March 19th, 2024

2 surprising ways that daylight saving time could affect your finances

Here in the UK, the clocks are set to go forward on Sunday 31 March – Easter Sunday – making our evenings one hour lighter, and our mornings an hour darker.

You might be greatly looking forward to this change; the chance to walk your dog in the light after work or simply sit outdoors with a glass of wine in the evening can be a huge mood booster.

Yet one thing you may never have considered is how daylight saving time could affect your money. Studies show how the system of turning the clocks back in October and forward again in March could be having an impact on the UK’s overall wealth.

So, to mark the upcoming winding forward of the clocks, let’s take a look at a brief history of daylight saving time, and two financial factors that it may affect.

A brief history of daylight saving time

Although first pioneered by a small Canadian community in the 1800s, the first national use of daylight saving time occurred in Germany in 1916, after British builder William Willett had proposed the move in 1907.

Willett published a pamphlet entitled The Waste of Daylight, an original copy of which you can still find in the National Museum of Scotland; the pamphlet argued that people would enjoy making the most of the light mornings of summer, rather than precious daylight hours being wasted while most of the population was asleep.

After just a few weeks of Germany’s daylight saving time experiment, several countries involved in the first world war followed suit. Two decades later, Britain even imposed a “British Double Summer Time” measure between the years of 1939 and 1945, imposed as a cost-saving strategy during wartime.

Since then, campaigners have made several attempts to alter daylight saving time in order to increase the light available during the evenings even further, with the most recent motion discussed between 2010 and 2012, but no proposed changes have been successful.

2 areas of your finances that could be affected by daylight saving time

Some studies show that daylight saving time could have an impact on your money. Keep reading to find out two areas that may be affected.

1. Your energy bills

One of the key benefits emphasised by those who support daylight saving time is that individuals may spend less on artificial lighting.

With an hour more evening light between March and April, and an hour’s extra light in the morning during winter months, there may be less of a need to switch on your overhead lights and lamps thanks to daylight saving time.

This said, the cost of running a few overhead lights for an hour each day is almost negligible – so you may not see a noticeable financial benefit from daylight saving time. Still, with the cost of energy remaining high in 2024, every small saving could help you work towards cutting your energy budget and relieving financial stress.

2. The stock market

One study, published by the National Library of Medicine, found that stock market volatility is highly likely in the days after the clocks change in both spring and autumn.

The study cites that interrupted sleeping patterns, caused by the clocks going backwards or forwards in October and March, can lead to rash or unusual decision-making, perhaps contributing towards an increased likelihood of market fluctuations.

Another piece of research, published by The Conversation, found that daylight saving time can prompt quick decision-making around company mergers, and if these firms are listed on the stock market, there could be a knock-on effect on their value.

It’s important to note, though, that any short-term volatility your portfolio experiences due to daylight saving time is likely to settle quickly. As such, remember to take a long-term view of your investments, and do not panic if your investments dip briefly when the clocks change.

Work with a financial planner to help reduce the effects of external factors on your wealth

Consulting a professional financial planner could help you to prepare, adapt, and maintain your wealth over several decades, even if forces outside of your control have an impact on your money.

Inflation, interest rates, political events, and even little-known factors like daylight saving time, can all affect your money positively and negatively. From a personal point of view, having a robust financial plan could prevent your money from being adversely affected by these events over the long term.

Email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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