Perhaps you’re looking to revamp this year’s savings plan, or you’re just interested in the effects of Coronavirus on savings and you’d like to understand more about what people are saving for in 2020 - either way this guide is a must read.
The effects of Coronavirus mean that having savings is more important than ever, so whether you’re able to save £1 or £1,000 regularly, it all counts, and seeing your savings grow can be very satisfying. We asked customers whether their savings habits had altered because of Coronavirus in 2020 and found some interesting results.
How people’s savings plans have changed because of Coronavirus
Not saving – increased by 56%
Whether it’s because of a change in people’s personal circumstances or priorities, or because people prefer to keep their money at home at the moment – 56% is a surprising increase and it means that 8% of people aren’t saving money at all at the moment.
This is the largest increase in any savings habit that people told us about, and one which means that many people could be losing out on interest as well as the protection of a savings account (if they’re choosing to keep money under the mattress instead!).
Saving to help family and friends – increased by 36%
According to gov.uk, as at 2 August, 9.6m employees in the UK have been forced to claim from the government furlough scheme, meaning it’s likely that a lot of us have friends and family in need of financial support during the pandemic. And at 36%, saving to help out family and friends is the second biggest increase, and a reflection of both the challenges that many of us may be facing as well as the togetherness that’s been shown by people in the UK.
One thing’s for certain, although we may have been further apart, lockdown has brought friends and family closer together through new means - whether that’s in online quizzes, through sharing more on social media, or even celebrating lockdown heroes.
Saving for emergencies – increased by 9%
Understandably, the majority of people who changed their savings plans this year decided against saving up for an extravagance like a car or house extension.
Instead, one of the most popular reasons for saving money in 2020 (which 27% of us are doing currently) is for an emergency fund, meaning people are putting more away to cover unexpected costs that may arise - perhaps because of the effects of Coronavirus.
However, those who’ve changed the items they’re saving for also suggest that they’ll eventually revert back to their original savings plans, explaining that they’ll need to fund big ticket items like cars and holidays in the future.
Saving for retirement – reduced by 10%
Just under 33% of the people that we asked are saving for retirement at the moment, making it the most popular amongst savers next to saving for emergencies.
The amount of people saving for retirement has reduced by 10% to accommodate other needs during Coronavirus though, and this is the second smallest reduction for any of the reasons people told us they’re saving - showing that saving for the long term is one of the things that most of us are least willing to give up.
Saving to move house – reduced by 9%
For most, buying a house is the biggest financial commitment that we’ll make, as well as usually being the most stressful thing we do! And so the uncertainty of lockdown is sure to have meant sleepless nights for those of us in the midst of a house purchase.
When it comes to saving up for a house move, the effects of Coronavirus have meant that 9% of the people we asked have put their home-moving savings on hold for the time being.
People did, however, explain that they don’t expect to stick to their new savings plans forever, with the necessity of moving house (amongst other things) providing motivation to return to their previous savings plans.
Saving for a new car – reduced by 13%
Even before the effects of Coronavirus, saving for a new car was something that few people were doing, with only 2% before and just 1.7% choosing to add it to their savings plan after the pandemic has ended. With people perhaps favouring the alternative finance options available at dealerships.
According to autocar.co.uk, new car registrations across the UK were down 44% in March due to the shutting of factories and dealerships, making lockdown a difficult time for people to splash out on a new saloon.
As expected, the downward trend followed into savings too, with 18% of the small number of people who were saving for a new car, now choosing to put their money to other uses, and one of the biggest reductions in people’s savings habits that we recorded.
Saving for a holiday – reduced by 23%
The rules around lockdown are starting to become a little more relaxed, but with the quarantine rules for foreign travel changing frequently - the way people think about holidays is changing all the time.
This year is certain to be the year of the staycation, with original and unusual ideas for how to spend the summer months topping everyone’s to-do list and social media feed.
However, with the majority of the UK set to host a summer staycation in 2020, it’s not surprising that we found the biggest reduction in people’s savings this year (23%) is aligned to holidays.
How people’s savings habits have changed because of Coronavirus
How people are spending money differently in 2020
Regardless of how much you’re able to save, consistency is the key to growing your savings. Many of our spending habits have changed due to Coronavirus, meaning at the moment it pays to be adaptable with the amount you’re putting away each month.
45% of people are withdrawing less money than they did before, with most people not making any changes to the amount they withdraw at all, meaning few people are making more withdrawals.
Only 21% of people suggested that they’ll revert to their original savings withdrawal habits once Coronavirus has passed, and more than 61% of people explained that they’ll continue to withdraw their savings at the rate they’ve become accustomed to during lockdown.
How people are managing their savings differently in 2020
Whether on the high street or through an iPad, or in the morning rather than at night - none of us manage our savings in the same way.
And most of us have a number of reasons for choosing the way that we do it, as well as which bank or building society we decide to trust to hold our savings.
The majority of people we asked told us that they prefer to manage their savings online rather than by visiting a branch, both before and after Coronavirus.
However, people have made changes to the way they manage their savings.
The responses we received show that people now prefer to bank in-branch rather than through a mobile app, with in-branch savings moving up to third place in popularity behind phone, and managing savings online.
And with the trend set to continue, with almost 90% explaining that they’ll still manage their savings the way they do, even after Coronavirus, it’s good to know that we’re here to help you every step of the way, however, or whenever you choose to save.