One of the defining features of the coronavirus lockdown has been the range of emotions many of us have experienced.
As a ‘black swan’ event – something rare, unexpected and emerging seemingly from nowhere – crises like the coronavirus pandemic come naturally as a shock, turning our lives upside down in a very abrupt and disorientating fashion.
The pandemic has taken an obvious toll on people all over the world. Anxiety and fear have been defining features for many, with uncertainty about the future, for individuals, families, businesses and society.
However, everyone has their own, unique experience of any event and for many of us there has also been a positive side. With more time to reflect and a taste of a different way of life, there has been hope and optimism that something better may emerge from it all.
Putting a price on it
The lockdown has brought economic activity to a shuddering halt and the easing of restrictions over the coming weeks and months will begin to tell us more about the long-term effect it is going to have on our personal finances and the wider economy.
We already know the economy took a sharp hit, shrinking 20.4% in April, the first full month of lockdown. We also know the government’s job retention scheme had seen over nine million UK employees placed on furlough by mid-June, and that self-employed workers had made 2.6 million claims for grants available under the Self-Employed Income Support Scheme (SEISS).
While it’s clear from these figures that some will be worse off, large numbers of people have also seen their financial situation remain relatively unchanged or even improved. With no travel, shops, restaurants, bars and other such services to spend money on in recent months, some households will have seen savings mount up.
A new focus on protection
Most of us are familiar with the need for a rainy-day fund – an emergency fund that, typically, can cover at least three months of living expenses should our usual source of income dry up.
For those households that have experienced job loss or a significant reduction in income as a result of lockdown, that rainy day will now have arrived.
Research suggests that even in normal times, one in five Britons would struggle to survive financially for more than a month in the event of suddenly losing their job, while 30% would only be able to live off their current savings for up to six months. If you were fortunate enough to have a good savings buffer in place when coronavirus hit it may have given you a new appreciation of the importance of being protected and a determination to replenish for the future.
Uncertainty and nervousness about incomes and finances has certainly caused some to think about what might happen to their family should the worst happen. Law firms reported a sharp jump in enquiries about wills amid the coronavirus outbreak, suggesting people were putting their affairs in order having been confronted with reminders of their own mortality.
Those same factors may linger for some time, prompting families to either review the extent to which they are already protected or to make sure they have something in place for the future, from emergency savings to wills and protection insurance.
A new set of challenges for businesses
The current situation will be giving double food for thought to those who have a business to think about as well as their personal and household finances. Businesses in a range of sectors are now reviewing how they operate, from remote working and whether they need premises, to what kind of new practices to introduce and how the crisis affects their prospects.
More than half of small business owners are worried about long lasting damage to their firms, according to research published in June by Visa. But nearly 40% said they had adapted their business model in order to keep going during the lockdown, reflecting a trend of firms that have diversified their operations and which may continue to do so when the crisis eases.
While support such as bounce-back loans has been made available, the same conversations will be happening in a lot of small firms: how to protect what they have, including their business operations, their employees and their key people.
Time to act?
Whatever the impact on you personally, you may have had more time to think in recent months. Perhaps you have been directly touched by the pandemic. Maybe the sheer scale and pace of developments have made you reconsider what you want from life. Or perhaps the absence of what we think of as ‘normal’ life has made you see things differently and appreciate what you most value and enjoy.
As the country steps hesitantly out of its coronavirus shell, there may be a temptation to try and resume life as before. But if you do want to see something good emerge from it all, now might also be the time to do something about those thoughts, plans and good intentions to change.
However it’s been for you, if you’re emerging from this with a new set of goals and priorities in life – and perhaps for a business too – you’ll want to be sure that your financial plans are aligned behind them. These are the times that we at Richmond House Corporate Services are prepared for – helping take the emotion out of decisions and working with you as your life and priorities continue to evolve.
If so, we’re here to help. Please contact us if you have questions or would like to talk about reviewing your current financial plans.
This article is provided by Richmond House Corporate Services for general information only and takes no account of personal circumstances. It is not a recommendation to buy or sell. Please be aware that the value of investments can fall as well as rise, so you could get back less than you invest.
Laws and tax rules may change in the future without notice.
Wendy Devlin Dip CII, CeFA, CeMap (MP & ER)
Corporate Business Development Manager