As a result of Coronavirus restrictions, many of us were forced to fundamentally change the way we live and work, including how we spend our money.
Socialising was simply not possible, nor were holidays or simple going to work at the office. This meant that vast sums of spending money were instead saved due to these extenuating circumstances.
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 the way 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 money in savings since the pandemic than they would have had if it never happened.
But perhaps more importantly, we have seen first hand how fragile our finances can be. Entire industries were forced to close their doors and millions of employees were told they cannot work. If it wasn’t for the Government starting the furlough scheme, they would have all lost their jobs.
This will have had a profound effect on those who take their money for granted, and assume that their lifestyle is unbreakable. Suddenly there was a real possibility of everything being lost due to something entirely out of their control.
Then it is no wonder that we are generally now more sensible with our spending.
Going back 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 compared to before the pandemic. In addition to this, 15 per cent said they are more focussed on improving their financial security.
It is worth noting that many participants in the survey may have started the pandemic with a very solid financial situation. In fact, 75 percent said that 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. This is an increase compared to 2020.
This may be a reflection of 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 be having an impact.
Will this anxiety and stress remain over the next months and years? There is little doubt that the situation will get worse before it gets better, so it appears likely. However, with sound financial advice, you can keep your finances on track during this difficult economic period.
