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A new survey has highlighted a growing financial strain among Australians, with many struggling to manage their mortgage repayments amid rising living costs.
The State of Aussies’ Savings survey released by InfoChoice has found that approximately 3.4 million Australians have less than $1,000 in savings, leaving them vulnerable to financial shocks.
The survey indicates that about 16 per cent of Australians are living on precarious financial ground, with 49 per cent of this group – equating to around 1.6 million people – drawing down on their scant emergency funds over the past month.
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This financial strain comes as basic costs like food, energy, and housing continue to climb.
InfoChoice money analyst Harrison Astbury warned that the situation is dire for many households: “Aussies are feeling the pinch from near-runaway inflation, which policymakers failed to wrestle in-time, and now higher interest rates to combat it.
“It’s evident one or two more rate rises would break a lot of mortgage holders, while renters are barely holding on, with no short-term relief in sight.”
The survey, which included responses from over 1,000 people, revealed that a significant portion of mortgage holders have alarmingly low savings.
Approximately 10.6 per cent of respondents with a mortgage reported having less than $1,000 in savings, while over a quarter (25.5 per cent) had less than $5,000.
Renters face an even tougher situation, with more than a quarter (27.4 per cent) having less than $1,000 in savings and over half (50.2 per cent) with less than $5,000.
Additionally, the survey found that more than a quarter (27.3 per cent) of all respondents have savings equivalent to less than one month’s income.
Gen X is particularly vulnerable, with 30.9 per cent falling below this threshold, compared to 20.5 per cent of Baby Boomers.
Renters are especially affected, being twice as likely as home owners to have savings equivalent to one month’s income or less (43.2 per cent versus 19.6 per cent).
Astbury pointed out the risks associated with these low savings levels: “The average time taken to find new employment in Australia is over three months, and for many, it can take even longer.
“A general guide for a healthy emergency fund balance is anywhere from three to six months’ worth of expenses.
“That level of security is a distant dream for millions of Australians right now, and there is no sign that things will get better any time soon.”
As Australians grapple with these financial challenges, the survey underscored the urgent need for more robust financial planning and support to help households navigate the ongoing economic pressures.
[RELATED: In Focus: Helping Australian borrowers manage the cost of living]
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