Credit, Collections & Insolvency News
A new study into the nation’s finances has shown that a fifth (20%) of consumers believe Coronavirus has been a financial wakeup call, with almost a third (30%) admitting they were unprepared money-wise for the situation.
The research, conducted to mark the launch of Zopa’s bank, shows 38% of people are now likely to create a reserve savings pot, in anticipation of another crisis. This comes as little surprise considering over two-thirds (68%) believe they will witness a lockdown again.
Defying their stereotype as carefree spenders, it is millennials that are leading the way when it comes to overhauling their savings habits – those aged 24 to 39 are twice as likely to start putting money aside now for unexpected events than those aged over 55 (50% vs 23%). Longer-term, millennials also plan to save the most; aiming to have an average of £21,567 by 2025, compared to £18,953 saved by those aged over-55 and a national average of £20,676.
Shorter-term, the average consumer has a savings goal of £6,697 by the end of this year to create a buffer for the future. However, with 51% admitting they are financially worse off since the pandemic, 13% have a savings goal to simply get back to where they were before the crisis hit, with the average estimated time to do so 11 months.
Consumers aren’t just saving for another possible pandemic – a fifth (20%) admit they are also saving now with the expectation that prices are going to rise later this year and into 2021. Topping the list of items consumers expect to see increase in price are flights (56%), holidays (53%) and eating out (53%). 16% also plan to save extra this year in order to go on bigger holidays in 2021, making up for the lack of them in 2020.
As consumers evaluate their spending, it seems that the pandemic has driven a more socially responsible approach to where people want to spend, with 62% willing to spend a little more at independent businesses post-Coronavirus, if it helps their recovery. In fact, the average person would spend £1.40 more on a pint and £1.60 more on a coffee at an independent business, if it would help the business to survive.
Clare Gambardella, Zopa’s Chief Customer Officer, said “The last few months have really put the nation’s finances under a microscope and forced many people to re-look at how they save and spend. Encouragingly, we can see that where possible, people are using this time to put in place good financial habits – particularly the younger millennial audience, which might surprise some.”
“At Zopa, we are launching our bank at a time when customers need products and services that can help them towards these financial goals. With 15 years’ experience in providing simple, fair products and award winning levels of customer service to over half a million customers, we look forward to offering more products to more people through our bank.”