Since the first national lockdown was announced in March 2020, many of us have settled into a routine and different trends have emerged. One of these trends is the increase in over-spending on unnecessary items.
As non-essential shops have been closed during each lockdown, consumers turned to online shopping, leading to many impulse buys and Amazon reporting that it had tripled its profits by the third quarter of 2020. However, while buying things that aren’t needed isn’t necessarily harmful, it can be detrimental to your finances.
With the third national lockdown underway, it’s worth assessing your spending habits to see if you’re buying more than you need to. To help, here’s a look at ways to combat shopping without reason and how you can get your finances back on track.
Why reassess spending?
For those who have been working from home, daily spending on the commute to the office and lunch at the local coffee shop has stopped. This has freed up cash to spend on items online, with many people buying items that they wouldn’t usually, and often purchasing things they didn’t need.
If this sounds familiar, it may be time to look at your spending habits. While enjoying some extra income can be a positive thing to begin with, you can find that you don’t have the money you need should something unforeseen happen.
For instance, if there’s a leak in the roof or your car breaks down and you need to get it fixed, the money you might have had to cover the costs won’t be there if you spent it on something frivolous.
Additionally, it may be that you’ve been paying for things on your credit card because you know you have the money in your bank to repay it. However, if you were to be called back into the office, you’d no longer have the extra cash to make the repayments.
Therefore, it’s worth looking at developing healthier spending habits. This includes setting up a savings account and only paying for non-frivolous things on your credit card. Here are some ways to develop better spending habits.
Set up a savings account and start setting aside the money you would usually spend on your commute or lunch. This will give you a rainy-day fund that you can tap into should you need it to replace the boiler or pay for a holiday after lockdown restrictions ease.
How does your food shop look?
During the first lockdown, many people overbought toilet rolls, pasta, and other items, leaving others without. In the lockdowns that have followed, supermarkets urged customers to not over-buy in case of food shortages.
Organise a weekly meal plan. This will give you a chance to come up with a shopping list that only includes the key ingredients, so you avoid over-buying and allows you to keep to a budget, preventing you from overspending.
Think about what you need
There are various instances where it’s a sensible choice to use a credit card. For example, if you need to replace your washing machine or fridge, a credit card can be a useful spending option that gives you a chance to fix the immediate problem while enjoying the benefits of payment protection.
This protection is in accordance with Section 75 of the Consumer Credit Act. If someone fraudulently uses your card or the card is used to pay for an item that does not arrive, the credit company refunds you if the retailer doesn’t.
If you have been overspending for a while and you want to make some changes this lockdown, or take advantage of the time to save, try some of these ideas.