Coronavirus is financially dividing the UK, with half of Brits bolstering their finances while the other half struggle to survive. The research comes after Young Money Blog took part in a special LinkedIn Live Employment Clinic with Anna Whitehouse of Mother Pukka fame…
New research from LinkedIn suggests that coronavirus is dividing the nation when it comes to our finances. Whilst 22% of furloughed workers are struggling to afford their rent or mortgage repayments, almost half of those surveyed (47%) say they are financially better off and have saved an extra £300 in the past month.
A quarter of those saving money are already making plans to splash out on a holiday when lockdown is over, whilst 14% plan on eating out more often.
In stark contrast, more than a quarter (28%) of those surveyed have been forced to dip into their savings to make ends meet and 6% have deferred their credit card repayments. A third of employees (34%) on furlough have had to proactively cut their spending, and a further 7% have had to take up a second job to make up the income loss.
Meanwhile, a separate ‘workforce confidence index’ from LinkedIn shows that majority of UK workers have reduced their personal spending during the crisis.
Finance expert, Iona Bain, said: “The research tells a tale of two extremes – on one side
people have been able to take advantage of the lockdown by spending less and saving
more. But on the other side, we have people who are unable to work and are having to enter
the benefit system for the first time or raid their savings. There’s also a lot of people who are
falling through the gaps when it comes to government support and loans. Whatever side you
fall on, there are definitely things you can start doing to get in control of your finances. It’s
the habits you form now that will benefit you in the future.”
Iona Bain’s tips for looking after your personal finances:
1. Get support!
Make sure you understand what resources are available to you at the moment. The three main avenues to look at as an individual are the benefit system, the coronavirus self-employed income support scheme, and the hardship fund. You can apply for Universal Credit if you are on low income, you are out of work, you are over the age of 18, and if you or your partner have less than £16,000 in savings. I would highly recommend going to www.turn2us.org.uk to see what benefits you may qualify for. If you fall through the gaps, there may be additional help available through industry specific associations and charities, so it’s worth doing your research.
2. Protect your pension
A lot of people are really worried about how the lockdown will affect their pension, and I would strongly recommend seeking professional advice to help you build a retirement savings plan specific to your circumstances. You are entitled to a ‘Pension Advice Allowance’ which is up to the value of £500 from your pension pot to help cover the cost of a financial advisor.
Alternatively, you can also find free advice from advisors via the Emergency Financial Advice website which has been set up specifically to help people concerned about their retirement funds at this time.
3. Build a financial buffer
If you’re fortunate enough to be in a position where you are able to save during these unprecedented times, try and build up a savings buffer. Begin to save for the sake of saving, without having an end goal in mind. Though savings rates with the Bank of England are at a record low, there are other challenger banks offering slightly higher interest rates. Don’t be discouraged by the current climate, if you remain patient you may see these interest rates start to increase over upcoming months.