Move over Spotify: Our favourite savings categories in 2020

author-avatar By on December 17, 2020
Move over Spotify: Our favourite savings categories in 2020

Australian savers grew their savings balances massively in 2020, with Gen Z in particular - ages 16-24 - saving in their droves.

Up customers have today received their year in review stats - like Spotify's year in review, but for money - and the data shows a massive increase in savings. 

According to Up's data, Upsiders (Up's name for its 300,000 customers) increased their Savers account balances by 44% by June 2020 compared to pre-March, and by November their savings balances were up by more than 70%. 

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

This supports ABS data which shows Australia's household savings rate skyrocketed over Covid from 6% to 19.8%, off the back of extra stimulus payments like JobKeeper and JobSeeker as well as general frugality. 

The majority of these recipients also spent their payments on the essentials, with saving being one of the major priorities, particularly among JobSeekers. 

Young people were the main recipients of JobSeeker over Covid, and Up's main customer base is the Gen Z cohort, aged 16-24. 

Up’s Head of Product Anson Parker said the data shows that younger Australians are trying to stay financially savvy, even during a pandemic and recession. 

“Up provides customers with small ways to save money like round-ups and pull to save and we can see this demographic use these tools daily," Mr Parker said. 

"We've helped over 50,000 Upsiders hit their savings goals in the last 2 years. They’ve even saved over $24m from their spare change through features like Round Ups and Pull-to-Save.” 

According to Up, the main savings goal for customers this year was a car, followed by:

Woolworths, Coles and McDonalds were the most popular merchants used by Up customers, while the biggest spending categories were:

  • Food
  • Life admin
  • And clothing 

With interest rates on savings so low at the moment, Up had previously told Savings.com.au that a unique user experience, such as good data visualisation and features to guide people in reaching their spending/savings goals, were more important than interest rates. 

Up co-founder Dom Pym reiterated this point again today. 

“We will continue to help customers save by giving them the tools they need to spend wisely and save effortlessly," Mr Pym told Savings.com.au. 

"The tools we have now have helped our customers reach amazing savings goals this year, and we’re looking forward to even more in 2021."

Gen Z Up customer Tash Etschmann meanwhile said knowledge is power when it comes to saving. 

“How are you supposed to know how to save money if you don't know where or what you're spending it on? It's powerful to see how small changes, such as round ups, compound to result in big savings over the year," she said. 

"It's so exciting to see a bank promote goal setting and saving rather than consumer debt."

[See also: Savings double over COVID, triple in the past three years]

Up not concerned about other neobanks failing

Yesterday saw some bombshell news: Neobank Xinja announced it would be handing back its banking license and would no longer offer savings and transaction accounts, the first time this has happened to an Australian bank for some time. 

Fellow neobank Volt could also be in trouble. After launching late in 2019 promising a 2.15% p.a savings account, it's still in beta, and is yet to launch to the wider public.

However, Mr Pym said Up is not worried, and that customers could still be confident in it. 

"Up is in a fortunate position as a collaboration between an Australian technology company, Ferocia, and a fully licensed bank, Bendigo Bank," he said. 

"We’re definitely building Up for the long term and adding customers every day.”

Australians saving money on household services, but overspending on food

With Up's data showing food as the biggest expense category, and McDonald's as the third biggest merchant, other data shows Australians overspent on food in 2020. 

A survey of over 3,000 Australians by financial advice platform She’s on the Money found 60% of Australians are spending up to $150 per person each week on groceries and takeaway food. 

This is supported by a recent paper by the Actuaries Institute that found consumer spend on the meal delivery sector (such as Uber Eats) surged by more than 100% during the pandemic. 

[See also: How to save money on groceries and The top apps for saving money on groceries]. 

However, the survey found Australians are also readily shopping around for better deals on their household services to compensate: More than half have switched banks in the past two years to save money on their mortgage repayments, for example. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

She’s on the Money founder Victoria Devine said families can save up to $3,000 a year simply by shopping around for a better deal, instead of just paying the bill when they have to.

“Cutting down on food costs is [important] but one of the quickest ways to save money [is] by shopping around for better deals on all household services like electricity, mobile phones, insurance and more,” Ms Devine said. 

“There is an increasing number of people who want to feel empowered over their finances and are taking steps to educate themselves about money, many who are highly educated with tertiary qualifications in other fields.”

According to Ms Devine, more Australians are turning to apps like GetReminded, which reminds Australians ahead of time when their bills and contracts are due. 

GetReminded Co-Founder Tim Nicholas said the app has seen a 70% increase in downloads in just the past month alone. 

“Insurance, mobile phones and electricity are the main areas people are setting reminders so they have the time to find a better deal and save money," Mr Nicholas said. 

See here for GetReminded's top tips for saving money on household bills like mobile plans, insurance, and energy bills. 


Image source: Up

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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