Some 4 in 10 people saved more during the pandemic than they managed to previously, with almost 70% citing the reduction in spending opportunities as the main reason for this. Of those who said they saved less, a reduction in personal and/or household income was the main reason.
According to the latest survey from Aviva Life & Pensions Ireland (Aviva) which looked at people’s savings habits during the pandemic and how they changed, a greater number of women (43%) than men (36%) increased their savings over the last two years. The research was conducted by iReach Insights of 1,000 adults nationwide in March.
Highlights from the survey included:
- People aged between 25-34 were the most active savers, with 50% of this age cohort saying they changed their savings habits for the better over the last two years, compared with a national average of 40%
- Uncertainty over the future was the catalyst for almost 4 in 10 people to save more
- Some 1/5 said the pandemic simply gave them more time to get their financial affairs in order and this was truer for younger age groups
- For 13% of those who saved less during the pandemic – a reduction in either personal and/ or household income was the primary reason for this
- For 1/5 of people, their increased use of online shopping during the lockdowns was a primary reason for them being unable to save – men were slightly more likely than women to cite this as a reason. Also, those in the 25- 34 age bracket were vastly more likely to contribute this as a major factor in them not saving (54%)
- 18 – 24-year-olds said their spending increased as a result of anxiety during the pandemic
- Significantly more women (41%) than men (24%) experienced a reduction in their personal income which precluded them from putting funds aside
- More men (27%) than women (4%) said they lost their job during the pandemic
- More than 1/5 (27%) of 35 – 44-year-olds said they were supporting family members financially during the pandemic
The fact that people aged between 25 and 34 were most likely to up their savings may well be down to the fact that this group would ordinarily spend a large portion of their disposable income on activities like socialising and holidays – both of which were severely curtailed. It could also be the case that, due to the feasibility of remote working, a sizeable portion of this age cohort may also have moved back to the family home during the pandemic thus saving on rent and bills. This finding supports the contention that the mortgage market is seeing people use their “pandemic savings” as a down-payment on a first home, as this age group would be the ones taking their first steps on the property ladder.Eoin Kennedy, Aviva
Why save more?
“In terms of other reasons why people were able to save more, restrictions reducing the opportunities to spend was the most common driver (69%), more so for those in the 18 – 24 age bracket – 94% of whom said that this was the case for them. This was followed by 80% of respondents over 55. This stands to reason as, for the former, their social lives were halted hugely – which is probably what they spend most of their income on, and the older cohort of respondents – particularly those over 70 - were restricted more than any other group in where they could go and what they could do over the past two years”.
Eoin Kennedy observed: “While savings definitely increased overall, we cannot overlook the 1 in 4 respondents to our survey who said that they either saved less or did not save at all during the pandemic. Clearly ‘pandemic savings’ is not universally applicable. It is clear however that many households were left financially vulnerable as a result of the pandemic, as many were feeling the squeeze before Covid, and it seems that financial hardship has certainly increased for more as a consequence of it.
“As we reach the far side of the pandemic it’s very interesting to look back over the last couple of years from this new vantage point, particularly when it comes to how we have fared in terms of personal finances over this difficult period. The survey indicates that in the main, we were able to save more, primarily due to having less opportunities to spend, but also because the down time gave people more time to get their affairs in order and develop a regular savings habit, with a fifth of respondents to the survey finding this to be the case. This tallies with CSO figures which found that gross saving of households increased by 166% to €31.5bn in 20201, compared with €11.9bn in 2019. By comparison, household savings had only risen by 1.2% the previous year”, concluded Eoin Kennedy.