four Methods The Covid-19 pandemic has modified our cash habits


The rapid introduction of contactless payment channels has been one of the major lifestyle changes brought about by the pandemic.

Have you ever wondered why more and more people are buying insurance these days, or why large numbers of people are willing to buy their own home instead of living on the rent? The Covid-19 pandemic has literally changed our world more than we can imagine. It has affected the way we think, work, travel (or not), study, communicate, and spend.

Here we take a look at how the pandemic has changed some of our money habits that will affect our future lives.

1. Rapid introduction of contactless payment channels

The rapid introduction of contactless payment channels has been one of the major lifestyle changes brought about by the pandemic. It is true that digital payments became popular long before the dreaded disease broke out. However, some of its channels, such as UPI, have seen explosive growth in recent months as transactions are fast, secure, convenient and contactless. In fact, according to the National Payments Corporation of India, UPI transactions rose to 2.21 billion in November from 1.22 billion in November 2019, while total transactions processed stood at 3.90.999 billion rupees, down from 1.89.229 billion Rupees 12 months ago.

This is a welcome trend that is likely to continue into the future, and more and more people would gradually move away from cash transactions. This rapid growth has also created an information gap that has been exploited by fraudsters. Hence, people should be made aware of the use of these sophisticated channels and exercise maximum caution to minimize losses due to fraud.

However, there was a decline in credit and debit card usage during the pandemic months, largely due to economic uncertainty, which reduced consumption. However, as things are slowly returning to normal, card transactions are reaching pre-Covid levels. According to the RBI, banks reported credit card transactions (at the POS) worth Rs 50,139.67 billion in September 2020, compared to Rs 50,696.50 billion in March, while the total number of credit cards outstanding at the end of September 2020 was Rs 58.69 million .

“It is worth pointing out here that credit cards, if used intelligently and responsibly, can be the most rewarding payment channel on the market. And as the pandemic continues to enable contactless application and use of credit cards, more and more people are likely to benefit from their features in the near future. Credit cards encourage regular spending with perks like cashback and reward points that can help them save more, especially when the card perks are tailored to their unique spending patterns and monthly card spending budget. However, the full amount must be paid in a timely manner each month to avoid interest expense that could offset the benefits gained and negatively affect the user's creditworthiness, ”said Adhil Shetty, CEO of

2. Growing enthusiasm for investing in direct stocks

The pandemic dealt a severe blow to the Indian economy, which was marked by widespread loss of income and wage cuts. In such an uncertain situation, countless people were forced to think about their financial future. The resulting lockdowns also meant people had more time to re-prioritize their financial goals and fewer opportunities to spend on discretionary things. While many took this as an opportunity to replenish their emergency reserves, others bought or replenished life and health insurance policies to ensure their families' financial health in the face of an unexpected crisis.

Another interesting trend was seen in many people who used their free time to sign up for direct stock investments to grow their wealth and take advantage of the high volatility in the markets that enabled discounted investment opportunities that could generate high returns. In fact, Indian brokers saw 24 lakh new Demat accounts between April and June last year.

Smart and disciplined investing are at the heart of wealth creation, and the growing craze for stock market investing is certainly exciting as stocks have the potential to generate high returns. However, they are also inherently very risky, which requires expertise and a research-oriented approach to cash in on high dividends and minimize the likelihood of heavy losses. Hence, amateur investors need to invest the time and effort into understanding the gist of stock investing before taking the plunge. This includes being clear about the various investment costs and understanding fundamental and technical analysis in order to be able to make independent and informed investment decisions that are fully in line with their risk appetite, financial goals, liquidity and portfolio diversification requirements.

So, before starting your stock investing journey, make sure you have the expertise you need by reading books and articles or signing up for an online course. If you don't have the time and expertise to invest directly in stocks, but also don't want to miss out on the investment opportunities, it is better to invest in high-quality equity funds rather than professional fund managers making important investment decisions on behalf of investors for high returns achievable, albeit with medium to high risk. You can consult a certified investment advisor to help you make the right fund selection based on your return expectations and risk tolerance, ”advises Shetty.

3. Home ownership takes precedence over rents

COVID-19 has polarized opinions on real estate like never before. Pro-renting proponents continue to emphasize the arguments of flexibility, freedom of choice and reduced financial commitment. In this day and age, renting is only seen as a choice for those who have lost their jobs or are at risk of doing so.

In particular, the security associated with owning a physical asset during a coronavirus-like crisis and the growing reluctance to invest in high-risk investments lead to an increased demand for residential property purchases versus rents.

In another trend noted during Covid-19, many longtime renters prefer to buy a home rather than rent it. The key factor behind this change was the fact that countless landlords / owners asked their tenants to vacate the property. This prompted affected tenants who had the financial means to consider buying a home. This trend was particularly widespread in the Pune and Bangalore IT hubs and even in MMR.

In addition, many tenants are increasingly seeing the monthly rental income as a pure expense with further advantages. Paying EMIs than SIPs for building non-volatile assets like real estate makes much more sense to them. They are further encouraged by the cheaper home loan interest rates, which currently average between 6.85% and 7.5%. Once the current uncertainties like wage cuts and even the potential job loss are resolved, they would prefer to buy houses.

“The rent-everything mindset of the Ola-Uber generation of millennials is also giving way in the post-COVID-19 world. Homeownership in this day and age has gained many positive connotations for them. ANAROCK's consumer sentiment survey conducted during the lockdown confirmed that millennials are indeed the top drivers of residential property demand right now. The prevailing uncertainties, volatility in the stock markets, recent incidents in the financial sector and travel bans have changed the mindset of millennials. Of those surveyed who voted for real estate as an investment option, 55% were between 25 and 35 years old – and 68% are end users. In the previous edition of this survey, only 42% were in this age group, ”says Prashant Thakur, Director & Head – Research at ANAROCK Property Consultants.

4. More people are buying insurance

A recent change in consumer behavior was that more and more people started taking out life and health insurance after the spread of Covid-19. For example, the pandemic made everyone think about their safety net. Millennials between the ages of 22 and 35 have a better assessment of their protection needs when it comes to purchasing risk covers that will adequately protect them. According to Policybazaar, purchase of risk insurance by the millennial generation has increased 40% year over year. Data shows that the proportion of term policies purchased by millennials with an insured amount of Rs 50 lakh and beyond has more than doubled in the past 5 years, increasing from 20% to 42%. Meanwhile, Rs 50+ Lakh coverage is the new brand for Millennials as almost 30% of them are aiming for this now secured amount.

“The data clearly shows how millennials today have prioritized buying more coverage to protect their family and loved ones from insecurity. The recent trend of shifting preference towards a higher sum insured purchase policy is in stark contrast to the millennial buying trends five years ago when Rs 15 lakh and Rs 20 lakh were the most sought-after coverage brands. Similarly, policies purchased by employees hold the largest share of 75%. However, we are also seeing a sloping growth in the proportion of self-employed ie 25% in 2020, ie 20% in 2019. The changing trend clearly shows how cautious millennials are today about the risks and therefore better understand the importance of a safety net ” , Says Tarun Mathur,

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Steven Gregory