Brits spend less in lockdown but half say savings would last only 2 months

As the coronavirus pandemic continues to put strain on the economy, new research by HSBC UK shows over two thirds of Brits are spending less in lockdown than they expected - but worryingly, nearly half (49%) of Brits say their savings would only last for two months or less if they were out of work.

Whilst the unique circumstances of lockdown have reduced outgoings for some (such as the costs of commuting), the research highlights the lack of savings to tide people over if they were to lose their job or face furlough.

Fiona McCaffrey, HSBC UK’s Head of Everyday Banking said: “These are difficult times for everyone, not least when it comes to people’s financial health. We have all had to develop personal as well as financial resilience, and as we get used to the ‘new normal’ it’s important to review our budgeting.

“Our research shows the worrying reality that many people don’t believe they can get by on their savings alone if their income is impacted. Now more than ever, it’s important to look at your outgoings to see where you can make changes, and if possible put a little aside should something unexpected happen.”

HSBC UK’s survey found 64% of people are spending less in lockdown, highlighting that there may be opportunities for people to review their expenses and make their money go further. When things are going well, it’s easy to just let things float along - but now might be a good time to try and improve your financial resilience. Experts often recommend having a minimum of three months’ salary saved to cover you should you experience a loss of income or be faced with an unexpected bill such as a car repair, a vet bill or boiler repair.

According to the research, nearly a fifth of people (18%) said they have had to borrow money from friends or family to get by and nearly two-thirds (59%) said they were worried about their finances in general.

Fiona continued: “Our first priority is to help our customers meet the financial challenges many now face. If you’re worried about your finances, there are ways to get support. We’re helping customers get through this period in several ways, including mortgage payment holidays, creating breathing space on other debts as well as introducing some flexibility with finances during this uncertain time.”

HSBC UK’s five top tips to help people manage their financial health during this period:

1. Where to get support - If you’re worried about your finances, there are ways to get support. If your income has been affected, you may be concerned about covering your normal monthly costs. We’re helping our customers get through this period in several ways - this could include mortgage payment holidays, creating breathing space on other debts, early access to savings, a temporary £500 interest free buffer on overdrafts and temporary increase in credit card and overdraft limits.
2. How to get your money back - Whether it’s holidays, festivals, sport or other events, most people’s social plans have fallen through and that can be upsetting – and the prospect of losing money can add to that feeling. In some instances, you’ll be able to rearrange or reschedule. But if not, it may be worth looking into refunds. How this works will depend on what you’ve bought, when you bought it and how you paid for it.
3. Budgeting: a new (temporary) reality - The temporary restrictions on how we live may, for some, mean a significant change to spending habits. You may find your outgoings will change during this period. Of course this will be different for everyone, some of these savings will be enforced but – if you’re looking for further ways to cut back – you may be able to cancel or reduce some of your regular expenses. Creating a revised budget based on your spending decisions can help you get a clear picture of your finances and help you plan ahead.
   If your income has not been impacted and you’re able to make savings as a result of changes to your budget, think about where to store any money you put aside.
4. Managing your pension or investments - If you’ve got a pension or other types of investments, they could be a further source of anxiety at the moment. The coronavirus outbreak is having a big impact on the global economy and the value of your pension or investments could have fallen in line with stock markets. As with everything else that’s going on, it’s important to try to stay calm. Investing is for the long term, and that of course applies to your pension too.
5. Making the most of online and mobile banking - If you normally do your banking in a branch, there are plenty of ways to take care of your money digitally instead. Through digital banking you can check your balance, send money, set up or cancel Direct Debits or standing orders and pay in a cheque through our mobile banking app. Once you’re set up, this is simple and secure, and you don’t need to leave the house. You can also use tools like Balance After Bills on our mobile app. It accounts for your regular bills to let you know how much money you could have left over.

HSBC UK has a dedicated coronavirus hub, which is regularly updated with frequently asked questions and supporting information.

Helpful HSBC UK Resources:

• How to build an emergency budget
• Managing Your Money – Spending and Saving
• How to Make the Right Financial Decisions
• Coronavirus – 6 Ways to Manage Your Financial Health

Notes:

• Research conducted by Without Borders,based on a survey of 2,000 between people between 30 April 2020 and 3 May 2020
• All research conducted adheres to the MRS Codes of Conduct (2010) in the UK and ICC/ESOMAR World Research Guidelines