Times are uncertain and, as the Autumn fast approaches, there is no sign of that changing. This will have a significant impact on personal finances and how wealthy or not you feel in the coming months. We have no control over what will happen but we can make sure we are as prepared as possible. This Autumn 2020 personal finance overview aims to give you the tools to navigate the coming months.
Covid-19 is likely to continue to dominate, sadly it doesn’t look like the virus is going anywhere. But, there are other factors that will have an impact. Worrying about all these different factors won’t change much, but knowing your options and how best to prepare can put you in the best situation to face whatever situation comes your way.
In this post I will cover:
- Tax increases
- US Election
- Other geopolitical concerns
Covid-19 – Personal finance implications
You can’t have an Autumn 2020 personal finance overview without mentioning coronavirus. Covid-19 has already dominated the past six months and this is set to continue.
A second wave is looking increasingly more likely and further lockdowns are likely to have significant economic consequences. Striking a balance between public health and the economy appears to be a near impossible task.
Money is already tight for many – 4 million had missed a bill payment by May. Unfortunately, it seems this is going to get worse before it gets better. Managing your finances as well as you can and seeking support where necessary will be crucial for navigating the next few months.
This is certainly scary and could well negatively impact many individuals, including society’s most vulnerable. The pandemic has highlighted the inequalities of our economy and it is vital when recovering we remain aware of these issues and look to address them.
An unfortunate consequence of Covid-19 and the lockdown is an exponential rise in unemployment. Sadly, very few jobs are ‘fully safe’ at the moment as almost every industry has been affected.
According to a BBC Freedom of Information request, 300,000 redundancies were planned in June and July. Additionally, a third of firms plan to make job cuts between June and September.
This is going to have a huge impact on the economy and personal finances overall. With more people out of work and struggling for money, there will be less people out spending money in shops and restaurants. In turn, this makes it harder for those businesses to stay afloat and could lead to further job losses in those industries.
Keeping people in work and getting those who have lost their jobs back into employment has been and will continue to be a priority for the government. The Kickstart Scheme aims to help more 16-25 year-olds find employment, but whether it will have the desired effect remains to be seen.
The government claims the furlough scheme has protected 9.6 million jobs. But, with the scheme due to end on 31 October and it is likely this will lead to even more job losses. It seems unlikely that the government’s £1,000 incentive for employers to bring staff back to work will be enough to save jobs.
If you have lost your job or are concerned about losing your job, this post offers more tips on what to do and how to access the support available.
The deficit from coronavirus stimulus measures just keeps rising. At some point, the government is going to have to look at how it will pay for all the stimulus measures.
Hardly surprisingly, it has been rumoured that Chancellor Rishi Sunak is already considering tax rises.
While nothing is confirmed yet, it is likely there will be at least some increases. Public sentiment is much more in favour of tax rises than public spending cuts. Although this could be because there’s little left to cut after 10 years of austerity.
Wealth taxes appear to be the most popular, although it would be out of character for a Conservative government to fully get behind them. If they do, the majority of people won’t be affected. However, as big earners for HMRC, Income Tax, Capital Gains Tax and Inheritance Tax could all also be increased to help balance the books.
Could Brexit affect your personal finances?
In short, yes. If you live in the UK, Brexit will have both a short and a long term impact on your finances. It’s impossible to look at the long term implications without a crystal ball, but short term there will almost certainly be a negative economic effect.
No one knows how the situation will play out – the grounds on which the UK is leaving the EU have still not been finalised. Uncertainty is notoriously bad for the economy and will certainly be priced into the markets. The pound may also be weaker, making life harder for investors and those conducting international business.
It is currently looking like a ‘no deal’ scenario is the most likely, meaning essential services like trade and travel will be harder to organise and regulate. Given the UK is already in a deep recession, any additional financial shock is likely to be felt heavily and could mean your money is stretched even further.
It could also make travel harder and more expensive. Hopping over the Channel to France or Spain may not be so convenient or cheap as pre-pandemic times.
Why do I care about the US election if I don’t live there? Well, the US economy and its relationship with foreign countries is important wherever you are in the world.
Much like Brexit, a future trade deal is also on the cards for the UK. This is likely to look very different depending on which candidate gets elected.
Amid a challenging political backdrop, it’s setting up to be a nasty fight between Joe Biden and Donald Trump. The stark differences between the candidates is likely to create a lot of uncertainty in the markets, making life difficult for investors.
For American taxpayers, there are also likely to be significant tax implications depending on the result of the election. This is something to be aware of and seek advice on if you believe you will be affected by this.
Other geopolitical concerns
Much like the US elections, other geopolitical concerns can impact your finances, wherever you are in the world.
Anything that impacts financial markets or trade can impact your money. From unrest in Belarus to protests in Hong Kong, the world is a far from stable place.
You could spend all day consuming news and learning about new areas of concern. But, despite it being my job to write the news, I don’t recommend doing this. Instead, keep an eye on global headlines and consider adapting if possible.
This is probably most relevant to investors, especially those with a global outlook. You may need to adapt your portfolio to take into account volatility in certain countries and industries.
However, regular consumers can also be impacted. Take the trade tensions between the US and China for example. Imposing tariffs and sanctions makes trade more expensive and so drives up the price of goods. When money is already tight, this can make life even harder for individuals.
I hope you enjoyed this Autumn 2020 personal finance overview. If you found this post interesting, please like it and share across social media or send it to your friends. I’d also love to hear your thoughts and experiences, so please do leave a comment! What do you think the biggest personal finance concern will be this Autumn?