So, as I have previously posted about here, I have been furloughed. This is the strange scenario where I have essentially been put ‘on hold’ by my employer whilst the economy takes a downward turn and we are all bound to ‘lockdown’.
In the meantime, the government will cover 80% of my salary and I am at home, not doing anything. There are a wide range of implications that this will have on my personal finance and spending habits. There are different expenditures, missing expenditures, less income coming in but also less money going out.
As people across the country find that they have too much time, it is a great opportunity to take time to reflect and analyse how your personal finance is looking. Here, I shall do just that. In both short term and longer-term focus.
As described, I am only receiving 80% of my income (equally, the maximum you can receive through the furlough scheme is £2,500). This obviously hurts a little. Although, as I am about to go through, it is only really hurting from an emotional and personal worth perspective.
Work clothes (probably a new shirt every 4 weeks).
These are all expenses which I am currently not incurring. Partly through my daily routine, I used to purchase lunch and snacks out every single day. If the metro had a problem, then I would have to pay for another mode of transport to get to the office. Other expenses have been taken away; the gyms have (in majority) decided to suspend payments of memberships. Lastly, I am buying less clothes as I have absolutely no need for them (whether they be work or casual).
All of this sounds good, right?
It is. I do not currently have a mortgage and I have been given a rent holiday, so without those obligatory expenses, I am doing just fine out of furlough. I am spending considerably less, and my earnings have not gone down as proportionally.
It is very easy to get into new habits during lockdown. Once the gym, pubs and holidays are back on the cards, of course I am going to indulge in all of these. They are part of my normal routine. What is not, though, is some habits that some people are getting into whilst in lockdown. This may be increased home drinking/smoking, spending on clothes as… well… ASOS is delivering, gambling and other vices. It is easy to think that spending patterns will change once everything is open and it will be easy to stop playing online poker (e.g.). I hope that is the case, but it is also easy to think humans are not creatures of habit. Be careful.
Longer term – less income?
I think it is fair to say that in careers that have a bonus structure, we will fall behind a cycle here. There has been a two-month lull and it is hard to imagine that we will restart and hit the ground running as before. People and the economy will come out of this sleepy (as they always do) and I think I may expect less income in the coming mid-term. I am constantly looking for ways to diversify my income streams, so if anybody has any legitimate (dividends / property does not count) ideas, I would love to hear them!
Longer term – less spending?
Famous last words, but I do think this lockdown has taught me the hobbies and expenditures which I do hold dearly and those which I could easily live without. I would like to think this minimalist epiphany will hold, but I am only human.
On the other hand, it genuinely has pointed be towards certain expenditure which I look forward to increasing. Namely travel and crib.
Being completely locked to square footage has reignited my fire to go travelling, go figure!? I have spent the time planning out various trips and routes that I would like to do when everything does return to the new normal.
I also have a greater desire to care / spend on my next residence. This may be completely superficial …. I admit… but being locked in 4 walls make you want to divert more of your resources to making it the best four walls you can. Hence, I have spent a copious amount of time on Rightmove. Furthermore, looking at designs for gardens (how valuable they are right now) and kitchens (always valuable, to be fair).
Half rant and half forecasting, I think I am trying to say that certain rules still apply. Saving and investing rules are permanent. Your health, hobbies and habitats are all permanent. It is easy to find ourselves scrapping some of our beliefs and plans, but instead lockdown it is a good time to build on them.