The UK government’s lifting of lockdown restrictions poses more temptation to spend and additional expenses. The same could hold true for freelancers in other markets, such as Australia, Asia and Europe.
The UK government’s announcement that the remaining lockdown restrictions are due to be lifted in the upcoming weeks is a welcome one for many. However, this increased freedom is likely to result in additional daily costs as well as more temptation to spend money on travelling and social events, according to a report by digital financial coaching app Claro Money.
As much as 20% of Brits have used lockdown as an opportunity to improve their financial situation, according to the new Mental Health Report by Claro Money. This threat of increased spending could undermine the good money habits that people have established throughout the pandemic, said the report.
Some social time with friends may pose some spending and who wouldn’t want to splurge on such an important experience after the year we have had?
Stacey Lowman, Financial Coach at Claro Money said: “While there is lots of optimism about life returning to some form of normality very soon, the value of being prepared and having a financial contingency plan for this shouldn’t be underestimated.”
Lowman suggests you consider how your spending may change and what you need to budget for once lockdown restrictions have fully lifted, establish what is set to change in your day-to-day life.
“For many people, this will include the return of commuting to office as well as more impromptu social plans, such as going for a drink after work or grabbing a bite to eat with friends. Consider how much this will realistically cost you each month,” said Lowman.
“To protect your personal finances, you should aim to replace expenses as opposed to simply increasing them. So, go through your budget line by line to see where you can cut current outgoings to accommodate for these returning costs – reducing, takeaways, online orders, and sourcing cheaper utilities providing could be a good place to start.”
Lowman also says we have to remember how having those extra pounds in our savings made us feel.
“Beyond just thinking about your budget, also consider the wellbeing impact of your finances. If you have been able to grow your savings throughout lockdown, reflect on how this has made you feel and the impact that continuing to save could have on your mental wellbeing. Similarly, evaluate how important the activities we have been unable to do, such as a night out on the town or attending local gigs, are to your state of mind and whether your mental health will be improved by participating in such activities.
“By measuring your spending habits not only by the money they cost or save, but also by the impact they will have on your overall mood and wellbeing, you will be in a better position to make considered financial decisions and develop a smart money mindset,” she said.
Claro is hiring. Check out their roles here.