May 18, 2021
Following the pandemic, some of our habits and attitudes towards money have changed forever. Spending and saving trends have shifted, with 54% of people re-evaluating where they spend their money and their financial priorities according to The Lab and Nature report from Australian Unity.
Here's what's stuck and what it means for the future.
Savings are the main priority
The priorities have largely shifted towards paying bills and saving money, rather than living a luxurious lifestyle. Whether people were stable or severely struggling through COVID, everybody got a reality check that saw an emphasis put on savings, and in fact many Australians saved more than usual in 2020.
Now, many still feel this financial anxiety, with the Australian Unity report revealing that nearly 50% of Australians expect at least another three years of financial difficulty and uncertainty. So, there’s an even greater importance on growing the nest egg and emergency funds.
Our spending is cautious and deliberate
Many Australians are a lot less spontaneous or care-free with their spending, instead choosing to focus on stricter budgets and plans. Many households fixate more on when and what they spend on, and where they can cut back. So, the focus has shifted to direct spending on non-discretionary items like groceries, as well as items or experiences they truly appreciate.
But it’s also about how much is being spent. People are being savvy and frugal, focusing on products that are on sale or are a cheaper alternative. In fact, a report by McKinsey & Co showed that 50% of the population buy products when there’s a bargain, while 40% are looking for cheaper options.
We value spending local
Australians have become more conscious about where they shop and who they support. More consumers are gravitating towards local businesses to boost the economy and support fellow Australians who need the backing more than ever. With overseas manufacturing also experiencing restrictions, consumers are placing greater value on Australian manufacturing and products.
The good news is this mindset will certainly have a long term positive impact on stimulating the economy and improving the livelihood of thousand of employees.
We have more rational decision-making
Investors in particular are striving to keep their emotions in check when it comes to their finances. COVID-19 created a world of pain for those who panicked and made rash decisions, many of whom suffered great long-term losses and setbacks in their portfolios and savings.
So for the future, the financial advice will steer more towards one’s behaviour and emotions, and learning to ride through the market volatility.
But it all depends on your consumer group ...
It needs to be noted that the degree of lifestyle change is dependent on the type of consumer. According to the Australian Unity report, there are a number of consumer categories that have emerged in COVID-19, and each category has a slightly different response. These range from ‘Strugglers’, who are greatly concerned and have responded with strict budgeting, to the ‘Opportunists’, who have more breathing room to achieve their pre-pandemic financial milestones and will look to capitalise on investing opportunities.
How have you responded?
If your experience lines up with what's been uncovered in this blog, it is mostly good news. Being more strategic with money, saving and being future focused are positive changes that can help get you set up for long term success, if you've adapted your wealth strategy in line with evolving circumstances.
Seek advice from a wealth expert
What ever your situation, it’s almost certain your financial habits have been impacted in some way and the ramifications will bring change.
That’s why now is the perfect time to re-evaluate your wealth strategy. The world has changed, and if your strategy hasn't adapted you open yourself up to risk and missed opportunities.
Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment.
Written by Aaron Doig at Calder Wealth Management.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.
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