Delving into the financial landscape of Korea, Shinhan Bank's latest report from April 2024, titled 'Ordinary People's Financial Life Report,' sheds light on the intricacies of how Koreans manage their finances. Originally published in Korean, we are providing a summary in English here. Based on a comprehensive survey of 10,000 economically active individuals aged 20 to 64 from across the nation, this report offers valuable insights into the financial behaviors and lifestyles prevalent among Koreans.

Rising Income and Spending Patterns

  • In 2023, economically active households aged 20 to 64 saw their monthly average total income reach 5.44 million won ($4,185), marking a consistent rise since 2021. Over the span of two years, this represents a cumulative increase of 510,000 won ($392), reflecting a growth rate of 10.3%.
  • As income levels ascended, so did expenditure patterns. While the monthly average household total income experienced a 4.4% uptick from 2022, consumption expenditure surged by 5.7% in 2023, indicating a higher growth rate in spending relative to income. This trend perpetuated the allocation of nearly half of the income to consumption, with the proportion of consumption expenditure to income steadily climbing since 2021.

Financial Adjustments and Living Expenses

  • Meanwhile, debt repayment, which constituted 10% of income in 2022, increased by an additional 20,000 won ($15).
  • Savings and investment, which experienced a decrease of 30,000 won ($23) in 2022, rebounded with a 50,000 won ($38) increase in 2023, maintaining its proportion within the income.
  • Apart from miscellaneous expenses, all expenditure categories either remained steady or saw an increase compared to 2022 levels.
  • Essential living expenses, including food, transportation/communication, and rent/maintenance/utility bills, comprised over half of the total spending, showing notable increases, particularly in food and rent costs.
  • Food expenses, constituting the largest share of spending, consistently rose, exceeding 600,000 won ($462) in 2023, marking a 60,000 won ($46) increase from 2022.

Asset Management and Investment Trends

  • Both emergency funds and savings/investment amounts also showed an increase. Despite a decrease of 30,000 won ($23) in 2022, savings and investment witnessed a 50,000 won ($38) rise in 2023, marking its highest level in the last three years, albeit still below 20% of income.
  • Moreover, emergency funds increased by 50,000 won ($38) in 2022 and saw a further 10,000 won ($8) rise in 2023, maintaining a proportion within the 20% range of income. This suggests ongoing endeavors to secure emergency funds among Koreans.
  • Since 2021, the average household assets, previously hovering around 500 million won ($384,615), exceeded 600 million won ($461,538) for the first time in 2023.
  • The asset composition remained consistent over the past three years, with real estate comprising 79.7%, financial assets 13.6%, and other assets 6.7%. However, it's noteworthy that the asset value increase in 2023 was only half compared to 2022, signaling a slowdown in asset accumulation.
  • Furthermore, with forecasts suggesting a potential decline in property values and a continued downward trajectory, the proportion of real estate assets experienced a slight decrease.

Strategies for Coping with Economic Challenges

  • To deal with the increasing cost of living, Koreans are adopting various strategies. For instance, in response to rising lunch prices, both men and women are embracing methods such as preparing lunch boxes and exploring alternative options. While men are turning to workplace cafeterias and ready-to-eat meals, women are focusing on reducing expenses after meals, such as cutting back on coffee and desserts. By opting for budget-friendly choices during lunch breaks or skipping dessert altogether, both genders have effectively slashed their lunch expenses by an average of 4,000 won ($3).
  • Furthermore, many individuals are taking up side jobs, primarily to cover living costs and plan for retirement, with about 4 out of 10 doing so for non-economic reasons.
  • These motivations vary slightly across generations; the MZ generation, which refers to individuals born between 1980 and 2010 who have adapted to the rapidly changing economic, social, and technological landscape, is preparing for entrepreneurship or career changes, while Gen Xers and baby boomers are seeking to enhance their skills in their primary occupation.

Job Preferences Across Generations

As a result, it comes as no surprise that salary remains the primary consideration for Koreans when selecting a job, regardless of their generation. Work-life balance ranks second, with a notably high response rate of 25% among the MZ generation.

About Shinan Bank : Shinhan Bank, headquartered in Seoul, South Korea, is a leading multinational bank known for its extensive range of financial services and strong presence in both domestic and international markets, boasting over 1,400 branches and 2,000 ATMs globally. With top rankings for customer service and financial stability, it offers personal and corporate banking, investment services, asset management, and insurance, cementing its status as a key player in the industry.