Coronavirus restrictions forced many of us to fundamentally change how we live and work, which in turn affected how we spend our money.
With socialising being out of the question, travel restrictions meaning we couldn’t go on holiday, and stay-at-home rules forcing those who could do so to work from home, many of us simply didn’t spend the money that we would have done in normal circumstances.
So what, if any, lasting impact has this had on how we feel about our money now that we’re closer to normal than we have been at any point since the pandemic began?
Well, a study by Schroders Personal Wealth has revealed that more than one in three people believe the pandemic has led to their financial situation improving.
This could be down to a combination of two factors. On the one hand, many of us have more money in our pockets than we would’ve had if the pandemic hadn’t happened.
But at the same time, we’ve had a dramatic demonstration of how perilous and insecure our financial status can be. Lockdowns forced entire industries to close or operate under strict restrictions, while millions of people were furloughed, relying on the state to pay the bulk of their wages while they couldn’t go to work.
This will have been profoundly shocking for those who previously took their lifestyle and source of income for granted. Whereas they’d once enjoyed safety and security without a second thought, they suddenly had to confront the possibility of it all being taken away in a stroke, for reasons completely beyond their control.
According to Schroders’ survey of 2,000 adults in the UK, nearly a quarter are more likely to create a financial plan now than they were two years ago. Similarly, 15 per cent said they are more focused on improving their financial security than they were pre-pandemic. Of course, many of those polled may have entered the pandemic on a relatively solid financial footing. Indeed, three-quarters of respondents said they didn’t have to make any changes to support themselves or their loved ones over the last two years.
But worryingly, many admitted they sometimes felt overwhelmed or stressed because of their financial situation. In fact, the percentage of those feeling this way has gone up from 48 per cent in 2020 to 52 per cent today. This could possibly reflect the wider uncertainty that was felt as a result of the pandemic, particularly when it came to job security. But it may also point to other, more recent developments that have followed. For example, the UK is currently seeing the highest rates of inflation in three decades, soaring living costs, tax increases and rising interest rates.
Will the stress people are feeling over their finances continue to become more widespread over the coming weeks and months? Given all the current pressures, which could get worse still, this seems likely, and makes it more imperative that people get the professional financial advice they need to keep their finances on track during this tough economic time.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.