New money mindset in a virus-hit world

‘With no current income I have adjusted to only buying the basics, such as food and fuel’

AUSTRALIANS’ attitudes to money are undergoing a permanent overhaul as we navigate the challenges of COVID-19.

Finance chiefs expect there to be lasting changes in money mindsets around areas such as debt, budgeting, spending and having emergency funds.

Beyond Bank Australia CEO Robert Keogh said people had carried high levels of household debt into the crisis, and many would now be resetting their attitudes and “trying to bring debt levels down to a number in which we can manage it in a future situation of great stress”. Household budgets and spending habits would also undergo lasting change, Mr Keogh said.

“A more frugal and cautious household budget is ahead,” he said.

“Discretionary spending is about to come under some real scrutiny – especially the buying of lifestyle and consumerable items.”

Business graduate Lucy Hack, 22, said she had been put on leave without pay from her casual role as a logistics assistant and was concerned about her career.

“With no current income I have adjusted to only buying the basics, such as food and fuel,” she said. Ms Hack, who has moved home with her parents, said if she had a stable income when COVID-19 was over she would still enjoy spending money on “things I had previously taken for granted”, such as dining, entertainment and experiences.

“You never know when this freedom may be taken away again, but I think I will be very conscious of what I spend for a long time now,” she said.

“Buying whatever I like is really going to change.”

Gateway Bank chief executive officer Lexi Airey said people’s spending would be more cautious and emergency funds would grow in importance.

“Many people haven’t lived through a recession, and grew up in an environment where having debt is normal, so the benefits of a financial safety net have come into sharp relief,” she said.

“Behavioural experts say it takes around two months to form a new habit, and with many Australians recently changing the way they spend and save – either by necessity or choice – there are likely to be some lasting effects.”

Ms Airey said she expected there to be heightened resourcefulness and greater planning – right down to weekly shopping lists.

“Some people will yearn to return to restaurants or travel, while others will realise that we don’t need so much stuff, and that will be better for our pocket and planet,” she said.