Embrace Change

 

There is nothing like a crisis to speed up change. The situation that the economy is in just now is unprecedented and both companies and individuals will have to change and adapt to a new normal. Can things go back to how they were before the coronavirus pandemic? Businesses will change as people have become used to acting differently which is leading to priorities changing. as a result. It is unclear if those priorities will change back to the pre coronavirus ways.

 

The full impact on the economy is going to take a long time to play out. While the focus of everyone is on health and social distancing at the moment, and the somewhat inevitable recession is taking a back seat. A recession will cause further disparity as the economic impact of Covid19 affects those with lower disposable income and wealth disproportionately.

 

While we are currently seeing some of the lowest paid in the workforce becoming the most important, the financial rewards won’t change and while being applauded is much appreciated, it doesn’t translate into anything that can benefit nurses, cleaners,  or GIG economy delivery drivers etc in the future. Recent research from the Living Wage Foundation and the New Economics Foundation released on 15th June 2020 suggests that there are 1.3million key workers being paid less than the real living wage and in insecure work.If this is the situation now, how does this translate to their savings for retirement? 

 

A lot of the workers currently furloughed, who don’t know what the future holds, perhaps in the hospitality or retail industries do not have the benefit of pension entitlements building. While the workplace pension is an admirable addition to the benefits of workers who many of whom do not have any private pension provision currently, many work on a self-employed basis and lack private pension wealth.

 

How does the economy as whole recover? Will austerity return or is there a different way of dealing with a situation where a large number of society are not prepared for their future. Recent statistics suggest that 1 in 4 adults in the UK have less than £100 in savings and austerity is shown to affect those underserved by the financial system more.

 

The lockdown we are experiencing, in many ways has changed the way people are thinking about life. People are working from home, so there is a decoupling of cities and the density of business. Supply and demand is altering as people begin to change their ways of life. Social hubs are becoming more important than economic hubs and consumerism is changing as health becomes more important than wealth.

The creation of a new social understanding where ‘clapping for carers’ and valuing many who’s contribution previously was deemed as ‘low skilled’ before coronavirus shows a changing attitude to community, but not at the expense of building wealth.

 

Focusing on building our own wealth in the best way we can is important but, also understanding that the biggest impediment to building wealth is the lack of access to capital is also important. If capital is available to an individual, they can borrow against it to gear up and create more wealth. For those who capital is not available to, and may be low paid, credit is expensive and can create greater problems in the future.

These are the issues that policy makers look at but so rarely experience or have empathy with.

Add  to the equation that people without access to capital are more likely to be those with less than £100 in savings, and are the most likely not to have any retirement wealth accumulated then there is a class of people who are underserved by the financial system.

Generally, the asset management sector does not care to serve those with assets under a certain minimum. Where do the underserved by the financial system turn therefore? The only option is the state.

People do however need to spend. By linking expenditure to saving we can help people build capital through their essential expenditure. Build wealth while spending, while not being penalised for not having high disposable income. That is what AirFunders is all about. Join us.

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