Think carefully before you spend your lockdown savings

Spending gives us a temporary dopamine hit – so consider how your current mental health could be affecting your financial decisions, writes Kash Amini

Problems with our mental health can hugely affect our ability to make well-balanced decisions, particularly those which impact our spending and finances (Getty)

There is still a huge amount of uncertainty around when the pandemic will end. Some claim it’s far too early to even imagine the lifting of restrictions, but with the vaccination programme well under way, others are daring to dream of what the exit from the pandemic might look like.

One such prediction was reported by the governor of the Bank of England, who said the banks should brace for the possibility that once restrictions are lifted, Britons will celebrate their regained freedoms with a mammoth post-Covid spending binge. Predicting a strong recovery for the economy, the governor said: “On the upside – after you lock people up for this long, they go for it.”

Nobody can deny that on the face of it, this sounds like a positive thing. The population has managed to stash away a massive £125bn in savings, all of which is waiting to be spent. And given the economy contracted by 9.9 per cent in 2020, it desperately needs to bounce back. What’s more, after a year of suffering the combined effects of isolation, bereavement and detachment from those dear to us, we’d all be lying if we said some celebratory spending wasn’t on our minds.

With all this positive talk around spending sprees, it might be tempting to convince ourselves we are simply playing our part in the economic recovery. Yet there are things we must all consider, before marking the end of the pandemic by delving deep into our pockets.

What we’ve all lived through since March 2020 has been challenging in several unique ways. For years to come, there will be research and speculation on the impact a year of repeated lockdowns and the most excess deaths since the Second World War has done to our bodies and our minds.

Research by YouGov found that 65 per cent of Britons believe the pandemic has harmed their mental health, higher than in any other country or region. After a year of negative news reports, we are used to seeing and reading these kinds of figures, but we cannot afford to downplay what they are telling us.

We are on the verge of a mental health crisis, and that’s why the governor’s predictions of what is to come are so particularly worrying. For too long, people have overlooked the intrinsic link that exists between our health and our wealth, often preferring to pretend it doesn’t really exist. In fact, our finances not only impact our mental and physical wellbeing, but our wellbeing can also have a huge impact on how we manage our money.

Problems with our mental health can hugely affect our ability to make well-balanced decisions, particularly those which impact our spending and finances. A survey by the Money and Mental Health Policy Institute found striking evidence of this connection – 93 per cent of respondents reported their spending increased when their mental health suffered. Spending gives us a temporary dopamine hit, but that’s exactly why it can be so problematic for those with mental health problems, or anyone just feeling even a little down. Emotional spending can easily spiral, with one purchase leading to another as we try to escape rising levels of guilt.

It’s a slippery slope from spending spree to accumulating debt. So, as we approach the “end of the pandemic”, rather than rejoicing by splashing excess cash, perhaps we should use this next period to invest in ourselves and rethink spending behaviour instead?

Lockdown has inadvertently forced many of us to pick up positive habits, ones which will hugely benefit our overall wellbeing and happiness if we keep them up during the return to normal life. If you’ve cut down on your drinking or smoking, taken up a new form of exercise, or have just found yourself walking more, don’t let the end of the pandemic spell the end of these good practices. After all, small improvements like these can help us feel our best.

Embrace the sense of flexibility that lockdown has imposed on us. Working from home isn’t always perfect, but it’s taught us the benefits of balance and has liberated us from five days of exhausting commuting. As things begin to open up again, try not to return to an incessantly fast lifestyle and remember you don’t have to attend every event you are invited to or indeed keep clicking on “add to basket”, “click to buy” and “complete the look” options. Letting go of this sense of guilt will do wonders for your wellbeing – and for your wallet, too.  

For years to come, we will all look back on the Covid-19 pandemic as a painful period of our lives. For us to move on and to process what has happened, we need to treat it as a learning curve and a chance for self-improvement. Consider what truly helped you to get through the darkest days. I can guarantee that deep down, it wasn’t spending money. Whether it was using your regained commuting time to put your children to bed, cooking good food with your partner or spending more time outdoors, don’t let these things go. This kind of self-investment will do more for your wellbeing than any spending spree.

Kash Amini is CEO of financial and wellness platform Maslife