Living through a pandemic has been challenging for most of us, but there has been one small silver lining. Cancelled overseas trips, weekends away and birthday outings, coupled with more time spent at home, has resulted in some healthier savings accounts.
First things first, not everyone has been able to add to their savings.
COVID-19 has created plenty of challenges for people. The unemployment rate rose to 6.9% in September last year and government stimulus packages – while helpful in some cases – aren’t enough for everybody and are slowly tapering off.
That said, there’s data to suggest Australia has seen a savings surge. So, it begs the question…
Why is Australia saving?
After the last 12 months of lockdowns and restrictions, people have had to adapt. The spending patterns and saving habits of many Australians have understandably changed.
And for many, that change has seen monthly savings increase. Statistics point to June last year witnessing a 31% rise in savings compared to a savings low point in January.
So how have Australians saved more since the pandemic began?
Well, recent research says just 54% of people in May 2020 felt secure in their jobs. And while those figures rose in the following months, it may begin to explain the recent swell in savings.
If nothing else, Covid-19 has taught us to expect the unexpected. By looking ahead and making some smart adjustments, Australian savers are increasingly switched on.
For now, it seems a portion of alert Australians are erring on the side of caution and putting a little extra cash away for a rainy day. Some saw their bank accounts grow during lockdown, inspiring them to embark on all new savings habits that are here to stay.
Food for thought
A further explanation is that usual spending opportunities were limited.
For starters, once restrictions were introduced, restaurants and cafes were forced to close their doors. Only takeaway could give customers a taste of the good old days. Fewer food forays have left patrons with fuller pockets. Albeit at the cost of a hurting hospitality industry. However, it also meant many Australians brushed up on their cooking skills and now have a new found love for the kitchen.
Travel and transport
Many Australians with travel plans have been forced to cancel or refund their trips. However, a lack of holidaying has given some Australians an unexpected budget boost. And swapping European jaunts for local road trips haven’t been the only unpredictable changes for households.
At one point, nearly five million Australians were working from home. A statistic which goes hand in hand with another – $12.7 million a day is being saved with fewer commutes.
That’s right, in pre-COVID times, Australians were spending close to $35 million every day travelling to and from work. And with an increase of employees working from home, commute costs crumbled.
Workplace expenses and tax time tactics
Not only are commutes cutting down costs, not being in the workplace has also altered traditional spending habits. Coffees, work lunches and even post-work drinks have all been put on ice for employees now working from home.
Adding to the savings upswing, it’s estimated that nearly 40% of Australians will be putting their tax return directly into their savings. A collective figure that is expected to total more than $17 billion. That’s a handy boost at a time like this!
What will savings translate to?
The savings spurt could mean a couple of things in the longer term.
If people choose to maintain these recent saving habits, it could reduce debt. And with some of the highest household debt figures anywhere in the world, that could be good news for plenty of Australians. As travel and offices slowly re-open however, only time will tell how Australians saving habits will respond.