Saving for a holiday is no longer Aussies' main savings goal

Two years ago, Australians’ No. 1 savings target might have been a new car or an overseas holiday. Not anymore.

A survey conducted by UBank has revealed that the pandemic has changed the things we’re saving for and how we save.

Lockdowns have ravaged the nation, with millions plunged into insecure financial situations. It’s no surprise then that Australians are now taking a more cautious approach to spending and banking more of their hard-earned cash.

The Know Your Numbers survey interviewed 1050 Australians aged 18 and over about their saving and spending habits over the past year. The results showed that rather than flashy items or holidays, we’re now more concerned with weathering future financial storms.

Read: Teaching an old dog new (savings) tricks

The survey revealed that building an emergency fund, the type that could have helped many Australians over the past 18 months, was top of your savings goals, with saving for a house or apartment second.

The results were a marked departure from previous years, and reflect a change in thinking fuelled by uncertain times. It seems that this year, financial security is front and centre.

And it’s not just what we’re saving for but how we’re saving for it. Put simply, we’re saving a lot more of our hard-earned dollars than we usually do. Figures from the Australian Bureau of Statistics (ABS) show the ratio of earnings put into savings was 11.6 per cent in the March quarter. Pre-pandemic, the savings rate hovered around 5.3 per cent, meaning we’re saving at more than twice the rate of a year ago.

The federal government has welcomed the savings news, saying it reflected a strong economy.

“The recovery has been driven by a strong recovery in household spending, supported by income support and tax relief,” federal Treasurer Josh Frydenberg told the AFR.

Read: Senator urges retirees to use their savings ‘more efficiently’

“Strong household balance sheets, driven by income growth, tax relief and elevated savings ratio will provide ongoing support for the economic recovery as confidence continues to build.”

But people are concerned about the future and discretionary spending in general has fallen.

ABS figures show retail trade fell by 1.8 per cent nationally in June, with sales in New South Wales (2 per cent) and Victoria (3.5 per cent) falling even further. Economists warn Australia may even be headed for its second recession in a year if lockdowns can’t be avoided at the end of the year.

“By definition, if you’re telling households and businesses to stay at home and stop doing things, then you’ll get less production,” Commonwealth Bank head of Australian economics Gareth Aird told the ABC.

Read: We’ve stockpiled more $200 billion of extra savings

“We’re going to have a significant hit to GDP in the September quarter but in order to meet the criteria for a technical recession you’d have to have another contraction in the December quarter, and I think at the moment that’s not the right call to make.

“I can’t imagine that we’re in a lockdown [in the three months to December] this year like we are at the moment.”

Are you saving more of your money than usual? What are you saving for? Let us know in the comments section below.

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Written by Brad Lockyer