2020 was a curve-ball year like no other! Not only did COVID-19 change the way we socialize, work and learn, interestingly, it also changed the way we spend and save. A surprising outcome of the pandemic year is the growing number of Australians who are saving more and spending less. Did you notice a change in your spending and saving habits too?
Less focus on material things
Temporary business closures and lockdowns throughout 2020 combined with extra Government support likely contributed towards Australians spending less and saving more. But that’s not all driving the rise in savings.
While mortgage deferrals and rent relief may be contributing towards the jump in savings, new insights from Deloitte’s “State of the Consumer Tracker”, which measures consumer trends, spending intent and consumption patterns, shows that since March 2020, Australians are spending less on things like eating out, clothes and shoes, and electronics.
An increase in savings
According to Canstar, around three quarters of Australians manage to put away a portion of their income each month, with the number of people not saving trending downwards over the last four years.
About 26 per cent of those saving each month are able to set aside up to 10 per cent of their earnings says Canstar, while the average Australian household put away about $854 per month in the six months up to June 2020, according to a report from ME Bank.
What’s more, the household savings ratio, which considers the portion of disposable income being put into savings, currently sits at 18.9 per cent, a relatively high level.
A slow-down in spending
Deputy Governor of the Reserve Bank of Australia, Guy Debelle acknowledged that rising incomes during a recession is quite remarkable and highly unusual, but says that without the government stimulus, households would have been left worse off.
“The fact that household income rose in the quarter does not mean that the stimulus was overdone. Absent the stimulus, the decline in GDP and employment would have been significantly larger and there would have been much greater financial hardship,” said Debelle.
“That households saved a large amount of this income support means that their balance sheets are in a considerably better place than would normally be the case in a recession. They are better placed to support the recovery as it unfolds.”
Refinance and save more
Another way to save money is to regularly review your mortgage to ensure you’re getting the best interest rate available. Right now, interest rates are at an all-time low so it makes sense to refinance if you’re not already getting the best rate. Get in touch with the team at Mortgage Express to talk about refinancing your mortgage so you can start saving.
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