How Covid19 Changed our Saving and Spending Habits
24 AUGUST 2023
Covid19 took a toll on consumers around the world in different but intrinsically similar ways. But how different is a pre-pandemic consumer to a post-pandemic?Whether it was our health or our pockets Covid19 impacted our lives in one way or another. 2020 was the height of the pandemic which was a very difficult time in our homes, communities and the world. Those who were employed were on temporary leave, started working from home or were retrenched. South Africa’s economy took a fall and inequality was even more pronounced. Consumers began thinking differently about money and how they wanted to spend it and, even today in 2022, post peak pandemic consumer spending habits have somewhat taken a new face.
The Covid19 Economic Hit
Before March 2020, South Africa’s economy was already ailing with GDP growth estimated at 0,9 for 2020. Poverty was also still quite rife in earlier years with the gap between rich and poor widening yearly. Covid19 revealed just how dire South Africa’s economic state was and highlighted a need for policy that would help remedy a pandemic-impacted South Africa. During the pandemic demand and supply between consumer and business was disrupted on a massive scale.
Advisory partner at PWC warned “The full extent of this shock is still unfolding, but the implications on the finance stream include shifting in the property market, reduced commercial activity and trade, tourism sector slow down, increased unemployment, increased poverty and dependence on state grants, humanitarian relief and exacerbated inequality” speaking at a webinar themed ‘The impact of Covid-19 on South Africa’s Metros’. It was evident just how deep the consequences of Covid19 were on the state, particularly in July 2021 during the looting and unrest.
Spending Makes a Comeback
As the vaccine campaign and rollout increased in South Africa and around the world, the economy has started to recover from the impact of the pandemic. South Africa's success in foreign trade keeps getting better and better, breaking records most notably for the total value of exports during the first five months of the year, which was R791 billion. In addition, domestic new car sales rose by almost 7% in June, while export sales rose by 18%.
Consumers are more confident in spending because they are able to go into their favourite stores. Social gatherings after the vaccine rollout have been slowly getting back to normal with concerts making a comeback. During the initial months of the pandemic consumers were a bit more cautious of how they were spending their money because of a number of reasons such as a reduced salary or income, being home and retrenchment. Now, as the economy is getting back on its feet consumers are more confident spenders even though they may be frugal in a lot of ways, they do tend to spend money on the products and services they need.
Evolving Savings and Spending Habits
Developing a saving habit has become a crucial financial hygiene step consumers have begun to take on post-Covid19. Where many people were spending without a budget, a set savings account or an emergency fund, consumers see the value in rethinking their spending habits so their money works for them meaningfully.
People are now considering long-term investment opportunities, purchasing property, setting up insurance policies and investing in other assets. Saving and investing money will help you become more financially confident and will help you secure a more comfortable future for you and your family. You may give thought to some habits made popular at the height of the pandemic, such as cooking more as opposed to eating out and exercising at home versus taking a gym membership. If you are working on-site you may even consider using public transport or starting a carpool club with your co-workers.
Here are some tips below to change your spending habits
Have a plan B: Having a side-hustle to help boost your monthly income is vital in safeguarding any eventualities in the future.
Spend Money Consciously: spending money in an efficient and conscious way helps you enjoy your money. It is good to educate yourself about financial literacy and the ways in which you can develop good saving and spending habits.
Importance of Life Insurance Policies: As someone who provides for their family you want to make sure that even after your death they are still able to make ends meet. Setting up insurance policies is a great way to help with this. Covid19 revealed just how necessary it is to have money for expenses such as funerals and, as you begin looking for ways to ensure that your family does not struggle financially, investigate insurance policies that make sense for you and your kin.
RCS offers an income protection plan to help your family make ends meet in the case of debt or hospitalisation.