Business

‘All dressed up and nowhere to go’ . . . but we've still less cash

WHO'S FOR A HAIRCUT? We’ve been saving on many items, such as personal grooming, as hairdressers were among the first businesses to close
WHO'S FOR A HAIRCUT? We’ve been saving on many items, such as personal grooming, as hairdressers were among the first businesses to close WHO'S FOR A HAIRCUT? We’ve been saving on many items, such as personal grooming, as hairdressers were among the first businesses to close

THE last three months has seriously affected our ability to save.

Some new information from Aviva shows that, while some of us have a little more cash than before, many have much less. Either way, financial planning has just become much more important.

First, the positive side. We’ve been ‘saving’ on many items, such as personal grooming, leisure and entertainments, for the obvious reason that, well, we haven’t had much choice. Everywhere’s been closed!

Hairdressers were one of the first to close, prompting somebody to say: “Three weeks from now, we get to know what everyone’s real hair colour is.”

Pubs, restaurants, cinemas and theatres also pulled the shutters down, and – most stressful of all for many – McDonalds, KFC and other food outlets too. This left us ‘all dressed up and nowhere to go’ - rather like those unsold Big Macs, when you think about it - but it did mean we’ve been spending less cash.

We were also driving the car a lot less. Aviva say that all this together cut average weekly household spending by a third (35 per cent).

On the other hand, we’ve upped spending on TV services like Netflix and Sky, and also on electricity and energy at home, which has cut that gain to 29 per cent; but the average overall household weekly saving has still been £171.

Despite these savings, many incomes were cut, as people were unable to go to work. As a result, a quarter of us have been worried about our inability to save, while one in five worry about our ability to pay household bills, and a quarter of us (23 per cent) worry that current stock market volatility has affected the value of our pensions or investments.

There is a gender divide in play here as well, and, as in so many areas of personal finance, women are getting the worst of it.

The effects of reduced salaries have kicked in, and more women are feeling financially strained than men.

Nearly two in five women (38 per cent) said they’ve had less money to spare at the end of the month than before lockdown, compared to just 29 per cent of men.

It’s not bad news for everyone, though, not everyone has had to tighten their belts. Some feel they have managed to cut spending and reserve money since March 23, when lockdown officially began.

Again, men are having a better time of it: two-thirds (66 per cent) of men feel they have more money in their pocket now, but only 56 per cent of women can say the same.

There’s also an age issue, with one specific group that’s really feeling pressure.

If you are between 25 and 34, you are most likely to be concerned that your job will go before long. In fact, 29 per cent in this age group have that fear. As a result a third (32 per cent) have been very concerned about their ability to save this year.

If you are worried about the longer term effects of reduced income in lockdown, we can help you with a plan to reduce the impact the virus has had on your money.

If, however, you are one of the lucky ones who feel you have a little more cash, well, we have good news for you: we can help you put that money to work as hard as it can, perhaps by bumping up your pension.

Aviva’s head of savings and retirement Alastair McQueen agrees. He said: “If you feel as if you have more cash to spare at the end of the month during this time, it’s important to consider a good home for it.

“Maintaining or even increasing pension contributions could be an attractive longer-term option for savers who can afford to do so, so that money you would otherwise have paid in tax on your earnings goes straight into your pension pot via tax relief.

“Providing you can access other funds at short notice if you need them, then small extra savings today could make a big difference tomorrow.”

:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice or via www.mkennedyfinancial.com