Fifth of people ‘say coronavirus crisis has been a financial wake-up call’
Three in 10 (30%) people say they were unprepared financially for the coronavirus crisis, a survey has found.
A fifth (20%) believe the crisis has been a financial wake-up call to manage their money better in future, according to Zopa.
Nearly two-fifths (38%) are aiming to boost their emergency savings reserves in case the coronavirus restrictions need to be tightened further at some stage.
Over two-thirds (68%) believe restrictions possibly will need to be tightened again.
People are using this time to put in place good financial habits - particularly the younger Millennial audience
Millennials aged 24 to 39 are twice as likely as over-55s to start putting money aside now for unexpected events, the research suggests. Half (50%) of the younger age group said they would do this, compared with just under a quarter (23%) of people aged over 55.
Clare Gambardella, Zopa’s chief customer officer, said: “The last few months have really put the nation’s finances under a microscope and forced many people to re-look at how they save and spend.
“Encouragingly, we can see that where possible, people are using this time to put in place good financial habits – particularly the younger Millennial audience.”
On average, people would like to build up a savings buffer of £6,697 by the end of 2020.
But this will be a challenge, as more than half (51%) of people surveyed said they are financially worse off since the pandemic hit.
One in seven (13%) people have set a savings goal just to get back to where they were before the crisis hit.
The average time they think it will take them to achieve this is 11 months.
And people are not just saving in case there is another possible spike in the coronavirus pandemic, or to get their finances back to where they were before the crisis.
A fifth (20%) of those surveyed expect the prices of goods and services to increase in 2020 and into 2021.
Flights, holidays and eating out top the list of the outgoings people expect to become more expensive.
One in six (16%) plan to save extra money this year to go on a bigger holiday in 2021, making up for some people’s holiday plans being derailed in 2020.
- Coffee, £1.60
- Pint, £1.40
However, more than six in 10 (62%) would be happy to spend more at independent businesses if it helps their recovery.
On average, people said they would be willing to spend as much as £1.40 more on a pint and £1.60 more on a coffee at an independent business, if it helps it to survive.
More than a quarter (28%) of restaurant goers said they would increase the amount they tip, having watched the impact of the lockdown on the hospitality sector, while nearly a quarter (24%) plan to give more money to charity.
Zopa’s background is in peer-to-peer lending, but it was recently granted a full licence as a bank. The new “digital first” bank will be launching a new set of products, starting with a fixed term savings account, offering a rate over one to five years. Accounts will be available to UK savers in the coming months.
A credit card which will help people have more control over their spending will launch later in the year, Zopa said.
More than 2,000 people were surveyed across the UK at the end of May.
Here are the extra amounts people would be willing to pay on average on items to help independent businesses to help them recover from the coronavirus lockdown, according to Zopa:
– Groceries, £7
– Clothes, £6.20
– Dinner, £5.60
– Hair and beauty treatments, £4.10
– Brunch, £2.50
– Coffee, £1.60
– Pint, £1.40
– Cocktail, £1.40