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While millions have sadly encountered a financial struggle during the coronavirus (COVID-19) pandemic, it’s a different story for others. With the UK lockdown requiring people to stay at home, many have reported making savings – be it from reduced spending on socialising to cutting costs on their commute.
In a recent survey by Moneybox, nearly half (47 percent) of the app’s users were found to be saving more during lockdown than usual.
But, with the new normal seeming to be getting underway as shops, restaurants and bars reopen their doors, the unexpected savings may well be beginning to burn a hole in some people’s pockets.
And, while Britons may be being urged to spend, continuing with these new thifty financial habits may be something some hope to continue.
In an effort to help savers strive to ensure their money is working harder for them, Mille Winge from Moneybox has shared her top tips on how to become – or remain – a savvy saver as lockdown measures ease in parts of the UK.
By making a seemingly minor change to spending habits, savings may well grow big, it’s been suggested.
Ms Winge said: “There are many simple ways to make saving and investing part of your everyday life.
“By starting with round ups on your everyday purchases, you can save and invest without even thinking about it.
“The average Moneybox user saves £500 per year in round ups alone. A small change that could make a big difference by the end of the year.”
Did someone say free money?
Another way of boosting savings is to look into whether a person can – and wants to – access particular schemes.
It’s something which Ms Winge suggested, as she explained some details about a Lifetime ISA.
This is a type of ISA which a person may use to save for their first property or for in retirement.
“It may sound too good to be true, but depending on what you are saving for, there are some great schemes out there that could actually give you free money,” she said.
“If you’re saving for your first home for example, you can get up to £1,000 every year from the government with a Lifetime ISA.
“With the Help To Buy ISA coming to an end last year, the Lifetime ISA is now the only product available to help young people get on the property ladder, so for the first time buyers out there this isn’t one you want to miss out on.”
That said, it’s important to be aware that eligibility rules apply when it comes to opening the account and to withdrawing the money without facing a penalty charge.
To open a Lifetime ISA, the saver must be aged 18 or older but under 40.
Eligible savers can then pay in up to £4,000 each year until they’re 50, with the government adding a 25 percent bonus – up to a maximum of £1,000 each tax year.
Pay yourself first
While setting aside savings may well be at the bottom of the list of things to pay for when bills are due, making an effort to separate the money from disposable income could be worthwhile, Ms Winge suggested.
“It may be tempting to go on a spending spree now that shops are re-opening, especially if you have been lucky enough to be saving more than usual during the lockdown,” she said.
“However, an important rule of thumb when it comes to saving is to always pay yourself first.
“When Moneybox users were asked about their biggest money lesson learned from lockdown, a majority said it was realising the importance of having emergency savings.
“We recommend setting up a weekly direct debit, or a payday boost to lock away some savings and avoid the temptation of spending it on anything else.
“This is a great way to build a savings habit without making huge changes to your lifestyle.”
Consider your goals
“Picturing your goals can be a great motivation when your credit card is burning a hole in your pocket,” commented Ms Winge.
“Are you saving for a car, a house, or just a rainy day? Spend some time looking into the products that are best suited to your financial goals.
“For shorter-term goals such as buying a car, a cash savings account is a good way to earn some interest on your savings, whilst for longer term goals you can consider investing in a Stocks and Shares ISA to make your money work harder for you.”
On the topic of thinking for the longer term, Ms Winge highlighted the importance of planning ahead for funding retirement.
“Although retirement might seem like a lifetime away for many of us, it’s never too early to start thinking about your pension,” she said.
“A good place to start is to find any retirement savings you may have already built up. This might sound obvious, but do you know how much money you have sitting in old pension pots?
“The ABI estimates that around £19.4billion worth of pensions in the UK are ‘lost’, as people change jobs and lose track of old workplace pensions. With 25 percent government tax relief on your pension contributions available each year – can you really afford not to find yours?”
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