Two years into the pandemic, people have started to realise that financial stability in their lives is more important than ever, after going through difficult challenges especially during the first lockdown.
According to asset management giant Abrdn, more than half (55%) of adults in the UK who are determined to improve the way they manage their money in 2022.
Of the 2,000 people polled in the representative study, 45% intend to invest their money in the new year, alongside 47% planning to save more and 44% looking to spend less.
Some 60% believe that improving their financial health could help them support others, while 69% believe this could improve their overall health, happiness and wellbeing.
Of those that plan to invest, 54% think their money could have a positive impact on society and 53% want to support causes they care about.
Jonny Black, strategic director at Abrdn, said: “Many are committed to improving their financial health in 2022, not only for the benefit of themselves and their families, but also for the communities and environment around them.
“Based on our research, around 19 million UK adults will look to invest their money in 2022 – creating a whole world of opportunities for both their finances and the world around them in the long-term. Being aware of this, alongside the shorter-term benefits of cutting back or saving more, will help position them for a bright future as they seek to take control of their finances and make their money work harder.”
Gender and age imbalances
But Abrdn found gender differences when it comes to savers’ intentions. Just 35% of women plan to invest in 2022 compared to 56% of men.
At the same time, younger people – those aged 18 to 24 years old – are more adamant to put their money to use with 69% wanting to invest, while this is true for only 38% of those in the 45+ age group.
Of the respondents who do not intend to invest this year, around 38% said they do not have any spare money to do so, followed by 36% not trusting the risks of investments, and 24% assuming the practice is only for those with significant wealth.
More than a third (34%), however, would be willing to invest if they knew their money could have a positive impact on society, while 32% would put their money into something they care about even if returns were lower.
Currently, just 37% of UK adults hold stocks, shares or bonds; approximately 46% of men and 28% of women.
The vast majority of savers (65%) has a private or company pension, while 14% invested in crypto – but the percentage surges to 38% for those aged 18 to 24.
Black added: “It is a positive sign that many are willing to invest their money if they had a better understanding of the process and wider effects. However, often perceived barriers – like needing to have a lot of money or it being too high risk – are still preventing people from investing in a brighter future.
“As an industry, we have a duty to change this by providing people with the knowledge and options that are available to them to improve their financial health. And for many, that means creating outcomes that are more than just financial. Because, done properly, investment creates opportunity – the opportunity to change things for the better.”
Mental health
In a similar piece of research, Schroders Personal Wealth (SPW) found that 49% of UK consumers are worried about their finances.
Some 57% said that this concern often affects their mental health, with 73% prioritising their finances in 2022.
Encouragingly, more than half of savers (54%) understand the value that a financial plan can have and said they will be relying on that to manage their money this year.
Also, nearly half (49%) said they would like to seek help from a financial adviser.
But there are still many who either are not going to make a financial plan or won’t turn to an adviser for help.
Among the main reasons for these attitudes are:
- Believing they don’t need help with their finances;
- Not knowing where to start;
- Believing that financial advice would cost too much; and
- Not being aware of the benefits that financial planning can bring.
Leigh Dunkley, financial wellbeing lead at Schroders Personal Wealth, said: “It’s worrying that 49% of those surveyed are concerned about their finances and for 57% this has a negative effect on their mental health. Unsurprisingly, covid-19 has also played a part in increasing money worries with 54% of people telling us they want to save more as a result of the pandemic.
“This is where a financial plan could help. Understanding what’s important to you, your current situation, and your long-term goals form the foundation of a good financial plan.
“Whether you engage with your finances on your own or seek support from a professional, we believe that the underlying process is the same. The end result of a financial plan could positively affect your overall wellbeing which is something everyone can aim to achieve.”
