COVID AND THE SAVING HABIT

For the most part of a year now, we have been on “lockdown”; staying at home in a bid to help reduce the spread of coronavirus and to protect the vital NHS. 

As well as these obvious positives, staying at home has also had a huge effect on our finances and our relationship with them. Of course, a huge number of people have felt, and continue to feel, the devastating impact of the pandemic as they simply battle to keep themselves and their businesses afloat on little to no funding or income. For those who have been fortunate enough to maintain a steady income stream during this time, staying at home may have led to increased saving.

The combination of falling household spending and possible future financial concern has, in some instances, created a greater willingness to save money.

When the pandemic began, we mentioned that around 12 million adults do not have any form of saving or investing account*, while almost half of people who do save £100 or less a month. Almost a quarter of people have no savings at all*. This may in some places, still be the case, however, it seems that some have adopted savings habits throughout the pandemic that they are keen to continue. (1)

The closure of leisure, hospitality and retail sectors is limiting recreational spending, and leaving some households with an increase in spare disposable income. This is turn has created a “savings buffer”, helping individuals and households feel protected of the risk of another economic downturn.

Currently, the want for greater visibility of finances and savings is bigger than ever. Potentially, many savers feel this will ensure a quicker route to protecting themselves against any future shocks the pandemic may bring. (2)

As a knock on, the interest in big returns on savings has dropped, with many simply looking for increased engagement with their finances. Therefore, a more cautious and flexible approach to saving and choosing where to place any savings or investments, seems to have been adopted. (3)

If unfortunately, you are someone whose income has been affected by enforced time off, you may still be able to take steps to potentially make it easier to save once this has passed.

is key especially in unsettled market periods, to set clear and achievable financial goals. Reviewing expenditure and income will help give an idea of spending and saving habits and allow you to build a plan on how to save more without negatively impacting your living standards.

It also helps, if possible, to look further than tomorrow and to set some long-term financial goals.  Do you have a retirement fund started? Are you able to start contributing to that monthly? If you can, accessing regulated professional financial advice will provide you with expert guidance to confidently plan your financial future.

If you are in a fortunate position where your income has not yet changed and you have noticed your spending reduce during this period of social distancing, maybe it’s time to start considering investing, and getting that money to work for your future.

We are incredibly aware that financially, this is a tough time for many and we want to be able to support as best we can. We hope you are all staying safe.

Source data:
[1] Research of 2,000 UK consumers conducted on behalf of Aviva by Censuswide, August 2020. Censuswide is a member of ESOMAR – a global association and voice of the data, research and insights industry. Censuswide comply with the MRS code of conduct based on the ESOMAR principles.

[2] https://www.bankofengland.co.uk/statistics/tables – Table A4.1

[3] https://www.bankofengland.co.uk/statistics/tables – Table A5.6