Time to reassess your financial habits

interactive investor comments on the £110 fall in weekly household spend during the pandemic.

New figures published today by the Office for National Statistics, revealed UK households reduced their spending during the coronavirus (COVID-19) pandemic by an average of £109.10 (or 19%) a week.

• During the year to March 2021, households spent less on goods and services that were restricted at various times to control the spread of coronavirus. At the height of the spring 2020 lockdown, more than one-fifth of usual household spending was largely prevented.
• However, for some, the reduction in spending may have been associated with a fall in income. Around a third of workers saw their household income fall in the financial year ending (FYE) 2021, rising to 42% for the 20% on the lowest incomes (who were more likely to be furloughed and less likely to be able to work from home than people on higher incomes).

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The gap between the 'haves' and 'have nots' has widened because of the Covid pandemic. The pandemic has left many on the financial cliff edge, forcing some to cut back on spending. Others have been more fortunate. Many Britons have found themselves with more money in the bank, becoming accidental savers as a result of a dramatic dip in their expenditure on travel and entertainment because of strict lockdown restrictions.

“With society returning to some semblance of normality, now is a good time to reassess your financial habits. With scores of workers returning to the office, it may be worth taking a fresh look at your spending habits. If reverting to all your pre-coronavirus spending habits, bear in mind that rising inflation means that the cost of living is on the up, which may come as a surprise to your bottom line.

“The lockdown period may have made you realise that some of your spending habits were unnecessary, but there is a balance to be struck – some of us have missed picking up posh coffees on the way to the office. It may sound trivial, but it is also worth factoring the cost of lunch. For many, preparing lunch at home during the pandemic has worked out cheaper than supermarket lunch meal deals and food from the office cafeteria.

“It remains good practice to keep a rainy-day fund to tide you over when times are tough financially. And do seek help and support – talking about money issues is the first step towards a solution.”