Singles saving more, and banks take notice
“I like living alone because I have no obligation to anyone other than myself,” said Kim. “I also prefer something that doesn’t fluctuate too much so I am considering safer investment options.” Kim would like to use the money that she’s been socking away to purchase an apartment in the next couple of years. “As soon as I pay off my student loan, I would like to buy a house,” she said.
Although some data show single household spending is on the rise, more individuals such as Kim are also looking for chances to bulk up their net assets to prepare for the future.
Net liabilities of single households posted the least growth among households in Korea in the past five years, up by just 13.1 percent while other household debt ballooned an average of 23.8 percent, according to Statistics Korea. The net assets of single households rose 18.7 percent while households with four or more members grew an average of 5 percent.
“Liabilities of single households are shrinking,” said Seo Jung-ju, a senior researcher at KB Financial Group’s research institute. “They manage their assets alone so most of them prefer to bet on safer products. And many of them are trying to rely less on loans and shed their debt as soon as possible if they have any.”
According to the survey by KB, nearly 83 percent of single households have fixed deposits or installment savings accounts and 57 percent said they would like to open more accounts. Among respondents, 28 percent also owned savings insurance, which is similar to a traditional savings account but invests into insurance companies for more than 10 years; nearly 30 percent said they would like to purchase additional policies.
The local financial industry can no longer ignore this demographic, as single households are growing to become the force to be reckoned with. The KB research institute speculated that by 2035, the number of single households in Korea will grow to as high as 7.6 million, comprising 34.3 percent of the entire population. The data also showed that of 1,500 individuals surveyed, nearly half said they are strongly willing to continue to live alone, while 25.3 percent said they are moderately willing.
“I have one health insurance and one life insurance policy, as well as two private pension funds and one monthly installment savings account,” said Choi. “I also put the bonus I receive from the company into fixed deposit accounts.
“Thinking about financial matters and other things like buying a house, it makes more sense to live alone,” she said.
In response, local financial institutions are coming up with offers targeting singles. KB Financial Group, for instance, will launch next week financial products aiming at singles.
“Based on the data here, our subsidiaries will launch products such as loans specifically for purchasing or renting out an officetel [a studio apartment in Korea fit to accommodate singles],” said Seo.
Other than KB, Shinhan Bank has already introduced a product for single households. The Shinhan Health Plus installment savings account, which was released in June, offers better interest rates if a customer fulfills certain health-related requirements, such as maintaining regular eating habits for at least 10 days. “Our target is individuals that live alone, who tend to care less about their health, and to give them incentive to develop healthy habits,” said a spokesperson from Shinhan Bank.
Woori Bank has a similar financial product. Wibee Bang Call Loan offers customers seeking to purchase or rent studio apartments a loan of up to 10 million won at an annual interest rate as low as 5.58 percent.
“It’s sort of obvious now that the rise of single households is the trend,” said Seo of KB. “Other industries have already taken this into consideration and started selling products targeting single households but the financial sector has only just begun contemplating how they can meet the new demand.”
More than 90 percent of single Koreans are interested in discounts that come with debit or credit cards. Nearly 40 percent of those surveyed said they are taking advantage of such discount options daily, while 40 percent of male respondents said they utilize such options fully. Of their female counterparts, 35 percent of women said they utilize card benefits.
BY CHOI HYUNG-JO [firstname.lastname@example.org]