There’s no question that the past year has been different. But did you know that one major thing that has been different is the amount of money we’ve been collectively saving? According to official statistics, household savings have increased by around 20%, during Covid.
For home workers, being stuck inside 24/7 has meant they can amass a substantial amount of savings. Saving money on commuting, coffees, and lunch-break shopping trips – homeworkers have been offered the once-in-a-lifetime opportunity to build up some much-needed capital. In the same breath, millions of people also became millionaires for the first time, due to the opportunity to save coupled with inflated household assets.
And it’s not just homeworkers that have been saving. Due to increased uncertainty and unemployment rocketing to 4.7%, numerous households have been pinching pennies out of necessity. Many others have had to rely on other financial support options such as bad credit loans or credit cards.
What have people saved most on?
You may be left wondering: what did most people save on?
According to statistics by the ONS, more than one-fifth of lockdown spending has not been possible during lockdowns. From travel, holidays, and meals out to things such as beauty appointments – many households have been made “accidental savers” due to government guidelines prohibiting much of this usual spending.
Homeworkers have also been able to save a significant sum of money by spending less on commuting and travel to and from the office.
Those that tend to spend a lot on non-essentials will have made the biggest savings, with households spending a large proportion of income on the essentials (such as rent and food) saving the least.
So what happens next?
With so many households saving during the pandemic, you may be left wondering what’s next. Are people going to splurge their savings? Will people continue to be tight-fisted?
Well,it looks like people have already started.
With lockdowns easing, many of us have flocked to shops, restaurants, and holiday homes to spend some hard-earned cash. However, many will still continue to save. With many people losing their jobs or being furloughed, there is still a significant proportion of households that will be more hesitant to spend frivolously.
Even for households with secure jobs, general uncertainty as we emerge out of the pandemic will result in reigning in spending.
Savers or non-savers – there’s one thing for certain: online shopping is here to stay. In a year where Amazon made $386 billion, online stores began to emerge to satisfy the growing needs of consumers. In an age where consumers want things quickly and easily without having to venture too far from home, it’s no surprise that we’ve got used to the convenience of e-commerce.
That’s why even as brick-and-mortar shops open their doors to the public once more, e-commerce will continue to boom. For those scrimping and saving, e-commerce is also predicted to be a favorite, as those with less disposable income can shop around for the best deal.
Although many families will have saved money during lockdowns, to what extent depends largely on the household’s finances. Whilst lockdown has made those with more disposable income to spend on “luxuries” richer, there are still many that have had to save out of necessity.
The bottom line is that with high rates of unemployment and many workers put on furlough, it’s no surprise that we saw an increase in households saving for a rainy day.