[Ordinary Person Report] Earned 4.86 Million KRW Monthly, Spent Half... Slight Increase in Consumption Amid Tight Household Budget

Shinhan Bank '2020 Ordinary People's Financial Life Report'
Average Monthly Income Increased by 100,000 KRW in One Year, but Spending Rose Only by 30,000 KRW to 2.41 Million KRW
Savings and Investments 1.17 Million KRW, Debt Repayment 410,000 KRW
Real Estate Asset Polarization Deepens... Top 20% Own 12.3 Times More Than Bottom 20%, Up from 11.6 Times

[Asia Economy Reporter Kwon Haeyoung] The average "ordinary household" in South Korea earned 4.86 million KRW per month last year and spent 2.41 million KRW, which is about half of their income. Monthly income increased by an average of 100,000 KRW compared to the previous year, but consumption only rose by 30,000 KRW. Amid uncertain economic conditions, as income growth slowed, households tightened their belts and saved the remaining income as surplus funds. While the number of "two-jobbers" who juggle main and side jobs increased due to tough living conditions, the gap in real estate assets between high-income and low-income households widened due to rising housing prices, intensifying polarization.

Shinhan Bank analyzed this in its "2020 Ordinary People Financial Life Report" released on the 27th. The report is based on an email survey conducted from September to October last year targeting 10,000 economically active individuals aged 20 to 64 nationwide (95% confidence level, margin of error ±0.98%p).

According to the report, the average monthly household income last year was 4.86 million KRW, an increase of 100,000 KRW from 4.76 million KRW the previous year. Income rose across all brackets but did not reach the 140,000 KRW increase seen the previous year. As income growth slowed, consumption rose by only 30,000 KRW to 2.41 million KRW from 2.38 million KRW the year before. Food expenses were the highest at 500,000 KRW, followed by transportation and communication costs at 360,000 KRW, education expenses at 280,000 KRW, and monthly rent and maintenance fees at 260,000 KRW.

Shinhan Bank explained, "Basic living expenses such as food, transportation and communication, and monthly rent and maintenance fees increased by only 10,000 to 20,000 KRW compared to the previous year. With household income stagnating amid uncertain economic conditions, spending did not increase, and spending patterns from 2018 were maintained last year."

Monthly savings and investments were 1.17 million KRW, and debt repayments were 410,000 KRW, maintaining similar levels to the previous year. Households reduced savings in existing investment products and adjusted their portfolios toward stable savings, subscription savings, and insurance. The remaining 870,000 KRW was left as household surplus funds, increasing its share from 17.2% to 17.9%.

The number of households with debt decreased. The debt holding rate dropped to 52.8% from 57.2% the previous year. However, the average debt balance of households with debt increased by 10.64 million KRW to 83.13 million KRW from 72.49 million KRW. Due to rising real estate prices, total household assets rose by 19.58 million KRW from 403.9 million KRW the previous year to 419.97 million KRW. Real estate assets, which account for 76% of total assets, increased by 15.25 million KRW, while financial assets and other assets including automobiles increased by 2.19 million KRW and 2.14 million KRW respectively.

Polarization of real estate assets by class deepened. Real estate, which constitutes the largest portion of total assets, is larger for higher-income groups and showed greater asset growth compared to 2018. Real estate asset size per household income was 694.33 million KRW for the top 20% income group, up 31.26 million KRW from 663.07 million KRW the previous year, while the bottom 20% had 56.44 million KRW, down 550,000 KRW from 56.99 million KRW. The gap in their real estate assets widened from 11.6 times in 2018 to 12.3 times in 2019, showing a rich-get-richer, poor-get-poorer phenomenon. The total asset size including real estate was 882.94 million KRW for the top 20%, which was 9.2 times that of the bottom 20% (95.92 million KRW).

Income disparity by class remained similar to the previous year. The top 20% income bracket earned 9.02 million KRW per month, while the bottom 20% earned 1.89 million KRW, maintaining a gap of 4.8 times compared to the previous year.

This content was produced with the assistance of AI translation services.