Two years of turmoil forces a change of plans
47% of people say they’ve had to change their financial plans as a result of everything that’s happened over the past two years. Some have suffered financially, so 15% have eaten into their savings and 7% have built up debts.
Some have had a lockdown boost, so 13% are building savings for emergencies and 11% are working to pay off their debts. Others want to make bigger changes in their life, including the 7% who’ve changed jobs, the 5% who want to work for themselves and the 5% who are planning to retire earlier.
Figures from a survey of 2,000 by Opinium for Hargreaves Lansdown in April 2022.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “Two years of turmoil has meant a change of plan for millions of people. But while some can afford to take positive steps because of the financial buffer they built during the pandemic, others have emerged from the crisis in a far worse financial position, and are having to change their plans to stay afloat.
The past couple of years gave us an opportunity to think clearly about what we really want out of life, and the best way to achieve it, so as things opened back up again, plenty of people have made big changes. Some 7% have either changed jobs or plan to do so, and 5% want to work for themselves so they have more control over their working life.
Our retirement plans have changed too – interestingly equally divided between the 5% who are planning to retire earlier and the 5% who are planning to retire later. In some cases, this is a deliberate plan because of the pandemic, including those who decided their home was their priority and others who saw hybrid working as an opportunity to work later.
Some of these changes have been made possible because people were able to build their resilience during the pandemic, including the 13% who are building savings for emergencies and the 11% who are working to pay off their debts. However, if you’re making a major change in life, you’ll need to revisit your broader financial plans too. If you had benefits like a pension, life insurance or other forms of insurance attached to your old job, check whether you’ll receive them in your new job, or whether you need to replace some of them.
If a new job means a pay rise, rather than letting it all be eaten by rising costs, consider whether you can take the chance to boost pension contributions, or save or invest for the future. Alternatively, a move to working for yourself can mean fairly uneven cashflow for a while, so it’s worth making sure you have enough savings to fall back on, and are budgeting for the lean months.
For others, the changes have been more from necessity than choice – including the 15% who’ve eaten into their savings and 7% who’ve built up debt that they need to address. Some have been forced to postpone retirement after losing work, pausing pension or mortgage contributions, or building up debts during the pandemic. Others have had to stop work earlier than planned after being unable to find a job, or falling ill.
If changes in the past couple of years have left you in a worse place financially, it’s going to be even more difficult to cope with the cost-of-living crisis. If your financial resilience has been worn away during the pandemic, the wave of higher costs could send your finances over the edge. If you’re in this position, you need to take stock of exactly where you stand.
The most effective approach is to draw up a budget of everything you have coming in, and everything you spend, so you know how big the shortfall is. You can then work on cutting back to make ends meet. By this stage, many of us have made all the easy cuts of shopping around and cutting out luxuries. It means we might need to consider bigger lifestyle changes. Nobody is pretending it’s easy, but it’s easier than going through the process a few months down the line, when you’re in an even deeper financial hole.”
How people’s financial plans have been affected over the past two years
- 15% of people have eaten into their savings
- 13% are building savings for emergencies
- 11% are paying off their debts
- 7% are building up debt
- 7% have changed jobs
- 5% want to work for themselves
- 5% are planning to retire earlier.
- 5% are planning to retire later
- 5% want to buy a house sooner
- 4% say it’ll take them longer to be able to afford a house