Coronavirus restrictions forced many of us to fundamentally change the way we live and work, including how we spend our money.
Socialising was simply not possible, nor were holidays or simply going to work at the office. Due to these extenuating circumstances, vast sums of spending money were instead saved.
So now that life is more or less back to normal, has there been a lasting impact on how we feel about our money, or have our spending habits also returned to how they were?
A study by Schroders Personal Wealth sought to answer this question. Following their study, it was revealed that one in three people’s financial situation has improved as a result of the pandemic.
This is most likely due to a combination of two different factors. Many people have more savings since the pandemic than they would have had if it had never happened.
Perhaps more importantly, we have seen firsthand how fragile our finances can be. Entire industries were forced to close their doors, and millions of employees were told they could not work. If it hadn’t been for the government to start the furlough scheme, they would have all lost their jobs.
This will profoundly affect those who take their money for granted and assume that their lifestyle is unbreakable. Suddenly, there was a real possibility that everything would be lost due to something entirely out of their control.
Then it is no wonder that we are generally now more sensible with our spending.
According to the Schroders survey, which involved 2,000 adults in the UK, almost a quarter of people are more likely to have a financial plan now than before the pandemic. In addition, 15 per cent said they are more focused on improving their financial security.
It is worth noting that many participants in the survey may have started the pandemic with an excellent financial situation. Seventy-five per cent said they did not need to make any financial changes to support their family during the pandemic.
Having said that, just over half admitted to feeling overwhelmed or stressed about their financial situation, an increase from 2020.
This may reflect the uncertainty being felt due to the pandemic, especially when talking about job security. However, the other major factor could be the rising rate of inflation coupled with tax increases. The cost-of-living crisis will most definitely have an impact.
Will this anxiety and stress remain over the following months and years? There is little doubt that the situation will worsen before it improves, so it appears likely. However, with sound financial advice, you can keep your finances on track during this challenging economic period.
