Important information:The value of investments and the income from them can go down as well as up, so you can get back less than what you invested.
Whether you are young or old, regardless of your gender, the pandemic, for most people, has been difficult. New data from Fidelity International1 shows two clear and disturbing trends that have emerged. And for those affected by both, the situation is potentially doubly precarious.
The first are women. As the pandemic has made saving and investing difficult for all women, single women have been hit the hardest, with more than a quarter seeing their incomes plummet, putting real pressure on their ability to protect themselves. financially.
But they are far from alone. The other group that has been hit the hardest is young adults, and government figures confirm these concerns, showing that almost half (48%) of those under 25 were unemployed at the end of 2020.2.
What all of this shows us is that a significant proportion of young people struggled financially during the pandemic, and they will likely continue to struggle for some time. They may have had to postpone certain life events, work longer, or turn to the savings they had to supplement their expenses. Deferred plans can have ripple effects and using savings or working more hours will undoubtedly cause long-term worries for those involved, and those anxieties can creep into everyday life and other concerns.
As for women in particular, more than a quarter (27%) of single women have seen their savings impacted, according to our data. In fact, this group struggled the most when trying to save or invest in the past year compared to single men (22%) or both men (23%) and women (21%) in a relationship with.
It is not a total surprise. Earlier this year, our research highlighted the disproportionate financial impact of the pandemic on women, after a year in which women were 1.5 times more likely to have lost or quit their jobs. , women were much more likely to be put on leave while many of those who stayed at work lost productivity due to family responsibilities and other pressures3.
What it does, however, is leave us in a position right now, in which certain sectors of society are much more disadvantaged financially than others, and that has far-reaching issues not only for this generation, but potentially for generations to come. Because, while the average person in the UK has £ 66,818 in retirement savings, it drops to just over half that amount – just £ 34,079 – for single women.
And, just like the pandemic itself, it’s not just a UK problem, of course. Research from Fidelity International, which is part of an international study of women’s finances in six key markets, including the UK, Hong Kong, China, Taiwan, Japan and Germany also found that 31% of all women saw the amount of money they were able to save in the past 12 months, compared to 26% of men. This trend is true in all the markets studied.
So what can be done? Well, as always, financial independence is in our hands. It is essential that we face the facts, take the necessary action and tackle head-on the financial side effects of the pandemic.
And, of course, you don’t have to be young and / or female to benefit from these six steps below.
1. Tackle all the debts that weigh you down
Borrowing money is not always a bad thing and can often be unavoidable in difficult financial situations. As long as you pay your bills on time, you’ll build a positive credit history. However, there comes a time when you can have too much debt, which can cause a lot of stress. If you’re struggling to pay off an overdraft, try to come up with a clear plan of how much money you can realistically afford to pay off each month. If you have credit card debt, focus on the ones with the highest interest rates first and keep track of your due dates so you don’t have to pay late fees.
2. Be honest with yourself about your relationship with money.
Watching where your money is going is a no-brainer, but all too easy to ignore when it comes to managing bad spending habits. The easiest way to keep tabs on your budget is to write down your daily, weekly, and monthly expenses. Like it or not, you’ll soon spot trends and themes. And don’t forget that there are plenty of tools and apps online to make the job a little easier.
3. Take the time to think carefully about your next big life decision.
Given the financial challenges of the past year, it’s no wonder that so many of us have reconsidered our big life plans. With the UK coming out of lockdown, now is the time to put a few of these plans back on your priority list so you can prepare financially for them. For example, house prices have gone up, so you may need additional funds for a deposit if you are planning to move, travel plans need to be streamlined, or you may want to build up a bigger nest egg before starting a business. family.
4. Try to create a fund for rainy days
When money is limited, saving can seem daunting. While some experts recommend having enough savings to cover three to six months of your living expenses, this may be unrealistic for some. It is good practice to save as much as possible for a “rainy day”, so that you are prepared for the unexpected. When it comes to saving, every little bit counts.
5. Don’t be afraid to get help
If you feel comfortable discussing your financial issues with family, friends, or a partner, do so. Sometimes someone else’s thoughts / observations / experiences can make all the difference when you are worried about something. Additionally, there are free and unbiased resources, such as Money Advice Service and Step Change, which provide free expert debt advice. While it can be uncomfortable talking about money, it’s always best to start the conversation as soon as possible if you’re having a hard time.
6. Anticipate your future
Finally, keep an eye on the road ahead. A regular monthly investment in a Self-Invested Personal Pension (SIPP) or ISA is a simple, tax-efficient way to help give yourself the financial freedom you want for the future – while many employers will offer to match. employees’ occupational pension contributions if they choose to increase them beyond the legal minimum. And this step is even more crucial for women given both the gender pension gap and many women’s preference for “safer” savings over arguably more effective long-term investment.
1 Research conducted by Opinium research between January 7 and January 12, 2021 with 12,038 men and women in the United Kingdom, Germany, China, Taiwan, Hong Kong and Japan. UK-specific results from the global study are based on a sample of 2,004 (990 males and 1,014 females). The description of single respondents refers to those who do not live in a couple and does not include those who are divorced.
2 ONS – Coronavirus and trends in youth labor market outcomes in the UK: March 2021
3 Institute for Fiscal Studies, How Mothers and Fathers Reconcile Work and Family Under Lockdown ?, May 27, 2020. https://www.ifs.org.uk/publications/14860
Important information:The value of investments and the income from them can go down as well as up, so you may get back less than what you invested. Investors should note that the opinions expressed may no longer be relevant and may have already been implemented. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a retirement product will not be possible before the age of 55. This information does not constitute a personal recommendation for any particular investment. If you are unsure of the suitability of an investment, you should speak with a Fidelity advisor or a licensed financial advisor of your choice.