With the nation under strict lockdown for many months and subjected to tiered restrictions for others, many were unable to spend in the usual way last year. For many people, taking an annual holiday was out of the question, while pubs and restaurants remained closed for most of the year. This led to people staying in more than going out, which resulted in a sharp drop in spending.
While some people saw their income levels also reduced during the pandemic, many others, such as those who are retired continued to receive the same fixed income each month. However, spending levels each month were reduced due to being unable to enjoy activities such as meals out, drinks with friends, holidays, and even shopping trips.
Saving money and clearing debt
People who maintained their usual income managed to save a lot of extra money over the year and pay down their debts. Figures show that a staggering £21.3 billion in debt was repaid between January and November last year.
Figures from the Bank of England show that household deposits have increased to £1.6 trillion. Between January and November last year, they increased by $124 billion. This compares to growth of under £50 billion over the same period in 2019, which equates to an increase of close to 150% in 2020. BoE data also suggested that the majority of households were not planning to spend the extra money saved.
Officials have confirmed that much of this growth was down to increased deposits in savings accounts. Total balances are said to have increased by nearly 6% between January and September last year. During the same period in 2019, total balances increased by 2.78%.
Many opting for instant access accounts
Data also suggests that many of those putting pandemic savings aside have opted for instant access accounts. With the pandemic resulting in ever-changing circumstances for many, some were keen to put money aside while also being able to access it with ease and without penalties when necessary.
Financial group, CACI, released figures that showed balances in easy access accounts tripled between January and September 2020 on a year-on-year basis. There was growth of 10.3% in non-ISA instant access stock compared to just 3.6% during the same period the year before.
Financial anxiety levels increase
Despite the boost in savings throughout 2020, data also shows financial anxiety levels rocketed for many people. More than 25% of UK residents felt more stressed about their financial situations. Many reported issues such as sleep and relationship problems stemming from their money worries.