05-Nov-2020 • Personal Finance

Around 77% of Australians have adopted a ‘more cautions spending mindset due to the economic impact of COVID-19’, according to ME’s latest COVID-19 Financial Sentiment and Spending Survey.

Of the 1,000 Australians surveyed, 68% said they ‘don’t feel they’re in financial trouble at the moment, but have chosen to cut back on spending just in case’ – an increase of 5 percentage points since April 2020, when ME first conducted the study.

Among Australians whose income was unaffected by the pandemic, over half (54%) said they’re now ‘saving more’ − aligning with the ABS’ highest household saving ratio since June 1975. 

ME’s General Manager Personal Banking, Claudio Mazzarella, said it’s likely many Australians are building their ‘rainy day’ cash buffers, which is a step in the right direction given ME’s latest Household Financial Comfort Report in July showed 21% had less than $1,000 in cash savings.

“Christmas 2020 will be a tough one for retailers based on these numbers,” Mr Mazzarella said.

“While saving is important, it’s also vital consumers shop around for the most competitive savings accounts and consider the best ways to spend to help get the economy firing again.

“Many retailers are offering very good deals. If your income is unaffected by the pandemic, now might be the ideal time to invest in discounted high-quality items you’ll need in future, like a new mattress, washing machine or a winter coat that will last for years.”

Spending paradox: Australians support local business, but won’t spend

According to ME’s survey, an overwhelming 91% of Australians said ‘it’s important to support businesses that have had their revenue and jobs negatively affected by the pandemic’.

Council of Small Business Organisations of Australia CEO, Peter Strong said while it’s wise to build up a good savings buffer during difficult economic times, it’s also important for Aussies to loosen the purse strings to a certain extent to get the economy moving again.

Buying from local small businesses is a great way to do this. Small businesses are doing it tough, but if everyone chooses to GO LOCAL FIRST and shop at small local businesses then we’ll be supporting our local community and contributing to Australia’s economic recovery.”

Easing of COVID-19 restrictions is exciting, but not enough to spend big

When Australians were asked if they ‘anticipate spending money to celebrate a return to normal life once all COVID-19 pandemic restrictions are lifted’, the majority of Australians (60%) said ‘no’ − once again reflective of a conservative spending mindset. The top reasons were:

  • 59% said they don’t feel the need to celebrate restrictions lifting or spend money to do so;
  • 48% said they would prefer to save their money, to improve their financial security.
Of those that do intend to spend once all restrictions have lifted, the most popular activities Australians are looking forward to are:
  • 68% said going on a holiday;
  • 54% said going out to eat at restaurants/cafes;
  • 36% said going for drinks at pubs/bars;
  • 36% said arranging a meal with the whole family;
  • 35% said shopping for items other than groceries (e.g. clothes, shoes).

Only Victorians are ready to spend for recovery

While the majority of Australians won’t be spending big to celebrate the end of all restrictions, Victorians appear to be the outlier, with 62% of Metropolitan Victorians planning to spend to celebrate once restrictions ease. This is compared to 47% of Sydneysiders or 39% of metropolitan Queenslanders.


Editor notes: ME’s 2nd COVID-19 Financial Sentiment and Spending Survey was completed by 1,000 Australian adults, nationally representative by age, sex and location in September 2020 via insights provider, Pure Profile.

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