How much does the average Australian save?

March,28,2022

With money proving to be tight for a wide range of Australians, what are we doing with what we have? Are we overspending, or are we being more cautious and stashing it away in our savings accounts? It appears to be the latter, based on information from a variety of entities. 

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When it comes to Australia's savings rate, the truth is that, despite everything that is going on in our economy, from housing pressures and slow wage growth to having to pay 15c for reusable plastic bags at the supermarket - Australians appear to be doing okay, but there are some alarming indicators. The fact that there has been no wage increase since 2009 is one of the most concerning ones.

Average savings in Australia

According to recent data by the Australian Bureau of Statistics, "Almost all 11 measures underlying the Household Financial Comfort Index improved to record levels." Numbers show that in the June '21 quarter, spending dropped while savings rose from previous periods.

 Despite these new highs, 21% of Australian households had less than $1,000 in cash savings in June 2021, a drop of 6 percentage points from the year before the pandemic.

What stops Australians from saving?

Overall, $2.6 billion is withdrawn from Australian savings accounts each year, with more than half of the Australian population – constituting 57% - using savings for the bills or purchases. Why?

 

 

Another significant contributor is mortgage stress, with 45 % of households devoting 30 % or more of their disposable income to mortgage obligations. There isn't much left over to save when so much of your money is spent on bills, rent, or mortgage payments. Combined with the fact that nearly half of all those surveyed reported no increase in income compared to a year ago, then it’s no surprise that so many people are struggling.

 

Savings vs. debt

According to Reserve Bank data, Australian credit card debt is decreasing consistently and is currently $17.6 billion. This is due to a decrease in expenditure since the value of interest-bearing personal credit and charge-card balances dropped significantly during the pandemic.

The popularity of the debit card has also taken off over the past decade. While saving money is something everyone should try to do, paying off debt should take priority, especially if you’re struggling to meet the minimum repayments.

 

To avoid the extensive damage that low credit and loan repayments can do to your financial health, contact us for expert guidance.

Why do Australians save?

According to data, travelling, having enough money saved for unexpected costs, buying a house, and to offset their mortgage or other loans, are the most common reasons for saving money. 

Research highlights, according to age groups:

  • 18-24 years are most likely to save for car and education costs
  • 25-34 years are most likely to save for a house deposit
  • 35-44 years are most likely to save for travel and holidays
  • 45+ are less likely than any other group to have a savings goal 

Increased household savings are also more strongly correlated with both age and wealth, so you’ll find people in certain brackets tend to save more on features or goals that others wouldn’t.

 

Disclaimer:The information included in all of our blog content is of general nature only. Any general advice included in this information has been prepared without taking into account your objectives, financial situation or needs.
Because of this, you should consider the appropriateness of the general advice to your objectives, financial situation and needs and obtain professional advice before acting on any general advice that we have provided to you.

 

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