Twice a year Compare Club takes a look at which bills are stressing out Australian households the most.
According the Australian Bureau of Statistics (ABS), Australians are living through the highest costs of living in three decades – since 1987 in fact, which was the last time inflation peaked at 9.3 per cent.
Compare Club’s last pulse check was back in May. This one was taken in November – and the differences are stark.
Overall, there’s been a rise of 19 per cent in anxiety around paying our household bills.
However, there is some good news for older Australians. The over-55s are the least stressed and one of the very few demographics to have seen a rise in the number of respondents who say they rarely or never get stressed about bills, along with those earning over $200k and, strangely, Queenslanders.
Given just 4.2 per cent of over-55s surveyed hold a mortgage, this is unsurprising. But this older cohort is the only demographic to have recorded an increase in stress over health insurance.
The biggest difference?
While 13 cash rate hikes have certainly created anxiety around covering the mortgage – and/or the rent – the bill causing the largest increase in stress across all ages, states, and income brackets (except $200K+) – is energy.
- 47 per cent of Australians are now anxious about affording their utility bills, including electricity, gas, water, broadband, a doubling since May (23.4 per cent).
- Victorians are most stressed about energy.
- WA has the highest stress about mortgages.
- 25-44 year-olds, parents, and low-income earners have shown the largest increase in financial stress levels.
- more Australians than ever say that over half their income is going on affording bills, with 71 per cent cutting back on non-essential spending to afford them.
Anxiety about paying utility bills, including electricity, gas, water and broadband have doubled since May 2023, making this Australia’s most stressful bill.
This is more marked among Australians aged over 55 years, likely because their mortgages are lower, to non-existent.
One stress to rule them all: Energy bills
Whether you rent your home or own it, share your space or live alone, no-one’s exempt from utility bill shocks.
As of November, 46.76 per cent of Australians reported feeling ‘extremely stressed’ about utility bills. This represents a sharp rise from the 23.4 per cent recorded in May.
Power prices have risen significantly since July, when the new reference prices kicked in. Energy bill stress across Australia has doubled from 23 per cent in May to 47 per cent in November. When asked to pick the most stressful bill, mortgages still come out on top, with 29 per cent of those surveyed naming it as the number one stress, but at 26 per cent, utilities are not far behind.
What’s more, all demographics – bar those earning over $200k, who are more stressed overall about mortgages – have high stress levels about their energy bills. Interestingly, the highest rise in stress around energy and other utility bills, comes from those who were relatively untroubled by these bills six months ago.
Victorians have seen a 162 per cent increase in people naming energy bills as a stressor. Households with incomes between $75k to $124k and $125k to $200k have seen stress levels around energy bills rise by 183 per cent and 266 per cent respectively, while parents have seen a 169 per cent increase. Combined with other stressors, this shows the high squeeze that energy has put on middle Australia’s household budgets.
Finally, it’s also worth noting that increases in general insurance premiums are also having an effect on stress levels. Car, home and pet insurance premiums are overtaking health cover and car loans as a major cause of bill stress for households.
In contrast to mortgages, more Australians are keen to find better deals for their utilities. The survey reports a significant increase in people switching their utility providers, from 20 per cent in May to 41 per cent in November.
While energy and broadband services seem overly complicated, full of jargon and hard to understand, they’re actually some of the easiest services to switch. It’s a good idea to look over your utility services at least once a year. One quick phone call to save a few hundred dollars a year is worth the effort.
Overall, more people looked for better deals in utilities from May to November, while fewer people switched their mortgage or loan providers.
Top tips to get on top of utility bill stress
- Fixing rates: Consider locking in your energy rates to protect against price fluctuations.
- Check for rebates: Explore available government rebates and incentives that can help lower your utility costs.
- Bill smoothing: Use the option to spread out your payments evenly over the year, avoiding seasonal peaks.
What’s bill smoothing?
Rather than getting a bill each quarter and not knowing what you’ll be in for, depending on the season, bill smoothing allows you to pay a set amount per month (which can be adjusted if your usage is less than what’s predicted). This helps you avoid large, one-off bills, making it easier to manage your household energy budget.
If your energy retailer doesn’t offer bill smoothing, switch to one that does.
What else keeps us awake at night?
Other bills causing us anxiety include:
- Mortgages: 33 per cent of people are stressed about this cost, up from 27 per cent in May.
- Rent: Up to 24 per cent from 16 per cent.
- General insurance (car, home and pet): Up to 22 per cent from 18 per cent.
Household stress levels over health cover, car loans and life insurance have dipped over the past six months, with many householders taking action to secure lower premiums, so that leaves mortgages and rent – basically accommodation stress.
Australia’s housing crisis has been with us for a long time, and it’s not going anywhere. It’s not getting any better either. Despite mortgage stress being the second biggest concern for Aussie households, fewer people said they switched providers compared to six months ago.
Compare Club brokers agree that those who were able to refinance, have done so. Those who haven’t, are stuck in mortgage prison because lenders aren’t willing to take on more high-risk loans. But this doesn’t mean you should despair. The housing market is moving all the time. Speak to your broker, and explore every avenue you can to get your payments down.
There’s also been a sharp drop in households with car loans, particularly among women and Australians over 55 years old.
The RBA says we’re coping – are we?
“Those who are coming off very low fixed-rate mortgages are managing quite well,” RBA governor Michele Bullock said in a statement when releasing the latest interest rate figures this week.
“All the indications from the banks, and all we hear from the banks is these households are doing fine.”
Hmmm … we’re definitely more stressed than we were six months ago, with three in 10 people spending 50-75 per cent of their income on monthly bills.
Perhaps the strongest indicator of bill stress is that people aged between 35 to 44 are spending 75 per cent or more of their incomes on monthly bills – a 220 per cent increase since May.
To cope with increasing bills, 71.63 per cent of Australians have cut back on non-essential spending (up from 59 per cent in May) and there’s been a slight rise from 50 per cent to 56 per cent in households actively budgeting.
However, there’s also been a steep decline in the number of Aussies seeking financial advice, while we’re 27 per cent less likely to switch providers in search of a better deal – even though savings of up to $11,000 are possible.
The bottom line
Comparing deals and switching to those that offer better value – preferably at a lower cost – remains one of the most effective ways to make a difference to your household budget right now.
Compare Club chief executive Lance Goodman sums it up well.
“Overall, the Aussie spirit of resilience is very much alive and well when it comes to our finances,” he says.
“In May, we were reeling, but by November, many households have proactively tackled the big expenses and have taken steps to cut back anything and everything.
“While nobody expects 2024 to be easy financially, the current Bill Stress Index suggests that when a bill becomes a problem, people take action, hence energy and general insurance still seeing strong levels of switching.”
Disclaimer: YourLifeChoices is owned by Compare Club.