8 ways a year of lockdowns has transformed our financial lives
Old habits supposedly die hard – but over the past year of the pandemic, the way we shop, spend and save has been transformed.
With the UK having now spent over a year in lockdowns, here’s a look at how Covid-19 has re-shaped our relationship with money…
1. Shopping priorities changed
Jack Duckett, associate director of consumer lifestyles research at market researchers Mintel, explains: “While already a booming consumer lifestyles trend, health and wellbeing has been a major area of increased interest, as consumers have realised the importance of maintaining good health.”
As the appetite for home gym equipment has grown, clothing tastes have become more casual – with comfort becoming top priority as we’ve spent so much time indoors and switched to working from home.
Homes have also had makeovers, as spaces have been turned into offices, exercise studios and classrooms. Duckett says: “While many hope to return to a more balanced life between time spent in and out of their homes, there can be little doubt that this multi-purpose home space will play a greater role in people’s lives, as working from home becomes a more persistent trend.”
2. Contactless payments have jumped
Jana Mackintosh, managing director of payments and innovation at UK Finance says an increase in the contactless limit in April 2020 to £45 helped people to make higher-value purchases contact-free. “In September 2020, the proportion of debit card transactions paid with contactless reached a record high,” Mackintosh adds.
Thomas Slide, Mintel senior financial services analyst, says that with contactless transaction limits rising to £100 this year, “contactless payments have become a way of life. While some people will want to return to cash once the pandemic is over, most will be won over by the ease and simplicity of making contactless payments, and cash will make up an ever-smaller share of the payments landscape.”
Banks may also look different, as more customers have got to grips with digital banking. Slide adds: “Banks and building societies seeking to maintain a physical link to local communities have an opportunity to rethink what this looks like, and bank branches are likely to look very different in the future as a result.”
3. Fewer ATM visits were made
Across the UK, people withdrew around £37 billion less during the ‘coronavirus year’, according to Link, which oversees the UK’s main cash machine network. The average amounts withdrawn per visit increased though, as people took out more to tide themselves over for longer.
4. Millions received support from their bank or building society
Among the coronavirus support measures, 27 million interest-free overdrafts were offered to customers and more than one million credit card payment holidays were issued, according to UK Finance.
5. Rainy day savings pots were raided
More than one in 10 (13%) people across the UK now have no savings at all set aside for a rainy day, according to money app Yolt. A fifth (21%) say they’ve been unable to save anything since the start of the pandemic.
6. But some people squirrelled more away
An estimated six million people, meanwhile, have become ‘accidental savers’ during the pandemic, according to a survey of employees from financial consultancy LCP (Lane Clark & Peacock).
Those who have not suffered big income falls may have saved more than usual, due to spending less on commuting or socialising.
7. Cash savings rates plunged to record lows
Average savings rates have continued to hit new lows, according to Moneyfacts.co.uk, with the average easy access account paying just 0.16% at the start of March 2021, down from 0.56% in March 2020.
8. And UK house prices hit new highs
As work-life balances have shifted, Andrew Asaam, a mortgages director at Halifax, says homebuyers are seeking more spacious properties and have widened their location searches. “We saw a surge in the market over the second half of last year, following the effective shutdown of the first lockdown,” says Asaam.
Halifax says the average UK house price jumped by around 12% or £35,000 between March 2020 and February 2021.