A year of strict limits on going out has helped many people build up more cash savings than they’ve ever had. Official figures show that Irish people have added a massive €15 billion to their savings over the past year. If you are among this lucky number, here are some tips on what to do with your excess lockdown savings.

1. Spend It

It’s great to have more money than usual to spend but think very carefully before blowing all the gains of lockdown. We are all itching to get back out there and splurge a bit but you should still have a good think about whether you really need what’s just caught your eye.

2. Save It

Instead of splashing the cash, why not put some of it out of the way of temptation. Setting up a direct debit to a deposit account will put your cash out of easy reach, create a savings habit and will make you much less likely to reduce or stop monthly contributions. Once you have built up an appropriate emergency funds reserve you can then consider better medium to long term places for your money.

3. Pay Off Debt

It’s definitely much better to avoid the urge to splurge if you are still in debt. Focus first on the most expensive debt, which for most of us is credit card debt. And make a resolution to pay off your credit card (or cards) in full each month from now on to avoid what can be crippling rates of interest.

4. Pay Off Mortgage

Paying off or reducing your mortgage can bring piece of mind – and of course reduce monthly outgoings – but if you have a low mortgage interest rate it makes economic sense to leave it be and instead invest your excess cash.

5. Top Up Pension

If you contribute €100 to a pension the tax man gives you up to €40 back. So a €100 investment costs as little as €60 and it grows tax free until you retire. This simple maths makes pensions a no-brainer – as long as you don’t need the money until retirement.

6. Invest It

Hoarding cash in bank accounts or state savings or prize bonds is not a good idea. Once you have an emergency cash buffer in place, everything else should be invested – which means taking some risk to enjoy better returns. Aim to continue investing surplus cash all through life and staying invested. It’s the only sure-fire way to beat inflation.

7. Buy A New Home

Finally, there will be many for whom lockdown was a double-edged sword. While the opportunity to accumulate cash was welcomed by those saving for a deposit, the Irish property market is as difficult to negotiate as ever, as lockdown has exacerbated the lack of supply and driven prices beyond the reach of many.


If you like this article, try this one: My 4 Unbreakable Rules of Investing