The start of the new year can be a great time to stop, reflect and consider what we would like to achieve in the months ahead. And after a year like no other, YouGov reported that one in five (19%) of us were setting resolutions for 20211, with ‘saving money’ high on the list.
A popular New Year’s resolution this may be, the reality for a lot of people in the UK is that simply getting by remains the main focus during the early part of 2021.
Our own research reveals how Brits’ experience during the pandemic has divided the country into two main camps and could be set to determine their long-term financial prospects.
Following a recent survey2, we found that almost two thirds (64%) of people who suffered a loss of income in 2020 are worried about being unable to pay a large, unexpected bill while nearly four in ten (39%) are concerned about maintaining their current credit agreements. In sharp contrast, Brits lucky enough to have benefitted from reduced outgoings last year are planning to take full advantage of their extra savings in 2021.
Nearly one third (32%) of those we spoke with said their savings have increased since the UK first went into lockdown in March. The majority (77%) of these people plan to spend the money next year, with the following being the most popular, intended outlays:
But we cannot ignore the squeeze on household finances that continues for many other families, with a quarter (25%) of people we spoke with claiming to be in a financially weaker position than they were before March 2020. Worse still, a further 22% do not expect to be any better off by the end of 2021.
Although some Brits have managed to pay down debts, more than a fifth (22%) of people have seen what they owe rise this year and 28% of people plan to borrow over the next 12 months. Credit cards look set to be the most likely form (13%), followed by personal loans (8%) and mortgages (7%).
2020 has been a challenging year for us all and we have had to adapt to unprecedented circumstances. As a country, we entered a recession for the first time in 11 years.
Whichever financial category you fall into however, the beginning of the year remains a good time to assess your finances, and the coronavirus pandemic has only highlighted the importance of saving and budgeting.
Whether you’re looking to cut back or save for your dream home, taking money management back to the basics by reviewing how much you have coming in versus what is going out is always the best place to start if you want to get on top of your finances. Wherever possible people should also aim to have three months of expenses saved up as a rule of thumb, as this will help to give you a buffer should the unexpected occur.
For those thinking about borrowing or taking out new credit, this is not a decision to rush into. Think carefully and take the time to shop around to make sure you are getting the best deal for you. If your circumstances change, would you be able to afford repayments? Do your research before committing to any additional finance and make sure you read the small print within any contracts.
If you’re feeling concerned about the impact of the pandemic on your finances this year, head over to our dedicated resource hub – MoneySure – which offers a host of useful guidance and other insights on how to manage your money.
1 Our consumer survey was conducted on a sample of 2,000 UK adults by 3GEM Research & Insights, and was undertaken between Sunday 29th November and Wednesday 2nd December 2020.
2 https://yougov.co.uk/topics/lifestyle/articles-reports/2020/12/30/new-years-resolutions-2020-and-2021
