Throughout the lockdown, one notable theme has been people looking to find enjoyment in the simpler things in life, such as home baking, gardening and crafts. The ‘back to basics’ theme has also become important for our personal finances.
Lessons from lockdown
Many people have seen their finances hit by the economic impact of the pandemic and may be trying to cope with less income, but the same outgoings. This has forced many consumers to review their financial habits by reducing expenses and becoming more mindful about expenditure.
Dealing with debt
Good budgeting skills have become a necessity, but it’s also important not to ignore debt. Mortgage repayment holidays and other debt payment breaks have helped in the short term, but these will not last forever. Going forward, it’s important to keep up with repayments or, if you are struggling, consult a debt adviser. When it comes to persistent debt, the worst thing to do is to do nothing.
In an ideal world, every household would have had a financial buffer to cushion the blow when the COVID-19 crisis hit. Sadly, for some people, the pandemic has highlighted the fragile nature of their financial safety net. Over the last few decades, the burden of responsibility has increasingly shifted from state to individual, which has increased the importance of protection insurance in maintaining both your own and your family’s financial security in uncertain times.
Rainy day funds
The pandemic has also highlighted the need for emergency savings. If you don’t have savings, regular schemes often pay more attractive rates of interest and can be a particularly good way to accumulate rainy day funds. If you do have savings, make sure you shop around for the best available rates rather than leaving funds stagnating in low interest accounts.
Plan for the long term
Although it’s extremely easy to focus solely on short-term financial needs, it’s also important not to lose sight of other long-term financial goals. While finding money to fund longer-term plans such as retirement savings can be difficult, the cost of delay can ultimately prove even more expensive.
Helping you build financial resilience
The last few months have shown that we never really know what’s around the corner and have also demonstrated the importance of being financially prepared for unexpected events in the future. If you need assistance strengthening your financial resilience, please get in touch.