Why it's time for a money makeover

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Date: 18 August 2020

A couple work out how much they can save each month

Three-quarters of Brits say the coronavirus pandemic has prompted them to rethink their spending and saving habits.

A poll of 2,000 adults by AA Financial Services has found that 77% of Brits want to change the way they manage their finances, rising to nine in ten people (91%) under the age of 35. The study suggests that months of home isolation and an uncertain economy has created a fundamental shift in people's attitudes to money, spending and saving.

The key findings show that:

  • 35% of respondents plan to increase the amount of money they put away each month;
  • 23% say they want to avoid dipping into their savings to pay for luxuries;
  • 16% want to get rid of their credit cards;
  • 10% plan to invest more money into their pension.

The under-35s are twice as likely as the over-55s to say they would save more than they had done before lockdown (46% vs 22%). The under-35s are also those most likely to say they will cut back on luxuries (30%), put more into their pension (13%) and consolidate their debts into a single loan (10%).

More broadly, the research found that 87% of those polled say that lockdown had prompted them to make significant changes to their lifestyle, from everyday money management to reassessing their carbon footprint.

A third of people (37%) intend to spend more time at home, while a quarter (23%) plan to cook more than they have done previously. Overall, 25% say they now have a greater appreciation of the environment and a stronger desire to protect the planet, while 18% of respondents intend to take more staycations.

The study also highlights a significant shift in attitudes to lifestyle, with 30% of respondents saying that they now have a greater appreciation of the simple pleasures in life. A quarter of those polled (25%) are planning to maintain a slower pace of life, 14% say they will spend less time on social media and 37% plan to spend more time with their loved ones in the months ahead.

James Fairclough, director of AA Financial Services, said: "The last couple of months have been very challenging and, for many, a period of anxiety and loss. But, as we emerge from lockdown, there are signs some positive habits from lockdown will remain. Many people have used the period at home to reflect on their lifestyles and make positive changes for the future.

"For some, the next few months will be a time for a money makeover. The two clear priorities relate to saving more money, to build up a rainy day fund for the future and to consolidate debts."

Written by Rachel Miller.

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