If listening to Theresa May try to court Nicola Sturgeon makes you want to throw your dinner at the TV, take heart: there is one thing in your life set to benefit from the triggering of Article 50 on Wednesday, and that’s your finances.
Barring complete economic calamity, it seems that some will do well out of Brexit not because of any fundamental benefits caused by the UK’s formal withdrawal proceedings, but because they are really pessimistic about the whole thing.
Those who feel most negative about the departure of the UK from Europe will do relatively well out of it simply because pessimism about the future will make them save more.
That’s because if you are down in the dumps, your awareness of the need for a safety net is that much greater, research, by YouGov on behalf of Zurich, suggests.
The findings indicate that current affairs have a significant impact on how people feel about the economy, with the two sides of the Brexit argument currently feeling very different about the future. Six in ten (60%) remain voters said they felt pessimistic about the economic outlook of the UK compared to just over one in five (22%) of those who chose to leave.
While it is helpful to understand the impact of such pessimism, it is important that people are consistent and take control of their saving rather than letting this be dictated by external factors.
This negative attitude is also having an effect on how people view their own finances and how they plan to save. When asked about their personal financial situation, 32% of remain voters feel pessimistic compared to 27% of leave voters. Over a quarter (26%) of remain voters expect to save more money in the coming year. Meanwhile, less than one in five (19%) leave voters said they planned to save more, while 27% expect to save less in the next year.
Further to this, younger people appear more likely to feel pessimistic about the economy and therefore intend to increase their savings.
81 per cent of 18 to 24 year olds feel bad about the UK economy as a result of Brexit. This number falls to 64 per cent of the over 65s. Meanwhile just under half (49%) of 18-24 year olds say that they are aiming to save more money in the next 12 months, compared to just 13% of 50-64 year olds.
The results of this survey, conducted by YouGov on behalf of Zurich, support the findings of a unique experiment from Mindlab, the neuroscience researchers, which revealed that people exposed to negative messages are more likely to consider the importance of savings than those who only experience positive messages.
Rose St Louis, of Zurich, said: “Behavioural change is often triggered by a negative stimulus, and our research shows this can prompt people to save more. Clearly, those who voted to remain in the EU are less confident in the economy than their ‘leave’ counterparts, and it seems the younger generation are taking action by choosing to put more money to one side. We should also recognise that consumer spending is a key driver for economic growth and if people are pessimistic and saving more, this could have repercussions for the wider economy.”
But don’t let all that negativity overwhelm you and definitely don’t let unwieldy current affairs alter your own path too much.
“While it is helpful to understand the impact of such pessimism, it is important that people are consistent and take control of their saving rather than letting this be dictated by external factors. Starting earlier and putting small amounts aside will help to build up a larger pot. By reviewing their investments to ensure they benefit from better returns, people can protect against volatility and the negative effects of inflation.”
6 ways to keep a savings habit:
- Choose a savings account or an investment that suits your needs, appetite for risk and interests (because yes, there are opportunities to invest in businesses you like and things that reflect your values, like renewable energy. Try EQ Investors Positive Impact Portfolio, Abundance Investment or Crowd2Fund)
- Set a purpose for your savings. One pot of savings per purpose ideally. If you have a “general” savings pot, there’s a danger you will dip into it for things and erode your savings more quickly.
- Set up a direct debit for an amount you can afford to put away – high enough to make a difference but not so high you get into financial trouble because you are saving.
- Don’t access your savings for anything other than the purpose you originally intended. If you need to, set up an emergency fund and save into that alongside so that if a need arises, you have something else to dip into.
- Cut your spending. Just one or two things at a time, like takeaway coffees or meals out. Do it for one month and put the money into savings instead. If you do it just for one month, then you’ll realise it’s not too tough.
- Take one month at a time and don’t be disheartened if there is some unforeseen expense that sets you off course. There often is, because, life.