The coronavirus (COVID-19) pandemic has had, and will continue to have, a major impact on our lives. It is not just impacting on people’s physical health but also their financial wellbeing. The economic consequences of the COVID-19 outbreak for some people will make it harder for them to achieve their financial goals.

This is why financial planning is key to align your needs, your values and your personal goals with every aspect of your finances, to give you a complete picture of where you are now and where you can get to in the future.

Planning for and protecting the future
Findings from a new survey show the pandemic has led to changes in long-term financial planning when it comes to people supporting their families, with around one in ten (9%) having increased the scope of their long-term financial planning to include more generations as a result of the pandemic[1].

Almost three quarters (73%) of UK households surveyed considered preparing for the future financial wellbeing of loved ones in other generations to be important, with more young people aged 18-24 of this view than any other age group (82%). Nearly one in four households surveyed (24%) would not consider other generations (such as children or parents) in their financial planning at all.

Of those households which have increased the scope of their long-term financial plans, more than one in four (27%) were not previously including other generations of their family in planning before the onset of the pandemic. This suggests a considerable change in behaviour, with those aged 35-44 recording the largest shift in favour of planning financially for future generations.

Workplace activity, income and job security
Positive news during the third quarter came from the labour market as UK households experienced improved trends with regard to both job security and income from employment. For the first time since Q1 2020, households’ income from employment rose over the quarter. At the same time, business activity continues to rise steeply, according to UK households. The rate of growth remained close to the survey record high recorded in Q2.

This combination of rising activity and greater incomes led some households to take an optimistic view with regard to job security – with the lowest level of pessimism recorded since the second quarter of 2019. Those in the youngest age group (18-34) recorded by far the strongest trend for job security in the third quarter of 2021.

Household finances
Q3 data also pointed to a further fall in the amount of cash UK households have available to spend. The rate of decrease quickened slightly on the quarter and was sharp, highlighting that rising living costs have partly offset increased employment income. As a result, household savings declined at the fastest rate since the end of 2020, with only the highest earners recording a rise over the third quarter.

Meanwhile, UK households registered a sustained fall in demand for unsecured credit, such as overdrafts and credit cards, with the decrease the strongest on record. The focus remained instead on paying down debt, which declined solidly again in Q3.

Source data:
[1] The Scottish Widows UK Household Finance IndexTM (HFITM) is compiled each quarter by IHS Markit, using original monthly survey data collected by Ipsos MORI from a representative sample of 4,500 UK households.