you’ll thank yourself later! Figure out the perfect balance for you and watch how your money amounts while you’re still able to do the things you enjoy!