Saving more during the pandemic

In many countries, while working hours were reduced across the globe and many lost their jobs entirely, people are actually saving much more during the pandemic.

That’s because during an economic slowdown, they reduce their expenditure. This pandemic also saw governments around the world helping to alleviate some of the pain through grants, special payouts or tax reliefs to both businesses and individuals.

pandemic saving rates composition
Changes in saving rates in the US throughout the pandemic

The fact that dining out has been curtailed by restrictions, and the need for transport has also reduced as we work from home, we actually see – unsurprisingly – a spike in savings.

There’s also a lesser need to meet friends, and with minimised interactions with others, there are really fewer opportunities to spend money, from clothes, to meals and concert or movie tickets. Some people might have been made redundant during this pandemic, and that also resulted in accelerated rate of savings.

This pandemic also reinforced the importance of an emergency fund, which ideally, should be around 6-12 months of your expenses to cover any sort of emergency cash drawdown for a year. I keep mine at 12 months and have them safe in a high yielding savings account like SingLife.

I have also been able to save more than 80% of my take home income which gets automatically invested according to my investment strategy. I am quite thankful that I have that privilege, and not many of us are able to save and invest aggressively to due housing loans, family commitments and more.

For those who have the ability to continue working from home and eating out less, you can use this time to build your nest egg, travel fund or investment portfolio, and when the economy eventually recovers, you can use the capital to receive regular streams of dividends that pays you while you sleep.

If you read my previous (long) article about the financial flywheel, you’ll find that this is the best time to build the income side of the flywheel, which can help you generate perpetual income for life through an enlarged capital base.

Saving more does not necessarily equate to a higher quality of life, especially since we are mostly mentally stressed from being locked at home and having to possibly work for longer hours and having blurred boundaries between work and play.

It’s also equally important to also balance financial wellbeing with personal well-being – so I’ve been increasing my spending on personal well-bring items like exercise equipments to de-stress from work. My employer allows me to claim reimbursements for wellness services so that has really helped both on the cash flow and personal wellness side.

I also found that I could cut a lot of useless items and clothing from my life since I haven’t used or worn them since the pandemic started. It’s continuous progress to living a more minimalistic but happier lifestyle.

It’s been more than a year since the pandemic started, and coping with the new normal has just begun. With vaccinations coming to more people and countries starting to open up, I think we’ll be mingling with our friends at the movies, gyms and public spaces very soon.

Have you guys increased savings too? If so, what you guys do with the cash?


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