Saving For ‘The’ Rainy Day


The current pandemic will change the future. We’ve no doubt all heard that phrase during these strange times, however, it is true.

For employees, a substantial amount will have worked from home and enjoyed more down time at home rather than toiling the daily commute back and forth. They will have likely been more productive with what is otherwise wasted time sitting in their chosen mode of transport.

Finances being paired back to the basics have many question ‘what do we spend our money on each month?’

For employers, those had not adopted a flexible work at home approach will have noticed that this way of working is not to be feared but rather embraced and indeed start to re-evaluate the need for expensive offices as an overhead to house their staff.

For both individuals and companies alike, despite the possible upsides of what may be the ‘new normal’, what is evident is the need for a contingency plan to ensure we all come out the other side. The ability to overcome the unthinkable which is no longer so. ‘The’ rainy day for many has just come to pass. Yes, the Government stepped in with all manner of support in the form of grants, loans, furlough schemes, etc. But still this pandemic has taken its toll. Many businesses have not or will not survive, with many jobs lost and many livelihoods impacted in financially terrible ways.

This pandemic has been a wake up call financially!

As outlined in our recent article ‘A Timely Reminder To Reflect On Our Need For Protection’ many have been given pause for thought on what happens if we die or become seriously ill.

But what happens if we don’t?

Having had plenty of time to examine our finances, perhaps we should be revisiting that time old strategy of squirreling away a percentage of our income to provide a financial buffer, the umbrella to protect against the rainy day. This goes for companies too! However, what is clear is that whilst accumulating funds over and above the working capital needed for our day to day existence, we should not accumulate ‘lazy capital’.

Whilst we benefit from low interest rates when it relates to mortgages and other financial liabilities, this is not our friend when it comes to saving. With the Bank of England base rate at 0.1% per annum, even allowing for marginally higher retail rates, funds invested in cash are not even going to keep pace with inflation. To protect against this, funds should be invested in such a away as to achieve at least inflation level of returns as a minimum, with some degree of growth over and above. Clearly in doing so, there is risk to capital but this can be managed to an acceptable level to balance between short term needs and longer term financial goals.

Whether you are considering your own savings habits or those of your company, please feel free to contact us to discuss your current or prospective savings and investment planning.