How has Covid-19 changed our saving and investing habits?

When lockdown began, many of us thought that it would be over in a few weeks. We had it in our heads that by summer we’d be back to normal.

As autumn approaches, our early optimism seems more like naivety. Whilst restrictions have eased over summer, we are all still adjusting, still learning to navigate this new world with its plethora of uncertainties and insecurities — not least when it comes to our money.

Many of us are looking for ideas on better ways to grow our savings, build our security nets, and make our money work for us, in the short and long-term.

In fact, according to a recent survey from Bancroft Wealth, a fifth of investors in the UK (20%) have found more time to optimise their investments, 15% have reviewed their pensions, and 12% have taken time to sort their tax affairs. Around 11% have also made additional investments they weren’t previously planning to — with younger investors (under 34) being the most likely to have proactively assessed and made changes to their portfolios — just 27% have taken no action to review their investments compared to 71% of investors aged 55 and above.

If you’re looking for where to start, here are five stories that might help.

Admin may be boring, but it can help

For Matthew, the last few months have been financially challenging but also eye-opening. There was the chest-squeezing anxiety of the first few weeks — as furlough schemes and redundancies dominated headlines, salaries were slashed, and budgets disappeared. Then came the prolonged lockdown that left plenty of time for introspection and self-reflection.

“I moved from ‘hunker down’ mode pretty quickly,” says Matt. “I was saving every penny possible at first but I guess I slowly came to a more explorative mindset in which I assessed what resources I had and how I could use these efficiently and effectively. I ended up doing a huge audit of my finances: figuring out a new budget, sorting out my different pension pots, researching new investment opportunities. Now, I feel relatively in control of my money (or as in control as I can be, given the circumstances).”

He adds, “Whilst things remain hard to predict, I think going back to basics helps — just going through the numbers and working out what you can afford and what you can maybe live without for a bit if you want to invest. I was financially savvy before but now I definitely feel like I know what I’m ready for in the future.”

The lifestyle change is good

The scene Vicky sets as we sit down to talk about her lockdown finances is one of warm evenings, cold wine, and good company. Since the pandemic hit, she’s found her lifestyle radically upended — going from nights out and drinks after work, big trips and long-distance holidays to a far more relaxed and local set of affairs.

“I’ve been able to save much more in lockdown,” she says. “My friends and I are now doing dinners in each other’s gardens rather than going out all the time. We’re not going to pubs or bars regularly or having nights out like before. And we’ve all been eating much more locally and healthily too, which has been great. One of my friends has actually started growing her own vegetables over the summer and we’ve been able to literally just eat fresh from the garden.”

She’s also gone from saving a few hundred a month to nearly half her monthly salary — and she says she doesn’t want to go back. “The lifestyle changes have made a big difference and I definitely don’t think I’d want to stop saving like this in the future. It’s also been really interesting as my group of friends has always been quite candid about money — we talk about it quite openly — but it’s definitely shifted in lockdown to be more about what we do with our new savings. I’ve ended up looking into more investment products again, having pulled most of my money out last year to buy a flat. It feels like a good position to be in — I know anything can happen in the next few months but overall I’m finding the changes to my lifestyle have been really good for my money and I’d like to keep it this way.”

Saving makes me feel in control as a new mother

Eliza became a mother for the first time in July, giving birth to a little boy. She’d been preparing for maternity leave well before the pandemic and had a healthy mix of savings and investments, which she held with a well-known wealth manager. However, when lockdown started, things became very difficult very quickly.

“Before lockdown, I was consistently saving a quarter of my salary into an investments ISA,” Eliza explains. “Then when lockdown started, I got really panicky watching my investments fall and fall. In one month I had lost £2,000 off the value — which I just could not afford as my savings were for maternity leave. They were needed in the more immediate future and I didn’t have time to wait for markets to recover.”

