Weak pay increase is squeezing Australian financially with more than a quarter of the population having less than $1,000 in the bank, a survey showed.
ME Bank study found a vast majority of people would struggle to handle a financial emergency. The situation was so bad as 26 percent of respondents admitted they had less than $1,000 in the bank while 13 percent of people had less than $100 in savings.
ME Bank consulting economist Jeff Oughton said many workers were desperately seeking more hours so they could pay their bills, with wages continuing to grow at below-average levels for the seventh year running.
“It’s mainly to do with sluggish income growth,” he told Daily Mail on Monday, “While we have relatively low unemployment we have very high levels of under-employment – about 25 percent of Australians are looking for more work.”
Should a financial calamity hit, 63 percent of respondents in the ME Bank’s Household Financial Comfort report said they would struggle to raise $3,000 in a week to cope with unexpected bills. A similar proportion, or 62 percent, of people saw their incomes either stay the same or fall during the past year with a third of these Australians suffering a pay cut.
Those with scant savings would be forced to seek help from family, friends, charity or government welfare. The high cost of living was cited as the No.1 concern by 44 percent of respondents in the Members Equity Bank survey of 1,500 adults, taken in December. Insufficient savings was a worry for 33 percent of people.
Renters had the lowest financial comfort score of 4.67 out of ten, with low-income people struggling to meet their housing costs.
Regional households scored just 5.08, as the worst drought in 100 years and the summer bushfires exacerbated living costs.
“The drought is inflating prices, making it harder to get food on the table,” a Queensland retiree told the survey.
Record-low interest rates, however, have boosted the financial comfort of those paying off a mortgage, particularly in Australia’s biggest cities where property prices have recovered during the past year.
This occurred despite 41 percent of survey respondents disclosing they spent a third of more of their take-home pay on their home loan, putting them in the mortgage stress category.
Sydney homeowners had a financial comfort score of 5.94 out of ten, marginally ahead of their Melbourne counterparts on 5.91 and the Brisbane equivalent of 5.82. Brisbane investors were the most optimist, with 67 percent expecting property prices to increase, compared with 55 percent of Melbourne owner-occupiers and 51 percent of Sydney investors.