During the COVID-19 pandemic, many lost jobs and livelihoods. The state of people’s personal finances was uncertain and money worries were rife as we grappled with the ‘new normal’.
With this in mind, it comes as no surprise that the UK is now feeling anxious about managing their money and getting back on track if they had some financial difficulties over this time.
We asked more than 2,000 UK residents their current concerns and anxieties about lending and borrowing money in 2021.
From how off-putting confusing language is in loan agreements to what money myths are believed to be true and false, our new report shows the level of financial anxiety felt throughout the UK.
Here’s how people are planning to spend their borrowed money over the next few months, and years:
Our study found that 30% of the British public admit to feeling some level of anxiety when it comes to managing their own finances.
Shawbrook Bank are able to reveal which residents in the UK feel the most anxiety around managing their money.
The study found that having a clear repayment plan is the most important part of applying for a personal loan. 53% selected this as the biggest factor for easing money worries. Having a fixed interest rate for the duration of their personal loan was the next important factor (52%).
When it comes to managing finances, including personal loans, the survey reveals how many Brits are unconfident in their knowledge of common financial terminology.
Our report found that only 30% agree that they are ‘very confident’ in their understanding of what a credit score is, and just 25% admit to knowing their current credit score. Further still, a quarter of Brits believe that having a personal loan will negatively impact their credit score - which is false if you manage it properly and make all your repayments on time.
How long do you spend reading Terms & Conditions (T&Cs) on a document before agreeing to it? Our study reveals that around 8% don’t read them at all.
Here’s how the UK scores against common money myths:
To help Brits manage their money better Sally Conway, Head of Consumer Communications at Shawbrook Bank provides money management advice:
Knowing how much money you have coming in versus your expenses is the best place to start. It’s important to include everything, from the odd takeaway coffee to your regular bills like rent or mortgage payments. If you are spending more than you earn, look at where you can cut back. Remember to be realistic. There is no point making a budget that you know you will not be able to stick to.
Anxiety stems from a fear of the unknown. As they say, information is power so you should take the time to get clued up when it comes to money matters. For example, if you look at our research, 1 in 3 people were unsure of, or didn’t know what their credit score was. Knowing this could give you a better idea of how likely a loan provider might be to lend to you. The bottom line is, by taking a proactive approach and educating yourself about financial products and money management, the less anxious you’ll be.
Sometimes a problem shared is a problem halved. Talk to your friends and family. You never know, they might have been through a similar situation before and give you a little guidance on what to do next. There are also plenty of independent organisations out there to help you if you are in financial difficulty or just looking for a little bit of advice.
If the last 18 months has taught us anything, it’s the fact that you never really know what’s around the corner. Planning for the unexpected is not easy. But, you can build an emergency fund if something unexpected does happen. Advisers typically recommend aiming for three months’ earnings, but any buffer is better than none at all. Start small and build it up, there are plenty of savings challenges out there that will ease you into the swing of things.
When it comes to money matters & financial products, shopping around is extremely important. There is a lot of choice out there and you’ll need to do your research to find the best deal for you. Whether it’s looking for the best ISA for your savings or finding a personal loan rate that you can afford, take your time, look at all your options and make sure you fully understand what you are signing up to.
Our videos will uncover the key information you need to know.
|What is an APR & interest rate?
||What is a soft credit search?