Survey reveals Australians built up their savings buffer in wake of economic downturn
Australia’s savings on the increase.
Australians have learnt a valuable lesson from recent tough economic times, and have been busy squirrelling away savings in order to protect themselves from any further uncertainty; RaboDirect research shows.
Impressively, almost a third of Australians have a savings safeguard that would last them at least seven months if they had to live off it – up from 19% in 2012 to 29% in 2013. And at a national level, the average savings buffer increased by 43 days last year – giving people at least an extra month to live off in the event they lost their job.
The findings paint a much rosier picture of the nation’s savings habits and outlook compared to just over one year ago when almost half of Australians were living on the brink and had one months’ savings or less worth to live off if they lost their job.
According to RaboDirect’s Group Executive Manager, Greg McAweeney, while it is important to be prepared for the unexpected, it isn’t about focusing on the negatives but about positively planning for the future.
“When viewed on a global economic scale, Australia came out of the financial crisis looking pretty good, particularly compared to parts of Europe and the United States. That being said, we saw the national unemployment rate rise to 5.8% in November 2013 which begs the question, are we out of the woods just yet?
“Our latest national research shows that 17% of Australians said they had felt the effect of an involuntary loss of employment in their household in the previous 12 months. It’s unfortunate that the research also indicates that those who are already struggling are most likely to have felt the impact of the tighter job market.
“While no one can say exactly what the future holds, we should focus on the things we can control such us our individual savings habits. And being in control of this can also provide peace of mind. In fact, at least a third of the population say that they are putting money aside because savings make them feel more comfortable,” Mr McAweeney said.
So what do our current savings habits say about us?
Saving more helps us deal with the dreaded d-word
In the past few years Australians have made a name for themselves as good savers. A fifth of the population is saving between $200 and $500 each month – or $2,400 – $6,000 a year. That equates to a new plasma TV or a round the world trip for two each year! At the same time, we also felt better about dealing with debt, with 23% in 2013 saying they feel very comfortable about paying off debt.
We’re savvy savers but are still falling prey to the wrong savings products
Average savings balances have increased to $1,995 in 2013 up from $1,396 in 2012. However, we’re still falling trap to zero or low-interest accounts that do nothing to boost our savings, and often end up costing us money with fees and fines.
“Unfortunately too many Australians – 85% of the nation in fact – are missing out on millions of dollars in interest by leaving their money laying idle in everyday transaction accounts. We know the average balance sitting in Australians’ accounts is residing in an everyday transaction account, and in 2013 compared to 2012 this has increased by a whopping 42.9%,” Mr McAweeney said.
We’ve all got our reasons for penny pinching
According to RaboDirect, the top three reasons for saving are: to feel more comfortable; to save for a holiday; and to have money in case of emergency.
Additional key findings:
- 33% of Baby Boomers have more than 12 months’ worth of savings, compared to 15% of Gen X and 11% of Gen Y.
- 17% of Australians don’t have any existing savings while a further 21% have less than a month worth of existing savings.
- Sydney residents (27.1%) were the most financially comfortable while only 3% of those from the Northern Territory were comfortable and not worried about money.
- Brisbane residents (21.2%) were the most likely to have experienced involuntary unemployment issues in the last 12 months. Whilst Melbourne residents (20.2%) had the highest percentage of involuntary reduction in the number of hours worked in a typical week.
