Tips to Utilise Your Work from Home Savings Effectively
A large number of companies have permitted their employees to work from home ever since the pandemic broke out. As a result, many people have found a significant plummet in their monthly expenses. Undoubtedly, commuting expenses have turned to zero, but a lot of other costs like rent, daycare and much more have added to savings.
Since the whole year people were supposed to do work from home, many have gone to their hometowns to save money on rent. Parents are usually at home, so they do not need to spend daycare expenses. Undoubtedly, work from home has saved all of you a lot of money.
Now the question is what you can do with this money. Are there alternatives to put this money into fair use? How can you utilise that money more effectively? Here are some of the tips to use these savings in a better way.
Throw them at your debts
Whether you are unemployed or you are working on a pay cut, you cannot escape paying your debts. If you have taken on debts like mortgages, personal loans in Ireland for bad credit, or auto loans, you can leverage your work from home savings to settle all your dues. Since the economic situation is uncertain and now is not the right time to be under debt.
Your company is allowing you to work as long as they can manage to pay you. What if the business goes down and your boss says they need to move the furniture around? You cannot flinch from paying off your debt just because you are facing redundancy. This is why it is always advisable that you settle all of your outstanding dues. The sooner you pay off, the better it is.
Whether it a cash loan or credit card bills, it makes sense to pay off your debt in full. If you are near the end of your repayment term, you should not hesitate to make early repayments although it will cost you additional charges. If you are already juggling with multiple debts and your savings are not enough to pay off all of them, seek for consolidating loans and utilise your savings to pay off that loan.
For most of you, this might not be a good time to invest money because the market is not healthy at all. However, if you smartly move your money, you can build your wealth. Stocks are undoubtedly volatile, and you may not be able to earn money. Instead, you should invest in mutual funds. They are not as riskier as equities.
Bonds can also be a great option. Although they will not let you earn as much as equities, they are less risky, and you will surely get a certain amount of money as interest. The investment world is full of uncertainties. If you are not familiar to it, you should try to take help from an investment expert.
Top up your emergency corpus
If you are debt-free and you do not want to invest your work from home savings in stocks and bonds, you should add it to your emergency funds. A good rule of thumb says that you should have at least six-month worth of living expenses in your emergency funds.
Even if you have no dependents in your family, you should have an emergency fund. This will help you tide over during financial emergencies, for instance, when you lose your job. Whether you have little or much money in your emergency cushion, you should top it up with your work from home savings.
Note that the size of emergency funds depends on your needs and living style. For example, if you are a single person in your family, you should have at least nine months worth of living cost. If you are a family of two, it should be six month worth of living cost provided both of you are working.
You are lucky to have saved some money due to work from home permit, but it will pay you off when you make the most of it. Do not let this cash be idle or spend on your discretionary expenses. Try to utilise this money in ways mentioned above.