Words by John Ellmore
Feeling anxious over one’s finances is common. Whether it’s short-term cash flow issues, or long-term financial planning, money worries never seem to be far from people’s minds.
Unfortunately, the onset of the coronavirus pandemic has made financial anxiety far more prevalent. It has caused hugeshockwaves in the UK jobs market, which in turn, has negativelyimpacted household income for millions of people.
The latest Government figures paint an ugly picture: 8.9 million workers were furloughed as of mid-June, while over 2.6 million self-employed people had applied to the Treasury for financial support. Sadly, British business executives believe worse will come, predicting that unemployment will leap to 3.5 million by the end of 2020.
Clearly people’s incomes are going to be impacted. Needless to say, this will create an inevitable surge in finance–related anxiety.
Indeed, research from KnowYourMoney.co.uk has revealed that almost a third (31%) of UK adults have seen their personal finances decrease as a result of the virus, with over a quarter (28%) of people saying they are worried about the financial situation.
Naturally, consumers are worried about multiple elements of their personal finances. For example, the survey uncovered that a fifth (21%) of UK adults felt guilty for not taking the time to properly assess their finances since the pandemic took hold. Meanwhile, 26% believe they could have saved more money during lockdown and slightly more (29%) admitted to excessive online shopping over recent months.
Hope on the horizon
Despite understandable consumer concerns, there are reasons to be more optimistic. For one, Chancellor Rishi Sunak’s so-called Summer Budget on 8th July offered some breathing space to consumers who are suffering from the financial strain.
Firstly, Sunak announced a huge cut in VAT for hospitality and tourism sectors – from 20% to 5% – in a bid to simultaneously protect jobs and pass savings on to consumers.
Additionally, he announced the introduction of a restaurant voucher scheme, Eat Out to Help Out, which will subsidise people’s meals in restaurants. This move hoped to persuade consumers back into restaurants, thereby supporting local businesses but without the guilt of spending their money.
Importantly, the ‘kick-starter’ job scheme and incentives to employers to take back furloughed staff ought to go some way to tackling the high levels of unemployment in the months ahead.
While these are positive steps, people may remain reluctant to part with money while the threat of the virus remains very much at large. This is particularly true for any consumers whose income has been affected by the pandemic. The question, therefore, is what action can people take to feel more in control of their finances?
Financial management may seem overwhelming, but on the contrary, it is a lot simpler than many people think.
While it may seem obvious, and excellent starting point is noting down incomings and outgoings. There are plenty of budgeting apps available, so consumers can conveniently track all spending habits on their mobile phone. Monitoring cashflow could expose any unnecessary and potentially problematic spending, which will in turn, help consumers eliminate it.
Comparison sites are also a useful tool when it comes to managing finances. Many consumers are unaware that they are overspending on certain products. Comparison websites are able to quickly search and compare prices for a range of products and services, from groceries to car insurance, so people can choose the best option for them. By taking the time to research various options, consumers could save themselves money and feel morein control of their bank balance.
Importantly, people should never feel as though they have to struggle through the financial maze by themselves. If the pressure becomes too great, debt charities such as StepChange could provide a vital lifeline. These charities are always on hand to listen to people’s financial worries and help them take steps to get their finances back on track.
We are living through extremely challenging times – and many consumers are being understandably cautious with their finances. There is no one-size-fits-all model when it comes to financial management and for now everyone should manage their finances as they see best.
Ultimately, there is no easy way to tackle financial anxiety. However, by taking small steps, be it taking advantage of the Eat Out to Help Out scheme or tracking spending habits, people will begin to feel more in control of their personal finances.
John Ellmore is Director for Know Your Money. Know Your Money is an independent financial comparison website, launched in 2004. Run by a dedicated team, Know Your Money’s goal is to provide clear, accurate and transparent comparisons for a wide range of financial products, such as business loans, mortgages and car insurance