Diana Clement: Be smarter with your money during lockdown

If you’re one of the lucky ones spending less in lockdown, then do something smart with that money.

Lockdown 2021 style is showing a shallower drop in spending than our first experience of staying home in 2020, according to Kiwibank, and the spend will rebound once restrictions are relaxed.

We’re more in the groove and credit card spending has only dropped around 20 per cent this time compared to 45 per cent in our first lockdown, says Kiwibank economist Jarrod Kerr.

Our online purchases fell through the floor in the 2020 lockdown, whereas they’ve crept up this time, with more available online to buy than there was last year and more comfort with whipping out our debit and credit cards to purchase.

Data from Westpac suggests we’ve definitely learned how to spend more in lockdown, with home meal kits and digital downloads. The data shows we’re not out in the evenings socialising with friends. But spending on downloaded content from companies such as Apple and Amazon have doubled. “In other words, Kiwis are reading, binge-watching and cooking up a storm,” Westpac NZ chief experience officer Oliver Lynch, said in a media release.

Justin Lester of DOT Loves Data, which analyses Eftpos New Zealand transactions, concurs that we have definitely spent less overall. Petrol is down more than 50 per cent. Department store spending is down by 99 per cent.

Some people will be shaking their heads at this because not everyone spends less. Some of our spending spikes in lockdown, including supermarket spending and utilities.

If you only truly buy bare essentials, you won’t see much difference, except perhaps commuting costs. The Westpac data showed supermarket spending accounted for 22 per cent of all transactions, up from 16 per cent in pre-lockdown times.

I’ve seen that in my household. The family members who usually buy their own lunches and dinners out with friends are of course eating 24/7 on my bill.

Rob Collins, chief executive of NZCU Auckland, says feedback from his members, mirrored in his own house, is that you don’t save much unless you had what he calls a flamboyant lifestyle before lockdown: frequently going out, entertaining, holidaying and so on. Fixed costs such as rent/mortgage and utilities are either the same or more.

Unfortunately, says Kerr, this is the inequality of recession and lockdowns.

Collins adds: “Being at home you suddenly see all the costs you normally don’t bother with or someone else pays for. It can be as simple as the coffee and milk you use at work or the quick lunch you get on the run.”

For families, says Collins, the kids now need feeding all day every day. Many schools offer free lunches and often breakfast clubs. Parents are now having to find extra food to feed them at home in lockdown.

For those who are spending less there will most certainly be a spike after lockdown, says Lester. Like many others, Lester himself, bought a spa pool after lockdown last year because the planned overseas holiday was off the cards.

If you can hang onto at least some of that saved money it can be put to good use.

Like me, Kerr says the first thing to do with any extra money left in the pot thanks to lockdown is to pay down debt. Then look at adding it to savings. That may be building up an emergency fund, or if you’re in the position to, add to long-term savings.

Another positive outcome, says Kerr, is sharing your sums with your children so that they learn.

“Let’s go through the finances with the children and show them that we’re spending $50 less than the normal. [Ask them] what should we do with it?” he says.

Even planning with the children to spend a portion of that money on something fun after lockdown is worth its weight in gold in financial literacy. Kerr wishes he’d had the same opportunities to learn about money when he was growing up.

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