In just a matter of months, the coronavirus pandemic has completely changed our lives. It is unthinkable to leave the house without a mask. We no longer shake hands when we arrive to an appointment. Meetings and family gatherings are held online. We wash our hands more thoroughly than ever before. And the effects of the crisis reach all the way to our wallets:
Day to day spending has changed
There is no question about it: the coronavirus pandemic and the accompanying lockdowns have changed people's attitudes when it comes to money, and Luxembourg is no exception. Respondents to an ING Survey self-report spending less, saving more and using card over cash to make payments.
According to the ING Survey, 55% of Luxembourg residents say they spend less now than before the virus swept the world which might be partly due to lack of options (restaurants, bars, retail shops, cinemas and other spending opportunities were closed during lockdown) and to the fact that people are still going out less. On top of that, some have suffered a sharp decrease in income and / or the threat of losing their job.
More cautious and frugal than before
Households in Luxembourg felt the impact of the coronavirus crisis on their personal finances as early as May according to another of our surveys: 61% of Luxembourg residents stated living more frugally than before. The coronavirus crisis has led 56% of respondents to feel more concerned about their financial situation. A whole 32% stated having already had negative consequences of the coronavirus crisis on their personal finances when we conducted this survey.
And yet there have been no significant changes in average self-reported household saving levels. The number of people who report having no savings has remained quite stable in Luxembourg - 8% in May 2020 compared to 13% in December 2019. We have asked this question annually for the past eight years and it consistently fluctuates around 12%. Luxembourg leads the European table in savings comfort!
Non-cash pocket money for a rainy day
In Luxembourg, nearly two thirds (66%) of those who give pocket money to their kids still do it in cash in 2020. But this is a lower percentage than in 2017, when it was 86%. The rest allow children to use payment cards, transfer pocket money to app-based systems or transfer directly to a bank account.
Getting away from cash is one thing but should not be the only take away from the pandemic: with 56% of Luxembourg residents saying they will pay more attention to building an emergency fund and 17% stating they will have to tap into their emergency fund due to the coronavirus crisis, educating youngsters on saving for a rainy day will probably be top of the list of reasons for giving pocket money.
From savings to investments
Our survey on the behaviour of consumers during the crisis found that 21% of Luxembourg residents are now more interested in investment funds. An in-depth analysis shows that interest is greater among 18 to 34-year-olds. There is also another interesting phenomenon: while residents with Luxembourg nationality account for only 13% of those saying their interest in investing has grown in the current context, 30% of resident foreigners stated that they intended to explore this alternative to savings.
Has your financial behaviour changed?