OPINION: After level 4 lockdown forced us back into our bubbles, some of us are feeling a little more flush than normal.
However, it's also been a tough time for many others, which is where rainy day savings and free budgeting advice can be a huge help.
For those who have managed to save money on things like petrol/transport, entertainment and holidays, how can that post lockdown loot be put to work?
Gillian Boyes, manager investor capability at Financial Markets Authority, shares her top tips.
Three ways to keep finances healthy after lockdown
1. Prioritise emergency savings
Before you start thinking about investing, it's important to have a sum of money that can be accessed quickly, to cover a sudden expense or unexpected dip in earnings.
Managing savings accounts can be a first step to getting your head around investment risk - something many women tell me they struggle with.
A female colleague recently told me having an emergency fund helps her feel safe.
"I know that if something really goes wrong, at least I've got my emergency savings in cash," she said.
Based on work around the psychology of investment decision making, the following tricks can be used for starting and growing an emergency fund.
First, make sure the money is a completely separate account, labelling it an 'emergency fund' or similar.
Our brains like having some order to simplify decision making, so identifying what the money is to be used for will help you treat it differently to money in regular accounts.
Alternatively, put it with a different bank, or in an account with your bank that you can’t see from your banking app.
Then, automate your ongoing emergency savings to make it a habit.
Automation is an efficient and simple way to make saving and investing more than just a one-off event - and removes any emotion.
2. Consider topping up your KiwiSaver
Most employed people have KiwiSaver payments deducted automatically from their pay.
But you can add to your KiwiSaver savings at any time, either by one-off amounts or as regular additional payments. Your KiwiSaver provider can tell you how to set this up.
I’m seeing a lot of commentary about people avoiding putting more than the bare minimum into KiwiSaver ($1042 per year), which gets the maximum Government contribution of $521.
The theory is you could then invest in something else which isn’t locked in.
That makes sense from a rational point of view, but let’s not forget that investing into KiwiSaver provides long-term benefits, the key one being compounding returns.
Putting extra money into KiwiSaver also avoids having to make what can be complicated decisions and tradeoffs.
I’ve spoken to many potential investors who are so focused on making the 'perfect' decision they don’t make one at all. This means they miss out on potentially thousands of dollars in the longer term.
If you suffer from investment procrastination or over-thinking, nudging up your KiwiSaver contributions could be the simplest solution.
3. Start investing
In the March 2020 lockdown, there was a leap in interest in online investing platforms, and for good reason.
Research we've conducted at Financial Markets Authority (FMA) shows they can help to build confidence and sensible investing habits (mostly).
These platforms let you invest in shares, ETFs and managed funds, with very small amounts of money. They're an accessible way to build wealth over the longer term. But don’t think you have to do it all yourself.
Financial advisers can help you build a sound investment strategy that works for you, and help you make decisions confidently.
If your savings are modest, look for an adviser who can help you set up a regular savings plan.
Head to the FMA website for independent guides on what to think about before investing, including available products and how to choose a platform or financial adviser.
Whether it’s an emergency fund or a short or longer-term investment goal, doing something with those unexpected savings could be a silver lining to those lockdown blues.
Gillian Boyes is the manager, investor capability at Financial Markets Authority (Te Mana Tātai Hokohoko).