Australian households are stuck in survival mode, according to Finder’s Cost of Living Report 2023, which has combined data from Finder’s Consumer Sentiment Tracker (CST) and Finder’s Reserve Bank of Australia Survey.
It has uncovered the far-reaching impacts of the cost of living crisis.
Rising costs have impacted the majority of Australians
Some of the key findings are:
- Almost 4 in 5 (78%) Aussies have had to reduce their spending to cope with the cost of living crunch.
- Grocery spending has taken the largest hit, with 50% of respondents cutting back on their shop.
- More than 1 in 2 (52%) have experienced financial stress, but it’s younger Aussies, and women, who are the most stressed.
- 70% of gen Z said they experienced financial stress, followed by 60% and 45% for generation Y and X. Baby boomers (29%) were the least likely to report financial stress.
- Women (58%) were more likely to report financial stress than men (46%).
Chris Ellis, Finder Australia CEO, says:
"The cost of living has soared dramatically, making it increasingly difficult for many Australians to afford their basic needs.
The economic conditions are some of the most challenging households have faced in decades.
Young consumers, those who are renting, paying off a mortgage, or raising young children are feeling the effects most acutely.
Raising awareness of the issues Australians are facing, and considering ways to respond, supports increased financial literacy at a time like this.
Finder’s report aims to provide a clear and accessible overview of the complex issue of the rising cost of living, and to empower consumers with the information and tools they need to improve their financial well-being.”
How the cost of living is impacting different demographics in Australia
Mortgage holders:
Finder estimates that the 10 RBA cash rate rises in 2022 and 2023 have increased a typical Australian mortgage holder’s repayments on a $600,000 loan by $12,061 per year – and this impact will be significantly higher for mortgage holders with larger loans.
Renters:
The increased costs of repaying loans have had a knock-on effect on the rental market.
Over 2022 there was a significant increase in the percentage of people saying they struggle to pay their rent.
Parents and families:
87% of parents have had to reduce their spending on at least 1 expense due to the increased cost of living.
This is compared to 74% of consumers without children.
Young Aussies:
The research shows younger Aussies are most heavily affected by the rising cost of living.
Higher vulnerability from their lower savings has led to over half (56%) of younger Australians (gen Z) feeling financially pressured to look for a second job in 2023.
Graham Cooke, head of consumer research at Finder, says:
“The financial future of millions of households is in limbo as they grapple with the perfect storm of price increases.
The economy itself may be out of your control, but your personal finance need not be.
The good news is there are some simple steps you can take to relieve some of the cost of living pressure.
The most important place to start is by examining the debt which is costing the highest amount of interest.
For most people, this will be credit card debt. If you have any unpaid credit cards, focus on paying them off as quickly as possible, or transferring that debt to a lower-interest alternative like a balance transfer card.
For homeowners, the mortgage will be the next most impactful expense – a small decrease in your interest rate can have a large impact in the long run.
Once these issues are addressed, you can review other spending habits by creating a budget, tracking and prioritising expenses, and switching to the most cost-effective financial products."
The expenses causing Australians the most financial stress
Each month, Finder’s CST asks consumers which household expenses, if any, are causing financial stress.
The most commonly nominated expenses are housing costs (rent/mortgage), groceries, petrol and energy.
The percentage of households citing these expenses as a source of stress has been increasing steadily since 2021.
The number of Australians pointing to the weekly grocery shop as a cause of stress has risen dramatically, from an average of 23% in March 2021 to 43% in March 2023.
How much the average Aussie has in savings
The average Aussie has around $30,000 in savings and is saving roughly $600 per month.
Gen Z Aussies have almost $38,000 less in savings than baby boomers
The average Baby Boomer has $51,300 in savings, compared to just $13,300 for the average gen Z.
This reduced savings buffer has meant that younger Australians are more heavily affected by the rising cost of living, with 90% of gen Z reporting reduced spending.
In comparison, 59% of baby boomers have lowered their spending.
Graham Cooke, head of consumer research at Finder, commented:
“Aussies should take advantage of the financial metric that benefits them in times of high-interest rates – better value savings accounts.
Now’s the time to find a better deal. If you haven’t switched to a more competitive rate, you could be missing out on hundreds of dollars worth of extra interest.
The standard saving accounts from some of the big banks are paying around 1.60% interest after temporary promotional periods.
One of the highest ongoing rates on the market is around 4.80%.
The average Australian with $30k in savings who puts $600 per month away would make an extra $2,178 in interest alone over 2 years by switching between these accounts.”
