Key takeaways
According to a new report by Compare the Market, 61% of Australian households are only just getting by as prices soar across the board. According to the report, the cost of groceries was the biggest concern for Australians, followed by rising electricity prices and fuel prices.
The report found that Baby Boomers are more likely to list car, health, home & contents insurance, healthcare, grocery and electricity prices as top stressors, Gen X is more likely to list life insurance as a top stressor, Millennials are more likely to list the cost of children's activities, daycare and school fees.
The report found that nearly 50% of adults across Australia said they had not invested money over the past year, and that Baby Boomers are the least likely to invest. Those with a postgraduate degree are the most likely to invest.
Younger generations rely heavier on the Bank of Mum and Dad to break the property market, with more than 30% of Gen Z and 26% of Millennials saying their family helped contribute to the deposit. However, more than 50% of Gen X and Baby Boomers said they had no help from family members.
With all the financial changes we've encountered in the last 12 months, how do Australian households cope?
Well, according to a new report by Compare the Market, 61% of Australian households are only just getting by as prices soar across the board.
Interestingly, more than a quarter of Aussie adults (26.3%) admit that their savings are going backwards, indicating that they’re chewing into their hard-earned savings to get by.
Compare the Market's General Manager of Money, Stephen Zeller, said:
“There has been an unprecedented financial change in the last 12 months and unfortunately the turmoil doesn’t look likely to end anytime soon.
A $500,000 variable mortgage holder has already seen an extra $1,209 added to their monthly repayments since the RBA started chasing its inflation target in May last year.
On top of that, we’re expecting electricity price hikes of up to 25% for those on default plans, when the new Default Market Offer and Victorian Default Offer take effect on 1 July.
With households getting hit at every corner, it’s no surprise 94% say they’ve felt the difference.”
What is stressing us the most?
According to the report, the cost of groceries was the biggest concern for Australians, with two-thirds of those surveyed anxious about their trip to the supermarket.
Rising electricity prices are also keeping Aussies up at night, as well as the cost of fuel, but the other big-ticket items varied between generations.
Comparing the stressors between generations, the report found that:
- Baby Boomers are more likely than any other generation to list car, health, home & contents insurance, healthcare, grocery and electricity prices as top stressors
- Gen X is more likely than any other generation to list life insurance as a top stressor
- Millennials are more likely than any other generation to list the cost of children’s activities, daycare and school fees as top stressors
- Gen Z are more likely than any other generation to list Internet & phone bills, fuel, pet insurance & upkeep, streaming costs
Furthermore, on an income basis:
- Electricity and groceries are a significant concern, regardless of the income bracket
- High earners ($150,000+) were the least concerned Australians about fuel
- Owner occupiers with an income over $100,000 were significantly more worried about mortgage repayments than homeowners on smaller salaries
The data also revealed that many Aussies are hesitant to reduce the price they pay, despite rising costs.
In fact, almost half of Australians (45%) said they hadn’t shopped around for a better deal to try and save during the past 12 months.
Mr Zeller commented:
“A lot of people are spending more than they need to without realising it or wrongly assuming that researching alternatives will take too much time.
Lower-income earners were less likely to shop around for better deals, despite standing to gain more from the process than people with larger pay packets to spend.
What could be a small change for some households could make a world of difference for people doing it tough.”
Are we still investing our money?
In terms of investing, the report found that nearly 50% of adults across Australia said they had not invested money over the past year.
Moreover, Baby Boomers are the least likely to invest.
Other interesting findings include:
- Younger generations were more likely to invest their money than older generations.
- Two-thirds of Baby Boomers hadn’t invested money in the past year, compared to a third of Millennials and 44.2% of Zoomers.
- Investing in Shares, Index funds, ETFs, Bonds and Managed funds was the most popular investment option for all generations.
- Aussie Boomers were more likely to put their money into a term deposit.
- An average of one in five young people say cryptocurrency is king, compared to just 2% of Boomers.
- Those with a postgraduate degree are the most likely to invest, while those with only a primary school education are the least likely to invest.
Younger generations rely heavier on the Bank of Mum and Dad to break the property market
According to the research, Millennials and Gen Z were more likely to get help from their parents and family to purchase their first home.
More than 30% of Gen Z and 26% of Millennials said their family helped contribute to the deposit.
Meanwhile, more than 50% of Gen X and Baby Boomers said they had no help from family members whatsoever.
Mr Zeller further commented:
“While each generation has faced different hurdles to homeownership, broad consensus is that young people today have it the hardest as climbing house prices continue to outpace the size of deposits."
Education is key to improving financial health
Mr Zeller said improving financial literacy should be made a top priority.
He further explained:
“People without education in budgeting basics are at a huge disadvantage when living costs rise.
We urge people not to be passive when they receive bills and renewal notices, and to check and make sure they’re not paying for unnecessary services, fees or add-ons.
Whether your mortgage repayments are going up, you’ve received a higher-than-expected bill or you want to ensure you’re not paying more than you need to for your insurance or fuel, it’s worth taking time to compare your options.”
