Australians have experienced substantial increases in our cost of living over the past few months.
In fact, based on Roy Morgan's and Melbourne Institute's research, for most people, making ends meet can require changes to behaviour and finding ways to mitigate the impact of higher prices on their personal finances.
The survey recently asked Australians to indicate which of 14 possible strategies or steps they have taken to deal with the rising cost of living.
Food choices and depletion of savings are major strategies
Based on the survey results, about 56% of Australians state they bought cheaper food options, and just over half have reduced the frequency at which they dine out.
Almost 38% of respondents are dipping into savings, and 37% are cutting back on home energy use.
Less than 10% have borrowed money from friends, relatives or financial institutions.
Single-parent households with children are struggling
Among single-parent households with children, just under half report using savings to cope with rising prices and almost 64% have sought out cheaper food options.
Worryingly, almost 15% have pawned or sold possessions, 24% have cancelled or deferred medical appointments, 34% deferred bills or negotiated payment plans and a quarter have borrowed from friends or relatives.
Although these strategies are also present among partnered households with children, the prevalence is much lower compared to single-parent households with children.
Strategies are very similar across income groups…but differ significantly by financial stress status
Though greater proportions of lower-income households dip into their savings or seek cheaper transport options compared to higher-income households, most income groups still report relatively similar proportions in their methods of adjusting to higher prices.
While cost-of-living pressures are experienced by individuals across all income groups, the use of the outlined measures is vastly different depending on reported financial stress status.
Roughly 64% of people in financial stress are using their savings, compared to 30% of those not in financial stress.
Other measures most common among those in financial stress include:
- pawning items (21%)
- borrowing from friends or relatives (23%)
- deferring bills or negotiating payment plans (32%)
- cancelling or deferring medical appointments (33%)
- cutting back on home energy use (53%) and on recreation (60%)
- reducing dining out (74%) and buying cheaper food options (78%)
In many cases, these proportions are more than triple for those in financial stress compared to those not.
The bottom line
Australians are employing a range of strategies to deal with the widespread increases in prices of goods and services, particularly in decisions related to food and the use of existing savings to fund expenditure.
Higher living costs have undoubtedly increased levels of financial stress across all household income groups.
People in financial stress also report the highest proportions of more extreme steps taken to deal with higher prices such as using savings to fund current expenditure, which may have negative long-term consequences on their finances.
