The boost to financial wellbeing triggered by the relaxing of pandemic measures dipped during the third quarter of this year – despite the first rise in household income from employment since Q1 2020 – according to the latest Scottish Widows Household Finance Index.
The Index, which measures households’ overall perceptions of financial wellbeing, dipped from 44.7 in the second quarter to 44.0 in Q3.
Despite fading in Q3, the pace of decline remained slower than at any other time since the onset of the covid-19 pandemic, and a far cry from the spring of 2020, in part due to improved trends around job security and income.
Households also recorded renewed pessimism with regards to their financial outlook over the next 12 months. At 49.2 in Q3, this index was down from 50.3 in the previous quarter. The youngest age groups (between 18 and 34 years old) bucked the overall trend, remaining upbeat on average (index at 56.2, up from 55.7).
PLANNING
The pandemic has led to changes in long-term financial planning when it comes to supporting their families, with around one in 10 (9%) having increased the scope of their long-term financial planning to include more generations as a result of the pandemic.
Almost three quarters (73%) of UK households surveyed considered preparing for the future financial wellbeing of loved ones in other generations to be important, with more young people aged 18-24 of this view than any other age group (82%).
Nearly one in four households surveyed (24%) would not consider other generations (such as children or parents) in their financial planning at all.
Of those households which have increased the scope of their long-term financial plans, more than one in four (27%) were not previously including other generations of their family in planning before the onset of the pandemic. This suggests a considerable change in behaviour, with those aged 35-44 recording the largest shift in favour of planning financially for future generations.
