For many, there has been a massive negative financial impact of the COVID-19 pandemic. Claims for benefits have increased, millions have been furloughed or lost their jobs. Elsewhere, others have found themselves ineligible for the various support schemes.
However, I read with interest a recent LCP report regarding Britain’s “accidental savers”. These are the people who have seen little change in their income through the COVID-19 pandemic, yet have seen their expenditure drop sharply. They’ve not been able to spend on things like holidays and meals out. They may also have seen a reduction in expenditure through working from home. In fact, the study estimates that six million workers have found themselves saving more as a result of the pandemic.
Although for many this might be a temporary situation, for others it’s started a pattern of saving they won’t want to stop. For some, changes in their working patterns (potentially more people working from home on a permanent basis, if only some of the time), will reduce their expenditure and therefore increase their capacity for savings for the foreseeable future.
Now’s the time to act
The worrying part of the study was how little proactive action was taken with these additional savings. Most people simply added to their current account or a savings account and very few adding monies to medium, long term or pension savings, or indeed paid off debt.
These are the people that we need to be speaking to. I had a call from a new client only late last week. Through an unexpected well-paid contract and not spending nearly as much as they normally do, they find themselves with a significant lump sum. Do they pay a lump sum off their mortgage? If they do, should they reduce the payments? Or maintain the levels of payments to pay the mortgage off early? Do they add to existing investments? Do they increase their pension contributions?
Just as we all start to look at the roadmap out of the COVID Lockdown, these clients need our help in creating their own Life Roadmap, the plan that helps in providing clarity about what they want their life to look like, and the plan that helps them achieve that in the most efficient way.
If you know of anyone who could benefit from our services, we’d be delighted to talk to them. Even if we’re not best placed to help, we will be able point them in the right direction.