money saving

Brits plan to chop expenditure due to coronavirus money worries

Exclusive research* from Forbes Advisor UK has revealed the steps that the nation’s adults have taken over the past year to weather the financial storm triggered by Covid-19.

Totting up the toll

The anniversary of the first UK lockdown in March 2020 is nearly upon us, making it a good time to reflect on how the nation has coped with the most significant crisis, arguably, since the Second World War.

Experiences have differed markedly, with some households enjoying an improvement in their finances as they have managed to work from home while avoiding the cost of commuting and daily incidental expenses.

But for millions of others, coronavirus has brought severe pressure to bear on their finances – prompting those even in relatively stable positions to batten down the hatches.

Over two thirds (69%) of those we asked agreed that Covid-19, and its effect on the economy, has made them more careful about money. Evidence of this is the fact that cash-conscious consumers have cut nearly £14 billion** from their household outgoings since the pandemic hit 12 months ago.

For those exercising caution, this has meant smarter shopping choices and financial decisions, but for near-on a third (30% – equivalent to 15.8 million*** UK adults), it has meant not spending money even on essentials such as heating or lighting their homes, clothing, and groceries.

A year of saving money…

Rank Step taken in the last 12 months to save money People who took this step (%)
1 Sold unwanted items on eBay, Facebook Marketplace, Gumtree, Depop etc. 30%
2 Started shopping at cheaper supermarkets (Lidl, Aldi, Iceland etc.) 28%
3 Voluntarily cancelled foreign holidays 27%
4 Switched energy provider 26%
5 Voluntarily cancelled UK holidays 23%
6 Switched car insurance 23%
7 Switched home insurance 19%
8 Switched mobile phone deal 18%
9 Cancelled TV subscriptions (Sky, Netflix, Amazon Prime, Disney+ etc.) 17%
10 Cancelled gym membership 16%
11 Switched broadband 14%
12 Sold items I wanted to keep on eBay, Facebook Marketplace, Gumtree, Depop etc. 12%
13 Cancelled newspaper/magazine subscriptions 9%
14 Switched mortgage deals 6%
15 Sold my car 5%
16 Declared car SORN1 and cancelled car insurance 5%
17 Cancelled life insurance 5%
18 Cancelled broadband 4%
19 Cancelled home insurance 4%
20 Gave a pet to a rescue centre 3%
Forbes Advisor UK/OnePoll

1Statutory Off-Road Notice, obtainable from DVLA. If you do not have a SORN, you must by law have at least third-party car insurance, even if your car is off-road and not used

Top worries for 2021

A year into the pandemic, and Covid-19 dominates concerns for 2021:

  • 72% of respondents citing the virus as the thing they are ‘most worried’ about
  • 60% are most concerned about the UK economy
  • 29% fear for their family’s financial situation
  • 24% are not confident about job security.

Our research found that most people (85%) have taken steps to shore up their finances over the last year, resulting in an average saving of £412.43, while 12% saved between £500 and £999, and one in 10 managed to save over £1,000.

Unfortunately, a small but significant number of people have had to take more drastic steps, including cancelling essential utilities and insurances.

Forbes Advisor UK/OnePoll

Protecting family finances

Our personal finance expert, Laura Howard, has studied the research, undertaken for us by OnePoll, in detail. She said: “Covid-19 has now been part of our daily lives for almost a year, and the entire population has been under some form of lockdown for almost as long.

“While the pandemic is first and foremost a health emergency, the financial impact on households and the wider economy has been huge and is likely to linger even once the vaccine rollout has completed.

“As such, it’s hardly surprising that most people in the UK are nervous about money matters and that they have been taking steps to protect their families’ finances.

“Many households have taken positive steps to free up some extra cash – such as switching to better energy, broadband, and insurance deals; selling unwanted items; or cancelling unused subscriptions. But it’s disturbing that almost a third of the UK’s adults – 15.8 million people – have cut back on essentials such as heating, clothing and even food.

“Millions are also potentially putting themselves in a precarious situation by cancelling important insurance policies. While car insurance is a legal requirement, other forms of cover may feel like a luxury. But the fact is that insurance never demonstrates its value until you need to use it, at which point it can often be a significant financial lifeline.”

Haves and Have-Nots

Laura added: “The pandemic has already shone a spotlight on the gap between the UK’s ‘haves’ and ‘have-nots’, and, while the government has a significant job to do in limiting its effect on health, the economy, and communities, making cash stretch as far as possible in terms of household bills and expenses will come down to individuals.

“For costs such as energy, car and home insurance, broadband, and mobile phone tariffs, the biggest savings often come from switching providers. In a matter of a couple of hours it’s possible to save many hundreds of pounds without sacrificing quality, and without having to cut your spending on essentials and life’s little pleasures – which, of course, are more important now than ever.”

*Between 5 and 9 February 2021, Forbes Advisor UK commissioned OnePoll conducted a nationally representative survey of 2,000 UK adults.

**64% of respondents said that they saved money in one of 20 ways (see table above). The average amount saved was £412.43. 64% of 52,673,433 UK adults is 33,710,997 x £412.43 = £13,903,426,493. 

***According to the most recent data from the ONS there are 52,673,433 adults (aged 18+) in the UK. 30% of 52,673,433 = 15,802,023.

 

Source: Forbes

About the Author

Karren Brandenburg

Karren Brandenburg is a travel and shopping expert. She has been quoted in Street Insider, Yahoo Finance, Reuters, ABC News, and MarketWatch. Karren has a total of 18 credit cards, using reward points to see the world on a budget.