Covid-19 And Your Financial Security:

It’s no secret! The ramifications of the Covid-19 pandemic are far-reaching, with the potential to impact nearly all aspects of life. Top of the list, no doubt by now, is the economy. So, it’s little wonder that many people have concerns about what the knock-on effect on their financial security will be. 

The government support measures have gone some way in mitigating the pandemic’s effect. However, some of the financial consequences will be slightly more insidious as the impacts slowly filter outwards across the economy. So, we decided to take this opportunity to outline a few of the secondary effects that could harm your financial security. Knowledge is power. So, by being informed, we hope that you will know what to look out for, and what might provide an obstacle in the immediate future. 

Borrowing money will be harder

During hard times, lenders restrict their lending criteria in preparation for the economic turmoil they expect.  This means that it is now much harder to get a mortgage, and credit card companies have significantly reduced credit limits. For those with anything less than a perfect lending history, the chances of securing a loan are greatly reduced.

So, generally speaking, young adults who might not have as much financial security as older generations, are likely to find it incredibly challenging to move forward with their lives at this time. 

Scamming will be rife

It’s a sad reality of life that when times are difficult, they are made all the more so by a surge in scams. Fraudsters often use the latest news stories to coerce people into scams. As they tend to be experts in preying upon people’s vulnerability, it is also more likely that people will fall victim to them when the chips are down.

While the pandemic has brought out the best in some people, it is a story very much of two halves. Invariably the worst is brought out in others. Some scammers are even going as far as to impersonate the World Health Organisation – so it is important to have your wits about you. 

The Covid-19 related scams we have heard of are varied, with many being extremely sophisticated. We’ve heard of scams about insurance policies, pension transfers and high return investment opportunities, including investments in coronavirus treatments!!! Such scammers will try every tactic under the sun to coax personal or financial information out of you. Some will even attempt to impersonate a company you already deal with.

So remember, if you get a call out of the blue asking for information, it’s okay at any point to ‘accidentally’ get cut off and phone the company back to speak directly about the situation with someone you know!

You’re more likely to make odd spending decisions

Lockdown and the pandemic have changed our spending habits. For the best part, most Britons fall into two parts. One group has benefited from saving due to restrictions on spending (namely eating out and commuter fairs). The other has been catapulted into financial hardship.   Whichever group you find yourself in, your spending habits have likely changed accordingly.

When times are tough, we often unconsciously make spending decisions that we think will restore control. For more on this, please see our ‘Guide to Human Behaviour in Uncertain Times.’ And, if you’re in any doubt about this, just think about how the nation randomly decided to stockpile toilet roll in the early days of the pandemic!

When thinking back over the last few months, many of us will notice a marked change in our spending habits. And, it’s highly likely that the strong emotions that the pandemic provoked will have been the driving force behind the change. 

 

 

As always, if you would like to speak to a financial adviser, please do call us on 01243 767 469. Alternatively, you can email us from our contact page, and an adviser will be in touch.

Written by Alex Welsh

Alex is a Resolution-accredited, Chartered financial adviser. Having joined the firm in 2012, he has extensive knowledge of all areas of financial planning.