Almost 46% of the overall population we surveyed in our global COVID-19 research has seen a cut in their income. By losing the sense of financial stability together with the uncertainty about the future, many people re-evaluate their attitude toward savings and investments. This shift in the consumers’ mindset is starting to change their purchasing habits and putting different priorities in place.
Even though we witness a tremendous impact of the crisis across many sectors, the newly adopted approach to savings and investment could turn out beneficial for the finance industry.
Considering there will be a significant shift in terms of what people will use their money for, we hope these insights will enable businesses to understand and predict the consumers’ behaviour and actions.
But what are people planning to do with these additional savings?
Only a quarter of savers are planning on spending that saved money in the next six months. France, Germany and China are most likely to keep spending, with about 40% claiming to spend the extra savings.
The majority of the consumers will use this money for long term saving and investment to secure the future. Especially consumers in China and South Africa (at least those who could save up), will put money aside long term. Short term savings are a second option though less attractive, pointing out that consumers believe this crisis will last for an extended period.
Each country drives specific differences in terms of saving behaviour. Still, the biggest driver of how much money people save and what they are planning to do with their savings is linked to the financial security and level of financial optimism of the consumer.
Those at the more comfortable end of the scale have been least impacted by the crisis, “the Comfortable optimists“, are unsurprisingly saving the most. They are the least affected by the crisis and are the least likely to change their spending habits. Nevertheless, they will also review their savings and investments, most likely to further optimise their wealth.
At the other end of the scale, for the “Financial survivors“, we can expect a significant reduction in spending and focus on saving money every way they can. For them reviewing their savings means using savings to pay their daily and monthly bills.
What we see is an unbalanced financial impact of COVID-19 across the society – an effect that could potentially create a substantial divide between the haves, and the have nots.
In the next article, we’ll continue to dive more into the concept of spending/saving as we’ll analyse how saving more in times of crisis is strongly linked to spending more wisely.