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Have your financial habits changed?

Have your financial habits changed?

Category: Money
19/01/2017

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

2016 was certainly a turbulent year, at least in a political and economic sense, and that turbulence has had a notable impact on household finances. Indeed, research from Standard Life shows that the events of last year have influenced the way over half of UK respondents manage their finances, with many becoming more cautious when it comes to their budgets.

For example, the figures show that 16% put off making important financial decisions last year, while 11% said that the uncertainty made them worried about their finances and unsure what to do, so it's clear that wider events can have a definite impact closer to home, too.

However, such events can also prompt people to take action and be more proactive: 9% decided to take more control of their finances, while the same proportion focused on being more prudent and cut costs wherever possible. An additional 12% said that saving more became their priority, in an attempt to build a larger financial buffer to protect them from any potential issues in the future.

Many respondents made specific financial New Year's resolutions, too: the most popular one was to save more than in 2016 (27%), closely followed by saving up for a holiday (21%). A further 18% plan to tighten their belts and cut costs in 2017, while 17% plan to review their utility providers to get a better deal, and 16% view paying off debts as a priority, perhaps wise considering that levels of debt are on the rise.

"It seems inevitable that the major events of 2016 would have an effect on people's approach to financial planning," said Jamie Jenkins, personal finance expert at Standard Life. "Our research shows that some people put off making important financial decisions, while others were driven to save more, which remains the most popular goal for 2017.

"Aiming to save more and build a solid buffer is always a good thing, and the start of the year is a good time to make a plan to see how much you can regularly tuck away. But it's not just how much you save, it's where you save that's important too."

As Jamie says, this means that you always need to be on the lookout for the best rates on savings accounts and cash ISAs – our Best Buys are a great place to start – and you may want to look beyond traditional savings, too. High interest current accounts, for example, could be well worth considering, as could stocks & shares ISAs, provided you're comfortable with the risks involved.

Don't forget about your pension, either. Standard Life's research found that just 10% of respondents intend to focus on saving more towards their retirement this year, but given that huge numbers are expected to experience an income shortfall in their later years, this is something that should be far higher up the agenda.

"By the end of this year, almost every business in the UK will have to provide a workplace pension scheme," said Jamie. "That means many more people working for the country's smallest businesses will be automatically enrolled in their workplace pension, joining over 7 million people who have already made a good start with their pension savings. Everyone should look to make the most of the opportunity that provides."

What next?

Find out why you need a workplace pension

Compare the top savings accounts

See if you can get a better deal on your utility bills

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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