A survey of over 4,000 customers by Virgin Money found one in eight had called on their bank for help in the form of overdrafts and payment holidays on mortgages, personal loans and credit cards, the equivalent of about 8 million people.
Virgin Money’s Financial Happiness report found that 1 in 4 (24%) of those that have been furloughed has taken some form of financial assistance – compared to 15% of those still in employment and that 21% of self-employed, have asked for some form of financial assistance.
22% of mortgage customers have taken some form of financial relief – including mortgage holidays and/or other types of assistance; and 24% of those surveyed with children have also done so, compared to 9% of those who do not.
Consumers also report they have had a fall in household income – which has driven the need for help with 28% of employed people have seen a fall in income – compared with 62% of those who are self-employed. 67% of those who have been furloughed have experienced a decline; and the decline was most pronounced for younger generations. More than 4 out of 10 of those under the age of 55 have seen a decline in income, compared to just two out of 10 of those over this age
The research also shows that people are thinking about money more than they did – and its meaning at present is clear: security and stability with 49% said they are thinking more about money in lockdown than they did previously and48% agreeing that money means security and stability, compared to 1% agreeing money means success.
Priorities are also changing. There is a greater emphasis on spending to boost happiness, and on spending time with or helping others 33% agree that they will now spend more money on the hobbies and lifestyle activities that make them happy, 64% say that having enough disposable income to go out with friends or family each week will be important to their happiness over the next year;
28% think they will be more likely to support friends or family financially in the future. Six in 10 rate this as being important to their happiness currently and over the next year; and more are also giving to charity. 18% of 18-25 year olds, 17% of 26-35 year olds and 18% of those 56 or older said they are currently donating more to charity.
The report also raises the interesting question: has the pandemic created a turning point for Millennials when it comes to money management? Evidence from the study suggests so. The findings also suggest the impact is much less severe on Baby Boomers, who appear to be coping well, with little change to money management habits., 58% of Gen Z (18-25 year olds) and 62% of Millennials (26-35 year olds) say they are thinking about money more since the outbreak of COVID-19, compared to just 32% of Baby Boomers (56+);
57% of Gen Z and 54% of Millennials say that the pandemic has rendered the issue of money management/finance more important to them in general, compared to just 23% of Baby Boomers. 6% of Gen Z and 61% of Millennials said they are taking a more cautious approach to money at present, compared to 38% of Baby Boomers; and 64% of Gen Z and 56% of Millennials said they are saving as much as possible at present, compared to just 32% of Baby Boomers.
It also seems that these changes will be reflected long term countering a deeply ingrained stereotype 66% of Gen Z and 65% of Millennials said that they will be more cautious with money long term, compared to 34% of Baby Boomers; and 66% of both Gen Z and Millennials say that they will maintain a financial buffer for emergencies in the future. 59% of Baby Boomers said the same.
The report also reveals that many intend to continue with the habits they’ve taken on during lockdown – and this could have an impact on the strength of the recovery, pnly 11% think they will ‘splash out’ once lock down is over and only 15% believe that it is a time to treat yourself to expensive items.
Although younger respondents are more likely to have seen their income decrease, it is the middle aged 35-44-year-olds who are most likely to worry that they will be in more debt by the end of lockdown, suggesting that those with family commitments see themselves as in the most vulnerable long-term position; and more than three in four people (76%) think that the cost of living will increase in the coming period.
There are good reasons, however for many small business owners to be optimistic; lots of us (37%) have increased our spending with local and independent businesses, while almost all of us (96%) say that it’s been important to support local businesses during the pandemic.
David Duffy, Chief Executive Officer of Virgin Money said “This research reveals that the lockdown has given us time to reflect on what’s important, and that we’ll change how we spend our money – and our time – in the coming months and years.”
“Virgin Money’s mission is to disrupt the status quo and make people happier about money – in how they manage it, borrow it, spend it, save it, grow it, and do amazing things with it.”
“To achieve that, we need to understand more about how the pandemic has affected our relationship with money and consider how these changes will endure and shape the way we should engage with our customers, colleagues and the community in the future.”