Revealed: The impact of 2020 on our financial decisions (and how to stick to good money habits post lockdown)
- first direct launches third ‘Money Wellness Index’ to uncover the changing state of the nation’s attitudes to money
- 120% increase in UK adults who believe they have an unhealthy relationship with money
- Millennials 4 times as likely to have an unhealthy relationship with money than Baby Boomers
- 1/4 of UK adults worried about being able to provide for their families
- Behaviour change expert shares how to maintain positive money habits as lockdown begins to ease
This last year has made people review their finances, job stability and priorities like never before, and one third of UK adults now believe they have an unhealthy relationship with money (33%), compared to just 15% at the beginning of 2020.
Those most impacted are millennials, who are almost 4 times as likely to have an unhealthy relationship with money compared to those aged over 55 (22% v 6%).
This is according to new research revealed today by first direct in its third Money Wellness Index, which investigates 4,000 people’s attitudes and behaviours towards money following an unprecedented 12 months.
Putting a (new) figure on financial wellness
Despite this, the ‘Money Wellness Index’ shows an overall money wellness score of 49 out of 100.1This represents a 2 point increase from the same period the year before (47), highlighting a slight improvement in how people in the UK overall feel about their money.
However, there are significant fluctuations across different demographics in the UK:
- 18-25 year olds have the lowest money wellness score (44), whereas those aged 55+ – with a likely higher level of income and savings, together with a higher proportion of home-ownership, job security – exhibited the highest score of any age group (57).
- There are also differences between how men and women relate to and manage their finances. One quarter of men claim there is no one they would feel confident talking to about money (24%), while almost half of women would talk to their family or friends about a financial issue (47%).
- In terms of regional differences, the Index showed people living in Yorkshire and Humber (52), Wales and the South West (51) have the highest money wellness scores, with the North West and East Midlands the lowest (46).
Chris Pitt, CEO at first direct, said: “Despite this turbulent year, the Money Wellness Index reports many of us have been able to reduce some of the worries surrounding managing our money. However, this doesn’t tell the whole story as the pandemic has also widened the differences in society to their highest ever levels.
“It’s hit younger adults the hardest – with the lockdowns impacting people entering the labour market, and furloughing particularly impacting service industry roles where younger people are make up a higher proportion of the workforce.
With the vaccine rollout indicating an end is in sight, now is the time for consumers to prepare for the future. By examining our finances regularly, and thinking about our goals and what’s important to us, we can prepare for the new normal.”
Preparing for the end of lockdown
To help people consider how they make their financial choices ahead of lockdown easing, first direct is once again working with Dr Ash Ranpura to review our decision making process and to share some simple plans to help us prepare for the future, wherever we are in our money wellness journey.
Neuroscientist, clinical neurologist and behaviour change expert, Ash Ranpura, commented: “If we learned nothing else in 2020, it is that the world can change in an instant. Jobs can disappear or become radically redefined, schools can close, and the world order can be reshuffled overnight.
“Typically, we respond to uncertainty and change like any threatened animal – with a fight-or-flight response, either aggressively overspending and ignoring the consequences, or retreating and hunkering down. But it is possible to achieve a feeling of ease and comfort, even in trying times. Starting with an honest emotional assessment of our feelings around money, putting some simple plans in place, and starting some open conversations about money, can put us back in touch with our core values.
“We have a once-in-a-lifetime chance for simple, radical change. Let's make the most of it."
1. Take the first step.
A long journey starts with a single step, and money wellness is no different. A simple action like updating your savings account or talking to your family about finances can start the ball rolling. As long as the first step is an honest one, you'll be that much closer to your goals.
2. Plan for luxuries.
While businesses have undoubtedly suffered during lockdown, our wallets have been able to breathe a sigh of relief. The closure of restaurants and shops have limited our opportunities for excess spending. But when lockdown lifts, most experts anticipate a surge in pent-up demand. Whether it is starting a personal slush fund or regularly saving up for a meaningful purchase, planning affordable luxuries can be an enjoyable and optimistic way to indulge.
3. Keep an eye on the little things.
When the world was spinning much faster, we hardly had time to take stock of little ongoing expenses like our mobile phone bills, television subscriptions and the small weekly indulgences at cafés or corner shops. Lockdown has given us a chance to reassess the extent to which those little expenses ever gave us any real pleasure. It's a good time to look over your bank statements and track down these little persistent leaks in your budget. Take any savings you can make and put them into your slush fund for additional motivation!
4. Acknowledge your biases.
The simplest thing you can do to move forward on your journey towards money wellness is simply to take stock of your emotions around money. When you think about your financial life, do you feel eager or do you feel anxious? Emotions powerfully steer our decision-making, but identifying them goes a long way to turning them from a liability into an asset.
The ‘Money Wellness Index’ can be downloaded here
Ends
For further information please contact Ben Marquand ben.marquand@firstdirect.com // 0113 2766700 or Jenny Wakeling jwakeling@webershandwick.com Opens an overlay [Will show a security message first] // 07772610478.
Notes to Editors:
Additional statistics available on request, including gender, age and location demographics.
About first direct
first direct provides mobile banking, online and telephone services to its 1.5m customers and offers a full range of personal banking products including its multi-award winning current account and mortgages. It’s been recognised as being a pioneer of amazing customer service by numerous independent third parties including The Competition and Markets Authority, Which?, Moneywise, Moneyfacts and Moneysavingexpert.com. As well as its Facebook page, first direct uses social media to engage with customers through LinkedIn Opens an overlay [Will show a security message first], Instagram, and Twitter.
About Money Wellness Index
The Money Wellness Index 2021 is a measure of how UK adults feel about Money. The index was derived from a large quantitative research study conducted by YouGov between 26 and 28 January 2021, of 4,318 UK adults.
1 The Money Wellness Index score is based on people’s responses to 16 statements which specifically measure how people feel about money. The score has been calculated based on the average % of consumers that provided a favourable response i.e. defined by agreeing with a positive statement or disagreeing with a negative statement