Lee Eun-hee, a 35-year-old lawyer, lives in a studio on busy Tehran Street in the posh Gangnam district, a 15-minute walk from her office. She takes ukulele lessons and exercises at a nearby fitness center two or three times a week. In August, she treated her retired parents to a two-month-long trip to Europe.
Lee belongs to the “gold miss” group, a growing number of single women in their 30s or older who have enough money from high-paying jobs to live comfortably.
Such women have caught the attention of financial companies because they tend to spend more money on themselves than they would if they were married. Trend watchers say they have formed a “solo economy” driven by these people, who are demanding different services than those offered by conventional financial products.
According to the 2010 census carried out by the state agency Statistics Korea, 23.9 percent of the country’s households were single-person households, representing more of the population than four-person households, which accounted for 22.5 percent. The number of single-person households is expected to increase to 27.1 percent by 2015 and to 34.3 percent by 2035. By then, the traditional “family” of two parents and two children is only likely to account for 19.4 percent, according to government reports.
The eye-catcher is that these solo dwellers earn and spend more than families with children.
As of end-2013, the annual income of single-person households was 17.25 million won ($15,600) on average. The comparative figure for a four-person household was 65.94 million won, which equates to 16.48 million won per person.
The number of single-person households with an annual income of 40 million won or more reached 130,000 in 2011, accounting for 8.2 percent of the economically active singles population, according to a report released by KB Research, a think tank run by KB Financial Group Inc. Their average annual income came to 60 million won with assets worth 360 million won.
Slightly more than 80 percent of the members of this group are between their 30s and 50s.
The gold miss group has a spending pattern of its own.
“I only think about my taste when I buy something. I think of spending as investing in me,” said Lee, who is in no hurry to get married. “I know I can’t spend like this if I get married.”
Card firms were the first to catch on to this new economic group.
The Red Card from Hyundai Card Co., the country’s fifth-largest card issuer by market share, is one of the most popular cards in the group. It offers 15 percent discounts at shopping malls and duty free shops, 250,000 won worth of travel and shopping vouchers and a free pass for 700 airport VIP lounges worldwide.
Despite a rather steep annual membership fee of 200,000 won, it had 110,000 holders as of July, up 28 percent from 86,000 a year ago.
The average amount of monthly purchases per cardholder was 3 million won as of June. The average for the rest of the company’s credit cards was 423,000 won.
Market leader Shinhan Card Co. recently upgraded the lineup of its premium The Best card brand. It offers a free one-night stay at a luxury hotel, airline mileage points and shopping discounts. Its card issuance rate rose 66 percent on-year to 105,000 as of June.
“Card firms are increasingly focusing their benefits on sectors that solo users spend money on. In the past, the popular benefits were discounts at family restaurants and amusement parks,” said Jung Hoon, a researcher at KB Research. “Now, (credit card firms) have come to a point where they cannot offer exceptional privileges to high-income singles because of possible reverse discrimination against ordinary customers.”
For the young and rich who need loans, Kookmin Bank’s ACE program lowers interest rates by 0.2 percentage point for professional workers such as accountants and employees of blue-chip companies and major media companies.
Shinhan Bank runs something very similar, the Elite Loan. Woori Bank competes with its S-Club unsecured loan package for select professionals.
“Card firms have well-developed special products targeting young, unmarried workers who have more disposable income,” said Kim Soo-hyun, a senior analyst at Shinhan Securities Co. “But other companies like banks and insurance firms have been slow to adapt.
They acknowledged the demographic change a few years ago, but they have just begun to offer products to this group.”
The insurance industry is responding to new demands from singles who are worried about their future as they age. Industry officials admit that they had not been fast enough in responding.
“The singletons will likely prefer insurance policies that cover themselves, like accidents and diseases, rather than the conventional types that pay benefits to family members after their death,” Jung from KB Research said.
Market experts advise that financial firms catch the singletons’ desire to design a lifetime budget that features different income and consumption patterns.
The worry for someone like Lee, the single lawyer, is that she is the sole contributor to rent, utilities and groceries ― and may be so for her entire life if she doesn’t get married and have children.
“I have more disposable income, and I can afford to take out more insurance policies and other financial instruments,” she said. (Yonhap)
