Brits saved GBP4bn due to Omicron fears ahead of looming cost of living crisis
New research from wealth manager Quilter, gathered by YouGov, has shown that Brits saved almost GBP4 billion as a result of the Omicron variant disrupting social plans during the festive period.
The identification of the new variant and the subsequent surge in positive cases caused many to put festive plans on hold this year, resulting in 35 per cent of people saving money, with an average saving of GBP212 per person.
1 per cent of people cancelled bigger plans over Christmas, resulting in savings of over GBP1,000. Overall UK adults saw total savings amount to approximately GBP4 billion.
The data also revealed that those aged 25-34 saw the biggest savings, with 41 per cent saying they had saved money on socialising during the festive period following the Omicron variant’s emergence. Previous Quilter research in 2020 found that 18–30-year-olds are the most likely to be saving more money as a result of the pandemic with almost 48 per cent saying they had put more money aside following the first lockdown.
Emma Prince, financial planning expert at Quilter says: “Many people found their festive plans scuppered this year as a result of the Omicron variant, whether that was as a result of catching Covid themselves, or cancelling plans in order to avoid the virus ahead of seeing friends and family on the big day.
“With a huge GBP4 billion saved over the festive period, many may now be sitting on unexpected savings for which they have no plans. If this is the case, the New Year could be the perfect time to take stock and plan your finances – particularly with the threat of the cost of living crisis looming.
“Being in control of your finances enables you to manage them more effectively and eliminates the pressure of worrying about money as you have the sense of security that comes with knowing how much you have available to spend.
“There will always be times throughout the year where expenditure will vary, so having well managed finances will allow you to be prepared, regardless of what changes may happen along the way – as was the case for so many during this festive period.”
If you find yourself with excess savings, there are several things you could do to put the money to good use. Emma Prince’s top five tips include:
Pay down debts
“Before you start saving you should tackle any debts you may have. Start with those with the highest interest as these will cause a significant drag on your finances.
Save into a rainy day fund
“While we often like to save for something in particular, it is important to first have a rainy day fund in case of emergencies such as a broken boiler or car repairs. It is a good idea to aim to have three to six months of expenses in this pot. With the cost of living rising, having cash savings to fall back on can help to relieve financial pressures should the need arise.”
Use tax-free savings
“The joy of savings these days is you will rarely have to pay tax on them. Everyone has a personal savings allowance of up to GBP1,000 depending on the level of tax you pay, while you can also put up to GBP20,000 each year into an ISA. While many will rarely reach this figure it is important not to overlook it and grow your money free of tax.
“Additionally, some ISAs are flexible, meaning that you can take money out of your ISA and replenish what you have withdrawn in the same tax year without it affecting your annual ISA allowance. In a time where expenditure may need be put on hold or cancelled due to the uncertainty of the pandemic, this may be a good option to consider.”
Consider investing for the long term
“Once you have built up a savings pot, you could consider creating an investment pot for longer-term savings. Putting money to work in the stock market for five years or more gives it the best chance to grow. The sooner you invest and the longer you do it for, the more likely to are to have the potential for healthy returns.
Seek professional advice
“Our research found more than a quarter (28 per cent) of people who were recipients of financial advice from an IFA had not saved any money even though they had socialised less. This could likely be due to the fact that those who receive financial advice will have an accurate financial plan in place. Once their plans to socialise had been cancelled, they had the option to spend the money they saved elsewhere, perhaps opting to invest it instead.
“If you are in a position to, it can be beneficial to speak to a financial adviser. They can help create a financial plan tailored to you that will help see you through the ups and downs, while also tweaking it according to your real-time circumstances. This ensures your money is working as hard as it can be.”