26 August 2019

Six-point Brexit action plan for your finances

6 min read

 
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Becky O'Connor

Personal Finance Specialist

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We are now just one month away from the date by which the UK is due to leave the EU (October 31) and we remain largely in the dark about what it will mean for us all personally.

From November last year, Royal London has been tracking the expectations of the British public on how they expect Brexit to impact their personal finances.

We are becoming more pessimistic as time goes on.

The proportion of Brits who think their finances will suffer has risen from 32 per cent in November to 36 per cent now – almost the same as the proportion who expect their finances will stay the same (42 per cent). Meanwhile the proportion who expect their finances to improve has fallen, from 9 per cent six months ago to 6 per cent now. However the percentage in the “don’t know” camp has gone down from 23 per cent last November to 17 per cent – suggesting there is more certainty, but less overall agreement.

The survey by YouGov on behalf of Royal London has also found that women are more likely to be pessimistic and so are people of working age. Those over the age of retirement tend to be more likely than other age groups to expect an improvement or for things to stay the same.

It also found that millions of us are putting off making big financial decisions – like buying a house or car – because they are worried about Brexit. Some are even delaying their retirement plans.

All of this goes to show that what is going on politically is affecting our personal lives in quite meaningful ways.

It also indicates that we aren’t sure what to do about it.

Royal London has come up with a six-point action plan for your finances. It mostly amounts to common sense, cautious measures, which can be easily forgotten in the good times. But if you are on the worried side in these times of uncertainty, it can’t hurt to check everything is in good shape.

The six-point Brexit plan for your finances

B – Balance your saving and spending needs


So far, there is no Brexit-related justification to cancel Christmas. But equally, it’s prudent not to blow all your spare cash in these times of uncertainty. The amount most of us should aim to have in emergency savings is three to six months’ worth of current income. If you’ve met this goal, there’s no reason to rein in your spending from what’s normal for you.

R – Regularly review outgoings


With the cost of many basic utilities and essentials changing often, it’s a good idea to review the deals you are on more regularly than normal at the moment. You could save money each month by switching to a cheaper mortgage deal if you are already at or coming to the end of an existing deal. It’s a good idea to contact a broker to access the very best rates available for your circumstances. Try an automatic energy switching service to ensure you are always on the cheapest energy deal. Check the cheapest petrol and diesel near you on petrol comparison websites to make sure you aren’t overpaying on fuel.

E – Explore savings options


 Not moved your savings lately? While interest rates still aren’t particularly alluring, it’s still going to be better for you to be on a best buy easy access account than the average rate. Check the best buy tables. If you can tie your money up for longer for a better rate, then consider a bond. Don’t put more than £85,000 with any authorised and regulated savings institution – this is the limit for compensation from the FSCS should the firm go bust.

X – Exchange your currency


The Pound has already weakened in response to Brexit.What we don’t know is whether it is likely to fall further or strengthen in the coming weeks or months. If you need to buy foreign currency for a future trip or to send money abroad, then you might want to exchange in advance to mitigate volatility, perhaps holding the money in a borderless multi-currency account in the meantime.

I – Invest wisely


The usual guidance to spread your investments is particularly worth heeding at times of uncertainty. Investors with a low appetite for risk should ensure most of their assets are held in sterling bonds and cash to protect their investments from swings in the exchange rate. If you are a growth-oriented investor you should consider opting for a multi-asset approach to help you ride out any ups and downs in the market with money spread across a variety of asset types including bonds and commercial property as well as stocks and shares, both at home and abroad.

T – Take action on retirement pot worries


For anyone about to retire, the big worry will be that stock market volatility will affect the value of their pension pots just at the point they want to draw on them. If this is you, it could be time to contact an adviser (www.unbiased.co.uk is a good place to find a qualified adviser near you) or to seek free guidance on the Money Advice Service.

 

Brits "more pessimistic and polarised" about Brexit impact on finances. This image is an infographic and has alternative text available if you are using a screen reader.

Ten Million Brits put life on Ice because of Brexit

3.2 Million have put off buying a house

3.6 Million have delayed booking a holiday

36 per cent of British adults - 18 million people - think their finances will get worse after Brexit, up from 32 per cent from November 2018

A rise in the cost of food, a fall in the value of the pound and a rise in the cost of energy are the chief concerns among those who think their personal finances are set to worsen after the UK departs.