It’s no secret that the pandemic has forced a nation of savers, but new research shows it has also triggered a profound shift in attitude towards spending.
As part of a survey of more than 8,000 customers, Paragon found that 40% of savers now want to prioritise spending money on experiences they can share with loved ones over material possessions, whilst more than a quarter (27%) felt they were less materialistic as a direct result of the pandemic.
Bank of England data showed that net new household deposits soared during the lockdown period, averaging around £17.2 billion per month between March and June.
Following this period of reduced spending, Paragon found that one in seven savers (15%) now felt they could live a fulfilling life on a reduced budget and would rather prioritise savings for the long-term.
Derek Sprawling, Savings Director at Paragon Bank, said: “The ‘experience economy’ trend was on the rise long before Covid-19, but it looks like the pandemic has certainly accelerated this. It’s no surprise that the restrictions around socialising have made people value time with loved ones more, with 60% of our savers seeing their priorities change.
“This preference for spending money on experiences with our nearest and dearest over material goods is usually predominantly linked to the younger generation. Our data shows that this trend is indeed strongest amongst 18-24 years-olds, with half of young savers agreeing with the claim against an average of 40%, however it is also consistent across all age groups.”
A shift in spending priorities
This change in attitude was reflected in spending habits across specific product categories during lockdown.
Paragon’s savers claimed to spend less on online clothes shopping now than before the pandemic, with 35% cutting down spending. The areas that people spent more money on during lockdown included groceries (42%), home improvements (33%), gardening (22%) and media entertainment (21%).
Younger savers were also the most likely to use the lockdown period to implement long-term saving habits, with 46% of 18-24 year-olds and 40% of 25-34 year-olds wanting to manage their finances better as a result of the pandemic.
Millennials were the most likely to agree that the pandemic has made them feel less materialistic, with one in three 25-35 year-olds (33%) agreeing with the claim.
Derek Sprawling added: “It’s clear from our data that many savers, particularly amongst younger age groups, have used the pandemic as an opportunity to form new saving habits that they’re hoping to carry forward long-term. It will be interesting to see if intentions translate into outcomes in 2021.”