New Zealanders are returning to normal life; flocking back to cafes, restaurants, beauty salons and hairdressers. After seven weeks of lockdown, Kiwis are opening their wallets again.
This is to be applauded - our economy is being restarted, and our local businesses need support, and our cash.
But there may be a need for caution - and perhaps some learnings - as we return to our pre-lockdown spending habits. Pressure on the economy is far from over. Emergency cash has been pumped at great speed into the economy, and we are yet to feel the full financial pain of Covid-19. So while there is temptation to spend, we might instead want to take a minute to weigh up our needs versus our wants. The latter got shoved aside during lockdown, and we did just fine. So now’s the ideal time to figure how - or if - we want to lock in our lockdown savings.
The precipitous drop in spending - particularly discretionary dollars - over lockdown is clear in the data. Reserve Bank figures show credit card expenditure fell more than 9 percent between February and March this year.
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During this time, Kiwis also paid off more of their credit cards. Credit card debt dropped by 4.6 percent from February to March, while it fell even further - 5.4 percent - compared to March last year. Meanwhile, retail sales fell by nearly 4 percent in March from February.
Through these last two months, many of us have lived more cheaply than we thought we could. Discretionary items were no longer available, and so we did without. We cooked at home, delayed haircuts, and cut back on entertainment costs. Many of us, it seems, saved some money.
Now could well be the time to assess if these forced savings can become ongoing habits. Many New Zealanders remain worried about their jobs, while others have had hours or salaries cut.
In this environment, Kiwis can:
● Draw up a home budget to track household spending. There are numerous budget templates online that can be used. Track your expenses - right down to that $5 flat white - and see where big chunks of cash go. Depending on the financial situation, you may decide to forego the daily coffee and instead put the cash aside.
● Consider budgeting regular, small amounts of money for ‘special costs’, like a haircut or visit to the cinema. Ensure the amount fits in with the budget already set. If not, delay the treat. We did without during lockdown, right? So we can do it again.
- Working from home has meant significant savings in transport and gas. Now could be a good time to consider the costs of getting around. Is your car the right one for your needs? Could you downsize your vehicle and release some cash?
- Check how much broadband you have used over the last two months. Given this is likely the highest usage you’ll reach, consider the most effective plan for household usage - it may be capped, rather than unlimited data.
- Contactless payments are becoming the default, and as such many of us are using our credit cards more frequently. As credit cards often have perks, make sure to check if yours suits your lifestyle. Benefits can include lower interest rates, Airpoints or cashbacks.
- Consider your electricity provider. Usage for most has spiked during lockdown, and may continue at a higher rate for those working from home. Consider if the provider is the right one for you, by exploring online calculators and considering benefits such as off-peak free “hours of power”.
- Plan a food menu. Do a big shop to the menu and stick to it, so you’re less reliant on unhealthy takeaways and everyday runs to the supermarket, which tend to add up.
As we emerge into this new reality, with its continued restrictions and social cautions, take a minute or two to pause. We all want our economy to get back up, but we also need to look after our own household’s needs. Take this time to consider what is best for you.
- Jose George is general manager at Canstar NZ
