Will Australia’s frugal saving habits last? Andrea Sophocleous investigates.
December 1, 2009
When sales at top-end retailer David Jones are down while shoppers flock to budget-friendly Big W, you know something has changed in our attitude to money.
The global financial crisis – the only financial event to earn its own acronym, the GFC – sparked a wave of frugality among Australians that is still being felt as the economy slides into recovery mode.
Terms such as ‘stealth wealth’ (being discreet rather than flaunting your wealth), ‘recessionista’ and ‘frugalista’ (remaining fashionable on a budget), and ‘shrewd shoppers’ have entered our daily lexicon, but social observers are not so sure of the depth of this newfound thriftiness.
“Frugality has become a status symbol,” says social researcher Neer Korn, director of Heartbeat Research. “But it's hypocritical. People are frugal in some areas but they spend big in other areas.
“Boasting about large purchases doesn't feel right at this point in time, because you don't know what circumstances other people are in.”
While this newfound frugality can be self-survival mechanism at times of financial hardship, Korn argues it was rearing its head before the GFC dealt its first blow. “Frugality was exaggerated by the GFC, but it was something people felt for a long time,” he says. “Mums, in particular, are delighted now that they can have an anti-materialistic focus. In research groups, mums boast about taking the family to the park and eating fish and chips rather than expensive outings.”
Sean Adams, managing director of research firm The Seed, thinks it's unclear if Australians will hang on to their frugal ways once the economy recovers.
“Six months ago it felt as though things were changing forever, and people were fundamentally changing their values,” Adams says. “Now that the impact of the recession wasn't as deep as we thought, people are feeling they didn't need to tighten their belts as much.”
Nevertheless, Australians have been saving more as a result of the GFC, as shown by the growth is savings account customers. “Yes, there has been a stronger growth [in savings accounts] since the GFC,” says Commonwealth Bank chief marketing officer Mark Buckman. “Saving book spot balances grew $9.9 billion, or 23 percent, in 61 weeks from pre-crash compared to $1.8 billion (4.6 percent) for the same period length before the GFC.”
With over 500 savings accounts available for comparison on RateCity, there is bound to be one to suit your needs. Even better, you can earn a tidy sum in interest rates. Take advantage of the frugal mood and turn your spending habit into a saving virtue.