FERMANAGH people have been mulling over the mid-August announcement that the UK officially entered the largest recession on record after figures showed the Covid-19 pandemic sent the economy plunging by 20.4 per cent between April and June.

When asked in what ways this could impact businesses and individuals/families in the Fermanagh area, Darren McDermott and Sue Wall McDermott, of DS McDermott Financial Planning Ltd., highlighted that people firstly need to remember that a recession is a technical term.

Sue said: “[A recession] means two quarters of negative growth in the economy, and doesn’t necessarily mean long-term economic decline. It will affect different people in different ways.”

She noted that the figures currently look like we will be coming out of the recession this quarter, as the so-called V-shaped recovery is looking more likely.

With their financial planning business, Darren and Sue help their clients to think about what financial goals they wish to achieve, both now and also in the medium- and long-term.

When asked by The Impartial Reporter what tips they would give individuals/families to help them future-proof themselves financially at this time, Darren outlined some rules that he believes people should be following irrespective of whether there is a recession or not.

He said: “Pay off debt, especially ‘expensive’ debt such as credit cards and store cards. Boost emergency savings.

“Ideally, you should have three to six months of normal expenditure saved for unexpected emergencies such as the boiler breaking down, the car needing new tyres, etc.

“Check all subscriptions to see if they are really vital,” he suggested, adding: “Live within your means. This is the easiest way to build wealth, and very few people do it, so spend less than you earn and save/invest the balance.”

“Focus on the long haul. Recessions are just a blip in history; keep focused on your goals and ride the recovery wave. Continue your education and build up skills.

Furlough

During lockdown, many people in Fermanagh were placed on furlough.

When asked what financial management tips they would offer to those currently on furlough, Sue noted that, looking at the statistics, it appears that people on furlough are often doing better than they were when they were in full-time employment.

She said: “They have no travelling expenses, no eating out costs, etc, so they should be in a similar situation even with the 80 per cent being paid.

“The big unknown is when they come off furlough - will the jobs still be there?”

At this time of financial uncertainty, some people have decided to stop paying in/or reducing what they are paying into their pension schemes.

However, Darren said this is not advisable: “Paying into a pension, consistently, month after month, year and year is the most effective way to build up a great nest egg.

“It should be one of the last things to cut out when times are tough. Maybe look at other discretionary expenses, such as eating out, rather than cutting an essential spend such as pensions.

“Even if you have to cut the level of pension investing, keep it at some level. Your future self will not forgive you for delaying or stopping your investing.”

The above comments are given as general guidelines and should not be viewed as advice.

For customised financial advice to suit your personal situation, please contact a qualified financial planner.