As a result, she’s stopped putting money into her ISA for now, instead choosing to save as much as she could into her bank. “My spending went down a lot during lockdown as no commuting costs, no eating out, no socialising and so on — so I started saving about half my salary from March to July into a cash savings account,” Eliza says. “I talked to family and friends, but it was very much a panic reaction to stop investing.

“It felt that all my security had gone away. I was really frightened that all the amount invested and saved for maternity leave was just going to be gone. However, seeing the money in a steady savings account makes me much more confident — yes, the pound may go down and the interest is rubbish, but I have the money there and I can see it and the numbers on the screen are not just shooting down out of my control. Plus, in savings account I can access it a lot more easily which means I’m not actually doing so.”

Women need to be part of the financial conversation.

For Angelica Malin, founder of About Time Magazine and #SheStartedItLive, the pandemic as made her much more conscious of how her business and personal finance intersect — as well as how essential it is that women are part of the conversation about money and economic recovery.

“I’ve always been quite careful with my money. I’ve never been a huge spender, but because of the pandemic — my work and world changed so dramatically. You know a lot of my work is built on freelancing as well as events — all of which are very heavily affected by the pandemic. There was a real sense of vulnerability — I kept asking myself: what if I can’t work for the rest of this year, how am I financially? It’s made me really think about setting goals for the first time and working out ways to make my money go further.”

It was during the process of setting goals and looking into different kinds of investment for the first time, that she also noticed how financial advice can deter women from investing.

“Financial education for women isn’t great — we’re always encouraged to be careful and not to take risks. It’s all like “have a f**k off fund” in case you need to leave your husband rather than tangible advice, which is really the same reason women don’t go for investments in business,” she explains. “But since lockdown I’ve had time to think about things as well as read more financial titles like Business Insider and the FT, as well as books like Catherine Morgan’s In Her Financial Shoes and You’re Not Broke, You’re Pre-Rich by Emilie Bellet. It all needs a bit of demystifying — the language can be very off-putting for women so I wanted to learn more and challenge any fear around money.”

Angelica is now dipping her toe in and really finding to make her money work for her. She started investing, opening a stocks and shares ISA with a roboadvisor as well as investigating funds as an investment option for the future.

Lockdown has broken the taboo around money

However, the key thing about lockdown for many of those I spoke to, is that it’s shattered many of the taboos around money.

As Angelica explains, “My head was a bit in the sand when it came to my money. It was very stable and predictable — coronavirus has thrown our futures into the air. But I wouldn’t go back now. The pandemic has created such a vulnerability in everyone — I would never normally ask people about money but now we’re talking about it.”

This is something Vicky echoes, saying that amongst her friends, the conversations around money are much more open and whilst they’re primarily focused on saving goals, investment is certainly something she’d be comfortable with discussing. “It feels easier to talk about money because we’re all kind of in the same boat — even if some friends have been furloughed or made redundant, we’re still living with the same constant uncertainty and really all we want to do is talk about things that help us feel more secure.”

“So many hard conversations are happening,” Angelica adds. “We’ve all realised we’re not as secure as we thought. I really think this has changed the conversation around money and I don’t think these financial conversations will go away.”

Nor do we — as more of us become comfortable talking about money, it seems more of us are also really thinking about our financial futures. And in uncertain times, that’s definitely a good thing.

Authors: Harriet Allner and ikigai

Harriet Allner is a writer, blogger and fintech specialist. She cares about stories that matter and is passionate about promoting conversation around money positivity and financial feminism.

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This article is not advice. ikigai is a trading name of Ikigai Invest Services Limited, a company registered in England and Wales (Company number: 12011662). Ikigai Invest Services Limited is registered with the Financial Conduct Authority (FCA) as an EMD Agent (reference number: 902740) of PayrNet Limited, an Electronic Money Institution authorised by the FCA (reference number: 900594) and is an appointed representative of WealthKernel (reference number: 723719) which is authorised and regulated by the FCA. ikigai is not a bank. Registered address: 16 Great Chapel Street, London, England, W1F 8FL.

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