When to Spend and When to Save - COVID edition!
The help you need to know when to spend and when to save during Covid.
Well, this is always a tough dilemma to be in, and one that is usually driven by impulse. Recently it has been made harder due to the unprecedented global economic crisis we find ourselves in, hooray, another thing to add to the list!
Feeling in control of your finances is key to financial well-being.
To save or not to save? That’s whats Shakepears said right? Anyway, we’ve pulled together some questions you should be asking yourself to help you to decide whether it’s the right decision to spend or save!
#1 Do you need it?
Your first answer will probably be ‘yes, of course, I need it!’, we all need a little pick me up. There is a difference, a pretty large one, on wants and needs. Medication that will keep you healthy? Definitely a need! A new outfit you’re not going to be wearing for the next couple of months? That is a want, even if you think you must simply have it!
Every time you go to put those card details into the online checkout, just ask yourself: Is this a need or a want. Why not try this, if you find something is falling into the ‘want’ list, stash away some money and save for it over a period of time - with us all being in isolation that shouldn’t take too long. The perfect excuse is to create a Jar in your Douugh app. This way you’ll stop spending money you really need for your ‘needs’.
Establishing a realistic monthly budget that you can stick to will help you to determine when you can buy those ‘want items’. Then make small adjustments within that budget to help you stay on track, so you can save for your ‘want items’ without your ‘need items’ being compromised!
#2 Can you afford it - actually afford it?
Its all very well looking at your checking account and seeing $1,500 and deciding that you’ve got the money for a splurge. However, in reality, there’s still a couple of bills yet to come out for the month and you’ve still got to buy groceries that last for another two weeks. We all do it from time to time, don’t worry.
Tracking your bills effectively allows you to keep tabs on what has and hasn’t left your account and more importantly, what’s safe to spend. This way, you can be sure that a ‘want item’ or a splurge isn’t going to affect your everyday spending. Douugh helps you achieve this by separating out your bills, showing you exactly what’s due and when. We even send you a push notification to remind you - so you never miss a payment, handy don’t you think?
#3 Is there an alternative?
Before handing over any cash or in our current situation card details, have a think about alternatives that might make a little more financial sense.
For instance, you’ve decided to start cycling into work (when we can finally go back to working in an office) to save money on public transport and you’ve got your eye on a brand new road bike. What if you realize that you won’t be cycling every day, maybe only two or three times a week, is it, therefore, justifiable to buy a new bike? - probably not! We’d bet that a friend or family member might have a bike you can buy or borrow from them. Hello Craiglist?
Other questions to ask yourself and to research are is there any upcoming sales, like the Black Friday or Cyber Monday sales. Could you find a coupon or discount code? With a little thought and research (and a bit of persistence), there are almost always compromises between spending and saving.
#4 Will there be consequences if you don’t get it?
Take a step back and really think about whether this item will drastically change your life if you buy it now, compared to in a couple of months.
Such as, if your mobile is broken and you’re having trouble taking work calls or can’t speak to family and friends, then it’s probably time to get a new one. However, if it working fine, bare a bad battery life, then holding out on a new purchase won’t exactly change or inhibit your life, will it - no!
It’s all about looking at the bigger picture and taking the time to question yourself and holding yourself accountable for purchases that aren’t always necessary.
#5 Should the money go towards something else?
COVID-19 is affecting everyone, and not all in the same way. Purchasing something may make complete sense, but not at that very moment. Adjusting your current spending habits may need to change to take into account something that may happen in the future - i.e. a pay cut.
For instance, if you know your fridge is on its last legs and will need replacing in the next couple of months, then spending a couple a hundred dollars on new headphones just isn’t logical, even as much as you would like them to be.
Preparing for the unknown emergencies
If you don’t currently have a Rainy Day fund set aside for emergencies, you might want to do that first before making any unnecessary purchases. Check out our blog on why a Rainy Day fund is so important.
Now we can’t tell you when to save and when to spend, but we hope we have given you some food for thought, which will help you make the right decision in any given situation. The next time you’re faced with a spend-or-save problem, consider asking yourself the above questions.
Happy spending and saving!