The coronavirus has affected the majority of people’s savings habits – but in starkly different ways according to new research from Aegon.
It found that while a third of people (31 per cent) had been able to increase regular savings during the pandemic, buta similar proportion (28 per cent) had been forced to reduce or stop regular savings altogether during this time.
Not surprisingly, employment status in particular is driving significant differences in savers’ actions.
The average increase among those who are saving more is £197. However this figures rises significantly for those who have remained in full-time employment (and have not been furloughed).
More than four out of 10 of this group (43 per cent) have been able to increase their savings with the average additional contribution being £216, as other spending demands have reduced.
This increase is significant and equivalent to around 10 per cent of average monthly earnings, according to Aegon. Young people aged between 18-34 have been disproportionately likely to increase their savings, with an average increase of £218.
In contrast, three out of 10 (28 per cent) savers have decreased or stopped saving with an average reduction of £159 per month. The greatest reductions in savings are amongst the self-employed where over half (53 per cent) have decreased saving by an average of £239 and furloughed workers where over 4 in 10 (42 per cent) have decreased savings by an average of £176.
Pensions director Steven Cameron says: “While the coronavirus is first and foremost a health crisis, it is also having a big impact on the nation’s wealth.
“Our consumer research shows six in 10 of the population have changed their savings levels since the start of the crisis with a stark divide between those who have been able to save more because their expenditure in lockdown has reduced and those who have had to cut back or stop regular savings.
“If this divide in savings patterns continues for any length of time, it will have a big impact on the future financial security of different groups.”
He says that for those fortunate enough to have continued in employment, there’s been a positive impact on saving, with less money being spent on holidays, the daily commute, leisure activities and eating out. This contrasts though with the experience of the self-employed and those who have been furloughed, who may have seen their drop and be facing uncertainty about future employment prospects.
Cameron adds: “Hopefully, the cuts in income these groups are suffering will be relatively short lived and they will be soon be able to resume saving for their futures.
“In these uncertain times, many have no option but to focus on today’s challenges. But where possible, putting more aside into savings can help people build up greater financial security for their futures. Before making any major changes to savings, it often pays to seek financial advice.”