WHY WE STASHED CASH
SOPHIE ELSWORTH
MORE than half of us were able to squirrel away cash during the pandemic and 60 per cent now want to spend it, research reveals.
Australians are confident about their financial outlook in 2021 after managing to save successfully.
The research commissioned by personal finance app Pocketbook, which has more than 800,000 account holders, found 54 per cent of people say the pandemic did not stop them from achieving their savings goals in 2020.
While savings have soared in the past year, the data also show about 60 per cent of people have the confidence to spend money at the same rate they did before the pandemic struck.
Pocketbook’s director Serdar Nurmammedov says “the pandemic affected the way we spend money”.
Latest Australian Bureau of Statistics data show for the December quarter a drop in the household savings rate to 12 per cent of net disposable income – down from 18.7 per cent in the September quarter.
So for every $100 earned, Australians were saving on average $12.
The great Australian dream remains the main priority for about 30 per cent of younger savers.
This compares to about 22 per cent of Australians who are saving for a rainy-day fund, followed by 16 per cent who say they are saving for a holiday, the Pocketbook data shows.
Nurmammedov says the pandemic, “certainly had an impact on the way we spend money”.
“We observed a bigger online ecommerce spend and then going back to old spending habits isn’t instant – it’s not a pause, play thing.”
Town planner Richard Seaward, 33, says the restrictions during the pandemic prevented him from spending easily.
“The money that I probably would have been spending by dining out and going to the pub I put aside – I haven’t invested it yet,” he says.
“During lockdown I was saving about $500 a week, whereas now I’m saving about $250 a week.”
He was also making his lunch while working from home, didn’t have public transport costs and was able to withdraw from his $10,000 superannuation to keep a cash buffer.
During the pandemic he also used his savings to buy a second-hand car for $12,000 so he didn’t have to rely on using public transport.
He has about $120,000 in cash savings now.
“Ultimately I would like to buy a property. The market is quite buoyant right now but I will just wait and see,” Seaward says.
While it can often be easier said than done, it’s ultimately about spending less than you earn.
Financial adviser Scott Haywood says a good place to start is setting up automatic direct debits that allow a portion of your salary to go straight to a savings account.
“As an employee you can say to your employer put 25 per cent of my pay into a separate account and that doesn’t get touched,” he says.
“That means you don’t see the money and you don’t have to do anything yourself to stash it away.”
Haywood says forced savings prevents you from easily spending it.
“A lot of people see money and they spend or they have money in their account and they take it out.”
He urges people to try and save at least 15 per cent of their take-home pay.