Savvy, has surveyed 1,014 Australians about their financial situation during the COVID-19 pandemic, including questions about whether they have cashed out their superannuation in the early access scheme, where it was spent, and how much people are saving.
- Savvy surveys 1,014 Australians on key financial questions
- 84% polled have not cashed out $10,000 super
- Of those that did, 54% spent it on personal items
- 53% said they are not saving more money during COVID-19
Only 16.1% of those polled said they withdrew from their superannuation account. The Federal Government allowed Australians to draw on their super with a $10,000 limit for FY2019-20 and FY2020-21. Of those that cashed out their super, 54% spent the money on “personal expenses”. 29.2% said they put it into their savings; 23% spent it on personal loans. 16.8% spent it on their car loan.
Savvy Managing Director and finance expert Bill Tsouvalas says that people may have $30,000 to $90,000 less when it comes to retirement if they cash out their super early. “Spending your super now or putting it into savings is like chasing good money after bad,” he says. “Keeping your super put helps you save for retirement. Spending your money on a consumable or short-term asset like a TV or furniture just isn’t worth it. You will get a much higher return on your super in the fund, as savings are even less attractive due to record low interest rates.”
The Reserve Bank of Australia cut the cash rate to 0.1%, the lowest in Australian financial history. This means banks will not pay as much on deposits as a result.
Savings not up despite recession
The survey sought to determine if Australians are saving more money amid the recession. The results are split almost down the middle: 53.3% say they aren’t, while 46.7% say they are. Of the almost half of respondents that are, 42.8% said they are saving up to $100; 31.2% said they are saving between $100-$300. 9.1% are saving over $600 to over $1,000.
“Saving is always good, especially for a rainy day. You don’t want to be going into unnecessary debt because a big bill or unexpected expense comes through,” Bill says. “there is a lot of uncertainty in the economy even at the best times, so saving and budgeting should be part of a good and lasting financial habit.”
“Within your budget, paying off debts should also be a priority. Again, since interest rates are so low, consolidating high-interest, short-term debts into lower interest loans should be something you should jump on sooner rather than later.”
Remember to consult a financial professional before making any substantial financial decision.