The latest Household Budget Barometer from Compare the Market surveyed over 3000 Australians to find out how they are coping with the rising cost of living.
And one in five Australians (22%) feels stressed about money every day.
It's Millennials who carry the biggest emotional burden, with 28% experiencing daily stress - almost three times more than people aged over 79, and close to double the rate of Baby Boomers.
"The findings paint a bleak picture of the one in five people for whom unrelenting price pressure and growing debts are a constant burden," said Compare the Market Economic Director David Koch.
"It is startling that most respondents (62%) felt financial stress once or more a month. Hundreds of people said they struggled to meet regular financial commitments, with 7% behind on bill payments, 5% in mortgage arrears and 9% in debt to their family.
"But the pressure isn’t evenly spread. People earning $150,000+ were more likely to say they were better able to maintain or grow their savings and were less likely to feel stressed about their financial situation," Koch said.
Savings accounts continue to experience a hit
Australia's ability to save continues to be impacted by rising costs across the board. According to survey participants,
- 29% of Australians are unable to save as much as they usually do
- Around one in five (18%) say their savings are slipping backwards
- There are 15% of respondents who are in debt or whose debt is growing
- There is some good news, though. Almost one in five Australians (22%) say they have consistently saved money, with 6% even saving more than before.
Indexes
Over the twelve months to the June 2024 quarter, the Consumer Price Index rose 3.8%.
Inflation has been above the Reserve Bank of Australia’s (RBA) target range of 2-3% for 11 consecutive quarters (as of August 2024).
Inflation is not expected to return to target range until mid-2025, resulting in higher home costs for Aussie households.
Inflation coupled with higher interest rates have squeezed homebuyers' borrowing power. New loan commitments have decreased as a result.
The median grocery spend was $200 in August 2024, compared with $150 in January 2024. That’s a 33% rise in just six months. The increase could be in part due to some Australians choosing to cook more at home and dine out less.
In the eight months leading up to August 2024, quarterly electricity bills increased from $300 to $350. As long as government rebates continue to cushion the blow, some households may not feel the impact of bill shock. Petrol spending, on the other hand, has remained mostly unchanged since early 2023, when a steep increase was reported.
Koch said mortgage stress was the biggest concern for high-income earners, while low-income earners struggled the most with everyday necessities such as power bills and groceries.
"Not everyone can earn a better salary or take on a side hustle to make extra cash. Many feel helpless as the bills pile higher and the debts plough deeper," he said.
"But rather than resign to the fact that costs are going up, we need to start questioning, ‘why?’. Because while these costs may be considered essential, we shouldn’t assume there is always a good reason for a price rise.
“We should be fighting back. Yet one in four people hadn’t compared any bills to save over the past 12 months. Your loyalty to a brand could be costing you more than you think.”