There is no question that, for many people across the UK, the Covid-19 pandemic has resulted in real financial difficulties.
However, being forced to stay inside and not pay for daily commutes, meals out or impulse high-street buys has also helped a great number of people, whose incomes have survived, to bulk up their savings.
It’s widely assumed those who have been able to tuck money away throughout the pandemic will spend a good portion of it in the coming months, as the economy seems poised for a comeback.
However, Kevin Johns, managing director at leading Midlands accountancy firm Prime Accountants Group, which has offices in Solihull, Birmingham and Coventry, is urging people to evaluate and take stock of their relationship with money before it’s too late.
He said: “The pandemic has turned some people into saving machines, many for the first time in their lives. While this is incredible, it comes with its own set of risks.
“The past year has certainly highlighted how vulnerable many people are to financial shocks. So, it is extremely important they embrace what has been a golden opportunity to save and evaluate how they can continue on this trajectory for future events.
“Put your spending habits into perspective and identify what your monthly income and outgoings are. Make it a habit to set aside a definite amount every month into a savings account – even if it’s a small amount, this can go a long way in helping you out on a rainy day.
“If you’ve historically found sticking to a budget challenging, make use of free budgeting apps that can help you plan better. Transfer the money into a separate bank account so that it’s out of sight and you’re not tempted to spend it.”
Commenting on credit card usage among consumers, Kevin said: “Credit cards can be a tricky business with the extremely high interest rates in the market today. Most credit card users are highly likely to pay more interest on debts than they earn from money in savings.
“This means if you do not use your savings to pay off debts, you will likely end up paying more in interest than if you just cleared them straight away, as the longer it takes you to repay your debts, the more interest will accumulate.
“My advice to Covid-19 savers would be to use a portion of their savings to clear any credit card debt. Using cash which you already have stashed away to clear your debts will save money in the long term, as you will ultimately pay less in interest.
“I also urge credit card spenders to re-evaluate their monthly spending. Building a credit history is important, but equally important is the ability to avoid spiralling debt.
“To do this you must spend within your means – plan, budget and evaluate, and you will be happier and more financially sound as we look to fully step out of restrictions and into a, hopefully, brighter future.”