The pandemic is serious stuff, we all know, and has created many changes to the lives we lead in lockdown.
Statistics and numbers are becoming the norm in noting variances in our lives as each aspect of our changed world is measured.
We appreciate that with the sun shining, and with time on your hands, taking a good look at your household finances may not be the most exciting thing to think about. However, it's a great opportunity to take a real look at your household spending, and that stuff called financial planning.
You're in luck if you don't want to, because others have looked at this position across the UK and the numbers are big! Both the Office for National Statistics (ONS)and Centre for Economics and Business Research (CEBR) have made estimates and then studied what will happen with spending, now that the shops, restaurants, pubs and leisure facilities are closed. The CEBR study is from 24 April 2020 and more can be found here: https://cebr.com/reports/23-billion-in-excess-savings-set-to-accumulate-in-q2-as-consumer-spending-declines-dramatically/
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Here are some of their findings, along with the ONS, looking at the second quarter in the UK:
CEBR: Expects excess household savings of around £23 billion to accumulate, as many rein-in their expenditure.
CEBR: Average UK households will see their monthly incomes drop by £515 in Q2 as a result of the labour market impacts of the pandemic.
OBR: In 2019, the Office for National Statistics (ONS) measured the average share of household disposable income that is saved, to stand at around 6%.
CEBR: During the lockdown, the CEBR expects this ratio to rise to over 20%.
Big numbers, I am sure you would agree. For some households the potential drop in income will be difficult. It is also clear that for some, excess funds will be available, even when taking into account the only real alternative of internet shopping. Spending on clothes, shoes and textiles as examples are down 35% as a monthly decline, with food spending up 10%. Overall retail sales volumes were down by 5.1% in March, according to the ONS.
These are difficult times for most, and many fear greater concerns than their money position. However, the pandemic will end, and we will in the future return to 'normal' lives, whatever those look like, and I am not sure they will be the same again.
If you do get the chance, take a look at your financial planning, your household income and outgoings, check your bank and loan statements, and try and put some extra funds aside, even if it is to treat yourself when this ends...and it will!