Ford Money’s recent research shows a notable consensus among the different generations about a lack of financial education and how this can impact later life. In our early years we often rely on our parents and their older relatives to teach us the value of money, often seeing them as a valuable resource of information. Despite this, there are still some generations that are hesitant to pass down knowledge as they feel it is not their place to do so, perhaps unless approached. Knowledge is valuable and having an open conversation has never been more critical following the impacts of the Coronavirus pandemic, something I will come on to later in this article. In my personal experience, I have been fortunate enough to have been taught the value of money from an early age, a foundation of knowledge I have continued to build upon to better understand the benefits of saving, overpaying debt, and managing my expenditures. By sharing my own experiences with others, I hope that it can improve their own financial wellbeing and make them consider alternative technologies and providers that best suit their needs.
It’s important to understand that each generation has something different to give and share when it comes to financial planning and resilience. Growing up in different eras and having access to different technology means that each person can share some valuable life lessons and insight into how to save and spend money more effectively. The younger generations may be more adept with financial apps and how to switch online and find exclusive deals, whereas older generations may be more experienced at understanding core money values and cutting out non-essential spends.
Whether someone has been able to save more during 2020 does depend on how they were impacted by the pandemic, but even if they have not been able to as yet, it’s hoped that saving will become more of a priority as things settle down. Prioritising the repayment of debts is wise but it’s also a good idea to start up a small savings pot to. Budgeting and saving little and often is key to keeping on top of your finances and making some headway in achieving your goals. Making small changes to your finances is important but maintaining a positive attitude towards money is currently very difficult for many, especially for savers searching for a decent return on their nest egg.
The impact of Covid-19 on the UK savings landscape
Optimism among savers may be sparse as interest rates across the savings landscape continue to fall to new lows providing little encouragement for consumers to chase down a good deal. However, the biggest danger is for those savers who may be placing their cash in a poor paying account or who have failed to review any of their old savings pots. As the market experienced two base rate cuts in 2020, and competition in the market waned, it’s vital that savers reconsider their options. The mindset to save might be set for a change for different reasons and primarily this could be down to having a safety net in place. Indeed, it seems savers who do put aside their hard-earned cash are doing so in accounts where they can quickly gain access.
This year it is hoped that more providers could enter the market and aim to entice savers deposits to fund their future lending, but it is too early to tell at this stage. In the meantime, savers may be more inclined to put their cash with familiar brands, such as with a high-street bank, that typically don’t provide competitive returns on savings accounts. The murmurings of negative interest rates may see banks charge customers to hold substantial deposits too, so savers may need to split their cash with different institutions if this were to transpire. Challenger banks continue to offer some of the best interest rates on the market, so savers would be wise to consider those brands if they are searching for a better return on their cash. If these banks are protected by the Financial Services Compensation Scheme (FSCS), then customers’ deposits are just as safe as a well-known high street bank.
Selecting a savings provider does not solely depend on the interest rate offered. Instead, convenience, service, familiarity and recommendation all play a part as well. Therefore, it’s not surprising to see savers choose a brand they know and have heard positive things about from their family or friends. Indeed, if a person has had a good experience with a brand and shares their opinion with a family member, they may be more inclined to choose the very same brand regardless of whether they sit at the top of the rate tables or not. Trust has huge appeal and word of mouth can go a long way. The technology offered by a savings provider can also enhance their appeal, such as a transparent website with a clear journey or a mobile banking app that is simple to use and feels safe. Throughout 2021, trust may play a pivotal part in savers decisions as we remain in an uncertain, low interest rate environment. But it is still important that savers make time to review and switch their account to ensure it is earning a competitive return.