With one month of the lockdown coming to a close, I was looking back on all my monetary outflows during this period. It’s certainly been an odd thirty days – my expenses hit a record low! My family budget covers two people, my husband and me. And we noticed that our spending has reduced by 25%. Now that’s a big number!
Being at home due to the lockdown, expenses on weekly outings, fuel for our vehicles and the frequent trips we make to visit our families in Bangalore and Pune, were all wiped out.
I wondered, have others felt this too?
So, I asked around, and my friends and peers observed similar trends for their own spends.
Prasanna Akella, Product Manager at a Bangalore based tech start-up says, “My expenses have definitely come down. It’s something I’d forecasted when the lockdown began. There’s been a major cut in travelling and I’ve even received some refunds. That’s created some much needed liquidity. But the biggest reduction has been from online shopping, food delivery, outings and entertainment.”
“Expenses can be classified into three categories. Fixed expenses, variable expenses for sustenance and lifestyle expenses. The first two are more or less the same. It’s the lifestyle expenses that have reduced”, says Sumit Bansal, CFO, Mantra Properties.
Anushree Saha, Corporate Lawyer and a resident of Mumbai, noted that apart from the exorbitant rent, her expenses are almost zero. “Despite the fact that my electricity bill has shot up because I’m now at home, I haven’t gone on any shopping sprees or eaten out. These non-essentials being cut off has led to savings on a larger scale,” she says.
Reduced expenses = Increased surplus?
This reduced expenditure certainly gives rise to a surplus, that can be used however we like. Normally, I’d advise investing any excess, or at least a portion of it. But these are extraordinary times. It got me wondering, would the same advice hold good even now? And if investments are taken care of at the beginning of the month, what’s the best strategy for this surplus?
To answer that question, I’ve put down a plan. It’ll give you the low-down on what to do with these lockdown savings, as well as what to do if you haven’t been able to save enough.
Strategy for Surplus Savings
There’s something more I’d like to bring up here. If you don’t follow a budget yet, now is the best time to put one in place.
- Pull out your bank statement for the last couple of months
- Jot down all your expenses
- Categorize all these spends
- Assign an estimated value to these categories
And voila! Your budget is ready!
Tracking your expenses and ensuring that they’re in line with your budget is the easiest way to be in control of your money. It’s the foundation of sound financial health. The uncertainty surrounding us compels me to ensure that you cover all your bases. So while it’s a great time to invest for the long term, do that if and only if your foundation is solid first.
- An adequate emergency fund
- A robust health and life insurance cover
- Regular, diversified investing, for the near term as well as the long term
As Warren Buffet wisely says, “An idiot with a plan beats a genius without a plan.”
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