If you have spent less money during the lockdown, how do you plan to allocate that money for the future? According to new research, more than eight in 10 people have spent significantly less money since the lockdown started. With the lockdown making it harder to buy treats and everyday items, the savings have been significant in many cases.
AA Financial Services found that, of those who saved money, three-quarters plan to pay off outstanding credit card debt, build up their investments, or add to their cash savings. With concerns about the state of the economy as the lockdown eases, and a large number of workers on furlough, the research suggests that household finances have changed in a big way in recent months.
85% of people are spending less money due to the lockdown restrictions, with the biggest savings coming from not spending on holidays or city breaks. On average, the absence of holiday spending is resulting in savings of £124 a month. Not spending money on eating out or drinking in pubs is saving an average of £57.49 a month.
We’re also saving in other areas, including on High Street shopping, with an average saving of £53.46 a month. By not spending on weekend trips and days out, we save an average of £48 a
month. A further £48 a month is saved on the cost of petrol and diesel, with car maintenance costs leading to savings of £36.16 a month. Leisure activities including trips to the cinema, concerts, gigs and theatre visits lead to an average saving of £36.02.
The research asked respondents about their plans for this money saved during the lockdown. Three in four people plan to repurpose the money, with nearly a third saying they will put the extra cash in a savings account.
More than a quarter said they wanted to put the money away for a ‘rainy day’; a priority for the over 65’s, while 15% said they intended to use the money to pay off credit card debts.
James Fairclough, Director at AA Financial Services, said:
“Coronavirus is impacting our livelihoods, family wellbeing and the economy at large. There are doubts over when the restrictions will be lifted and, for many, what the impact may be on job security.
“Given this economic uncertainty, it is understandable that many people are planning to use any surplus money they accumulate from reduced spending in lockdown to top up rainy day savings, or clear debts.
“Whilst the future is uncertain, some people may come out of this period of isolation with their personal finances in better shape than when lockdown began and this will help prepare them to cope a bit better with the challenging times ahead.
“Going forward, many people will be reflecting on how they can keep costs down once restrictions are lifted – while switching to cheaper shopping brands or changing energy provider may be a good place to start, there is also merit in making sure your car is well maintained to avoid unexpected costs later.”
Next article: Financial preparedness and wellbeing during the pandemic