Let's have a chat about Aussies and their savings habits.
It's a topic that often comes up, especially when we're thinking about financial security and future planning.
Average savings across the board
On average, Australians have about $37,408 tucked away in their savings accounts.
However, this figure can be a bit misleading due to the small number of individuals with significantly large balances.
A more telling figure is the median savings, which sits at approximately $3,559.
This means that half of Australians have less than this amount saved.
Savings by age bracket
Savings naturally fluctuate across different age groups, often reflecting life stages and financial responsibilities.
Here's a breakdown:
- 18 to 26 years old: Average savings of $20,160.
- 27 to 41 years old: Average savings of $36,214.
- 42 to 61 years old: Average savings of $51,789.
- Over 61 years old: Average savings of $49,076.
As expected, savings tend to increase with age, peaking in the 42 to 61 bracket, which often corresponds with peak earning years.
Offset accounts: a deeper dive
Now, let's talk about offset accounts—a popular tool among mortgage holders.
An offset account is a transaction account linked to your home loan.
The balance in this account offsets your loan principal, reducing the interest you pay.
For instance, if you have a $500,000 loan and $50,000 in your offset account, you'd only pay interest on $450,000.
As of March 2024, Australians had a record $271.7 billion in offset accounts, marking the third consecutive quarter of growth.
This trend suggests that many are leveraging offset accounts to manage mortgage interest effectively, and this means they really have greater savings than the figures above suggest.
Final thoughts
While these numbers provide a snapshot, they also highlight a sobering reality—most Australians don’t have enough savings to fall back on if something unexpected happens.
With a median savings of just $3,559, many households would struggle to cover even a few months’ worth of expenses in an emergency.
This underlines the importance of taking a proactive approach to financial planning.
The truth is, we need to embrace the concept of delayed gratification.
Investing in your future may mean doing the hard things now—budgeting carefully, saving consistently, and resisting the temptation to spend on non-essentials.
But the payoff can be life-changing.
As the saying goes: “Do the hard things now, and you’ll have an easy life later. Do the easy things now, and you’ll have a hard life later.”
Start by building an emergency fund, then consider investing for the long term.
Property, shares, or other wealth-building vehicles can provide financial security and independence in the years to come.
By prioritizing your future self, you’re setting the foundation for a more comfortable and secure life down the track.
The journey might be challenging, but the rewards are worth it.
