How to maintain your post-pandemic savings habits
For all of us, the Covid-19 pandemic forced us to adjust how we work, learn, shop, and even enjoy the company of family and friends. But the pandemic didn’t just affect our personal lives — turns out, it also greatly impacted our finances and the way we feel about money.
According to a recent SaveBetter survey, “The Impact of the Covid-19 Pandemic on American Consumers’ Savings & Banking Behaviors,” about 68% of participants said the pandemic made them realize the importance of an emergency fund and nest egg. And, more than half of respondents said they plan to save more money this year.
Recent events also encouraged respondents to think more about the future, with more than two-thirds of survey participants saying they had “increased concerns about saving for retirement.”
One peculiar result of travel restrictions and business closures was some were able to spend less and save more. Almost half of the survey’s participants agreed that the pandemic actually allowed them to save more money. In fact, the U.S. personal savings rate reached a record 32% in April 2021, according to the U.S. Bureau of Economic Analysis. Meanwhile, overall spending fell around 12% because of unemployment and a slower economy.
While the reopening of the country is a welcome sign of getting back to life as we knew it, now it’s important not to let our coffee runs, entertainment, and travel plans put a damper on our newly-found saving habits.
So, here are five great ways to help maintain your post-pandemic money-saving momentum, including the questions to ask and declarations to make for consistent savings habits.
5 ways to save more in the post-pandemic world
1. Reconsider your necessities: “Do I really need it?”
A great place to start any money-saving journey is by going through your bank and credit card transactions. Review the past few months and write down all the non-essential purchases.
Decide which recurring expenses you can cancel and which ones you can reduce. For instance, if you’re spending less time in the house, perhaps it’s time to cut back on some streaming TV and movie subscriptions.
You may have also mastered an at-home brew, so consider keeping your stay-at-home coffee habit going rather than race back to the local cafe.
Every penny you can save is more money in your pocket — or savings account.
2. Make it harder to splurge: “I won’t be tempted to spend.”
One of the best ways to break a bad habit is to make that habit harder to do.
If you find yourself unable to resist the urge of splurging at online retailers, then consider removing your saved credit card information from every shopping website and delete any shopping apps from your phone.
Then, take it a step further by unsubscribing from your favorite retailers’ promotional emails. You may be less likely to visit the website when “not to be missed deals” don’t hit you every time you open your inbox.
These small actions can reduce the temptation of spending or get you to think twice before you hit the checkout button.
3. Review your insurance premiums: “Am I paying too much for coverage?”
Another simple way to save money without having to make sacrifices is to lower your insurance premiums, such as homeowners, renters, or car insurance.
First, call your providers to see if you’re eligible for any discounts. Then, you may also consider calling competitors to obtain additional quotes. Some insurance providers may offer new customer or bundle discounts if you switch all your policies at once.
Also, if you’ve made any changes over the past year that could lead to reduced rates, be sure to mention this to insurance providers, too. For instance, you could save on car insurance if you’ll be driving fewer miles now that you’re working from home. And if you recently added a home security system, you may be eligible for savings on your homeowners insurance.
Some companies may even issue a rebate for previous months if you overpaid for coverage, so don’t be afraid to ask.
4. Take advantage of low interest rates on loans: “Can I pay less on my monthly loans?”
In an effort to support the economy in the midst of the health crisis, the Federal Reserve slashed the Federal Funds Rate to near zero. Because the Fed’s rate impacts consumer interest rates, it could provide you with money-saving opportunities on any outstanding loans.
A lower interest rate may save you hundreds or even thousands annually on interest charges, and you can funnel that difference into a savings account.
Loans that may benefit from the low interest rate environment include:
You’ll typically need to refinance to take advantage of lower rates. A refinance loan calculator can show you how much you could potentially save by doing so. Keep in mind, there may be fees that come along with refinancing, so you’ll want to ensure your savings outweigh the costs.
If you have multiple accounts that could benefit from a rate drop, then consider starting with the most significant savings opportunity. This is important because each time you apply for a refinance, a lender must pull your credit score to ensure your eligibility — and this can cause your credit score to dip between five and 10 points.
If your credit score drops low enough, you may not be eligible to receive the best rate offers, so that’s why it’s essential to concentrate on the biggest money-savers first.
You may also be able to consolidate multiple outstanding balances into one or fewer loans. This may not only help you save on interest costs, but can also cut down on the number of bills you have to pay each month.
5. Move your money into high-yield savings accounts: “I can make my cash work harder for me.”
While a lower Federal Funds Rate may mean decreased interest rates on consumer loans, it can also mean lower interest rates on savings accounts. To maximize your earning potential, consider moving your money from a traditional savings account to a high-yield savings account (HYSA) instead.
Both traditional and high-yield accounts work the same — they’re both liquid, have no or low fees, and provide various deposit and withdrawal options — but their main difference is how much you can earn.
For instance, the average national interest rate for a regular savings account as of May 2020 is just 0.06%, according to the Federal Deposit Insurance Corporation (FDIC), but high yield savings accounts or money market deposit accounts, like those offered by SaveBetter’s partner banks, are currently offering rates as high as 0.51%.
Now that you’re saving more, it’s time to save better
SaveBetter’s online marketplace makes it easy to compare the best savings account offers from our curated network of FDIC-insured partner banks. You can quickly scan our platform, review each bank’s terms, and open a new account within a few simple steps.
You can even split deposits across multiple savings products and access all your accounts from one login.
By shopping for a savings account with SaveBetter, your money can start working harder to earn the higher interest rate you deserve.
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APY means Annual Percentage Yield.
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