Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Returning from furlough: How to use your extra 20%
Reading Time: 4 minutesIt’s no secret that lots of us have been struggling during the furlough period. With reduced wages for a lot of people, households across the nation have been struggling to pay the bills – even when reduced socialising costs are taken into account. Because of this, returning from furlough might throw up some unexpected issues.
When you return to your normal wage it might suddenly feel like you’ve had a bit of a pay rise. It’s important not to let the extra cash run away with you, though. If you’ve got debts to pay off or you held back on certain things whilst on your lower wage, now is the time to get things (including your finances) back to normal. This should be your priority, however much you might want to accept every social invitation that comes your way.
Equally, if you managed to save during your furlough period the return to a full wage might make you feel like going on a shopping spree. There are probably better things to do with your money, though!
Here’s what to think about now you’ve got that extra 20% back.
- Consider a slower pace of life
- Avoiding spending sprees after returning from furlough
- Pay off your debts
- Put extra money into savings
- Invest your extra 20% in education…
- …or into making a business out of your side hustle
Consider a slower pace of life
Whilst we’ve all been missing friends and family during the lockdown, a lot of people have been open about how a slower pace of life has been a welcome benefit. For those lucky enough to have been working from home, or indeed those on furlough, commuting time being replaced with new hobbies, exercise or family time at home has been a welcome surprise.
This slower pace of life might mean that you have extra money in your pocket after returning from furlough. If that’s the case, it makes sense to think about how you can incorporate what you’ve been doing to save money over the past months into your regular life as we return to normality.
So, have you enjoyed cooking rather than ordering takeaways or eating out? Realised that a walk in the park and a picnic is just as fun for kids as an afternoon in an expensive jungle gym? Found that free online workouts and running are better for your mental and physical health than the gym? If the answer is yes, keep these things up. Not everything has to go back to the way it was before, especially if “before” was busy and needlessly expensive.
Avoiding spending sprees after returning from furlough
Once you go back up to your normal wage, it might feel like your extra money is burning a hole in your pocket. But a shopping spree with things that you don’t need is almost certainly not going to be the answer… no matter how tempting it might be to hit the shops. So do your very best to avoid buying things that you don’t need, just because you can.
Our personal recommendation is staying away from social media for a while (especially Instagram, where fashion brands are most aggressively targeting consumers with cut-price retail offerings).
It’s inevitable that once the shops all reopen, we’re going to stock up on some things we’ve put off buying for a while. Make sure to check out our article on post-lockdown savings to always get the best deals!
Pay off your debts
If you’ve got outstanding credit card bills or overdraft fees that are causing a dent in your bank account, returning from furlough might be a good time to consider wiping the slate clean.
Got more than one debt? Consider paying off the most expensive ones first. These are often the ones with the highest interest. They might not be the biggest overall debt, but they will cost you the most over time.
If you’ve got a couple of hundred pounds on a credit card that you need to wipe, upping your monthly repayments whilst your living costs are low is also a sensible idea. The same goes for overdrafts, loans and other debts.
Not sure where to start with paying off your debts? Money Magpie can help! Check out our debt management articles – and hop onto our forum to ask questions, too.
Put extra money into savings
Found that surviving on 80% of your pay has actually been OK? If you can work from home once your furlough period has ended, it’s likely that you’ll be able to keep costs (travel, food, etc) around the same as they were whilst you weren’t working.
If that’s the case, take advantage and start putting a bit of money every week or month into your savings. It’ll be easier than you think, and you’ll quickly be thanking yourself for it! After all, it’s unlikely that you’ll ever get a chance to save like this again.
Invest your extra 20% in education…
For those who enjoy the slower-paced life and have the extra 20% to spare, learning something new is a great investment in yourself. It could be the right time to invest in a course to build your skillset, enrol on that diploma you’ve been thinking about for years, or sign up to an evening class. We can’t think of a better use for your extra cash than this! If you’re not sure what you might want to learn about, Google evening classes in your area to see what’s on offer.
…or into making a business out of your side hustle
Another hugely valuable way to invest your extra money, aside from education, is in setting up a new business. If you’re working from home (and especially when the kids are back at school) returning from furlough might offer the perfect opportunity to kickstart your side hustle into a real business. Check out our Small Business Ideas section for lots of inspiration!
Now Read These articles
For more information about managing debt or investing your extra 20%, try these articles next:
- First Steps to Tackling Debt in a COVID-19 World
- 6 Mistakes to Avoid when Consolidating Credit Card Debts
- Practical Solutions for Professionally Managing High Debts
- How to Launch Your Online Business from Home with Minimum Effort
- How to Turn Your Hobby into a Successful Business
- Cheap Family Entertainment Tips
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Nice article for me!
Paying off debt is the best option, it reduces other issues such as stress as well.
I heartily endorse the ‘side hustle’ idea. It certainly worked for me.