Luisa Low, 29, who works at a university, and her husband Richard Moore, 32, who works in advertising, are among the Sydneysiders who have found themselves getting ahead.
The couple from Normanhurst recently bought their first home, a semi in Marrickville, and will have savings left over after they pay the deposit and stamp duty. They plan to keep it in their offset account and use it for renovations later.
“We don’t know what’s going to happen to the economy and our jobs later down the track, but right now we’re in a better financial position than we thought we’d be just by virtue of the fact that we can’t do anything,” Ms Low said.
“We weren’t that bad before but there are things you can’t help spending money on, like a close friend’s birthday or catching the train to work.”
The couple’s experience with enforced saving is reflected in the wider economy.
Figures from the Commonwealth Bank confirm household spending is down far more than household income. Based on the bank’s credit and debit card transactions, overall spending for the week ended April 17 was 18 per cent lower than a year ago.
Meanwhile, Australian Bureau of Statistics figures show wages and salaries have fallen by far less – total wages paid by businesses decreased by 6.7 per cent between March 14 and April 4, the three weeks after Australia’s 100th confirmed COVID-19 case.
Brendan Coates, the program director for household finances at the Grattan Institute, said precautionary saving made sense for individuals but would make the recession deeper.
“People are worried about what might happen and so the natural response is to get ahead and save more to build up those buffers just in case you need them down the line,” Mr Coates said.
Mr Coates said people who had good balance sheets before the pandemic and managed to get through the crisis unscathed, could “come out the other side and make a lot of money”. This occurred after the global financial crisis and a COVID-19 recession would be “no different”.
However, Mr Coates said the timing was uncertain because the recovery would only be sustainable when opening up the economy did not spark another outbreak of the virus.
Household income actually rose in April. Commonwealth Bank head of Australian economics Gareth Aird said so far the decrease in salaries and wages was more than offset by an increase in government benefits.
Unemployment benefits, renamed from Newstart Allowance to JobSeeker Payment, have been doubled, to $565.70 for a single person with no dependents.
The JobKeeper payment of $1500 a fortnight was yet to kick into effect – the payments start this week and will be included in May figures.
Mr Aird said the savings rate will “rise massively” over the second quarter of the year, though the outlook over the next six months was uncertain.
“Just because you have more money in the bank, that doesn’t mean you’re actually better off because a lot of people choose to spend money because they get enjoyment from doing so,” he said.
“You could probably try to pick out the things that people don’t like spending money on that they’re not doing as a result of staying at home – like commuting or dry-cleaning.”
On Friday the ABS published a survey on the impacts of COVID-19 on households. More than half of respondents said household finances had remained the same due to the pandemic, while one in seven said their finances had improved.
People over the age of 65 were more likely to report improved finances than those aged 18 to 64.
People earning the same but spending less could have answered that finances had improved or stayed the same, depending on their interpretation.
Caitlin Fitzsimmons is a senior writer for The Sun-Herald, focusing on social affairs.