Australians are running down their savings to make ends meet, according to the latest edition of ME Bank’s biannual Household Financial Comfort Report.
The report shows that more than half the households at 53 per cent in June 2018 said the cost of necessities was their biggest financial concern. That’s up seven points from the last report.
Comfort with short term cash savings had fallen 3 per cent to 4.93 out of 10 during the first half of 2018 – its lowest level in a couple of years.
More Australians are also overspending – households who ‘typically spend all of their income and more’ increased 3 points to 11% during the six months to June.
ME Bank also found that households’ confidence to raise money for an emergency had dropped three points below the average since the survey began.
Fewer households are reporting that they are saving. The estimated amount that Australians are saving each month decreased by just over 10 per cent during the first half of 2018.
There was also an increase in the number expecting they would not be able to meet their required minimum payments on their debt. Many say they could just manage to make minimum payments on their debt’ in the next 6 –12 months.
That number was now 43 per cent combined compared to 38 per cent in December 2017.
“Clearly, this is a potential tipping point. At the moment, Australians generally can dip into their savings to get by. However, some households may get to a point where there’s no more savings to draw from. Currently, around a quarter of Australian households have less than $1000 in cash savings,” consulting economist for ME Jeff Oughton said.
“If we see big negative shocks in the coming year, whether they are higher loan rates or an international trade war, then a lot more families will suffer increased financial stress.”