17th Feb 2019
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The reason many Australians are tightening their belts
Author: Ben Hocking
Aussies tightening their belts

Australia’s financial comfort gap has narrowed for the first time in seven years, with most households feeling better about their finances despite significant falls in residential property and share markets.

Income gains, easing living costs, increased cash savings and reduced overspending were key drivers in households’ rising financial comfort, but despite this, many cautious Australians were still trying to rein in their spending.

ME Bank’s bi-annual Household Financial Comfort Report released in February, showed more households were saving and fewer overspending.

The number of households saving each month increased to 51 per cent in the past six months – its equal highest level since the survey began seven years ago – with the estimated average amount savers are putting away increasing seven per cent to $862 per month.

Meanwhile, the estimated average amount over-spenders drew-down on savings or credit each month decreased 28 per cent to $453 per month.

ME Bank economist Jeff Oughton said increased belt-tightening may be a consequence of sustained property falls as well as economic and political uncertainty.

“We’re still seeing some geopolitical effects, with households concerned about the world economy up … to 29 per cent, and combined with domestic property and share market corrections, many Australians are beginning to tighten their belts to build financial resiliency,” Mr Oughton said.

Increased savings have flowed through to greater financial resilience with an improvement in households’ ability to handle a financial emergency (up one percent to 4.83, the second highest level since the report began). 

In the seven years ME Bank has conducted the bi-annual survey, the financial comfort between property owners has diverged from renters. This is the first survey where the comfort between these cohorts narrowed.

“The comfort gap between property owners and renters, as well as between very high-income earners and other income brackets, has narrowed,” Mr Oughton explained.

“We’ve seen a correction for wealthier, older property-owning Australians who have been riding the hot property and bull share markets for much of the past seven years, while middle and lower-income households have begun to benefit from an easing in living cost pressures and income gains.

“Together the changes have helped to narrow the big gap in financial comfort that had been widening.

“Cooling housing and share markets haven’t yet dented the financial outlook of most Australian households, and many residential property owners remain positive: only 13 per cent of home owners and 11 per cent of investors expect the value of their properties to fall in 2019.”

How would you rate your own financial comfort? Have you been trying to cut back on your own spending this year? What have been the main reasons for this?

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    COMMENTS

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    Concerned
    19th Feb 2019
    9:54am
    Tightening the belt. For the first time in years I worry about paying for the groceries. I have to consider going to the doctor. My safe permanent position is now a casual one. I do not get sick leave or paid rec leave. This article does not do justice to many people’s lives. Perhaps the hard questions were not asked and perhaps the people questioned do not get asked the reality
    Aussiefrog
    19th Feb 2019
    10:04am
    Absolutely agree, one's wonder how they do their research? Asking the privileged?
    HKW
    19th Feb 2019
    11:34am
    YES!
    'This article does not do justice to many people’s lives. Perhaps the hard questions were not asked and perhaps the people questioned do not get asked the reality ' - fully agree with it.
    Most people I know are tightening the belt because of the increase in living cost, increased bills and council rates...etc.
    Many of my friends are sadder and suffer from depression.
    The world is turning upside down.
    The managers of our country are only following instructions of their New World Order bosses.
    They simply fill in their own pockets and don't give a damn about a common person.

    In fact, IT IS GETTING WORSE.

    Stop peddling false propaganda !
    jackie
    19th Feb 2019
    11:43am
    Concerned... I am sorry to hear your job has become casual with all its insecurities. That would be the reason many Australians are tightening their belts too. Too many casually employed. Others get paid less for doing more as the cost of living rises each week. Corrupt politicians and corporations are making life harder for Australian. No wonder we are tightening our belts.
    sunnyOz
    19th Feb 2019
    2:51pm
    Concerned...you are lucky, you have any type of job. I am now fully on OAP after being shafted from govt contract job for younger version (who by coincidence, was related to a senior manager). I have very small super and even owning my own small house, daily costs are getting out of hand. I need health insurance, then other insurances, rates (yeah god's, that is the rip of all time!). I don't eat meat, try to limit car trips, and scrimp and save as much as I can. But daily living costs are just growing. Couldn't do Uber as car too old, hard to find any small ways to earn an extra $. Have lost count of the number of businesses I have contacted seeking any type of work. I can't downsize (not interested in living in a caravan), and I really do despair about the coming years.
    GeorgeM
    19th Feb 2019
    3:00pm
    This is just a general study with not much relevance to the Retirees / Pre-Retirees on YLC.

    Since the Jan 2017 Assets Test change for OAP, belt tightening has obviously been widespread amongst Retirees who receive less income since then, and also by other Retirees in anticipation of further such Govt attacks on income in the future.
    Triss
    19th Feb 2019
    4:20pm
    How can one section tightening their belts be an indication of narrowing the gap? That’s comparing two different areas. The least wealthy section loosening their belts would be narrowing the gap.
    Maybe we all should write to this bloke, asking him the questions and telling him where he is wrong. Then write to the papers.
    jackie
    19th Feb 2019
    4:48pm
    sunnyOz...A fiend of mine does Uber and rents a lovely car from them. You can do Uber have a look into it.
    TREBOR
    19th Feb 2019
    5:48pm
    It narrows the gap below your ribcage.....
    Old Geezer
    19th Feb 2019
    10:34am
    I had a great Christmas with my free ham, free booze, free turkey and free Christmas hamper. It actually saved my money on my groceries.
    jackie
    19th Feb 2019
    11:34am
    Old Geezer...Leave that free food to the homeless. A lovely gourmet sandwich made by yours truly could have been better. I am considering that for this Christmas instead of all that expensive family togetherness.
    Old Geezer
    19th Feb 2019
    11:37am
    I didn't ask for any of it. It was all given to me. A sandwich would have done me too.
    jackie
    19th Feb 2019
    11:46am
    Old Geezer...Who gave it to you without asking first?
    Knows-a-lot
    19th Feb 2019
    11:50am
    Lieberal troll, trolling away.
    Old Geezer
    19th Feb 2019
    12:05pm
    People who think I am needy so are helping me out.
    Misty
    20th Feb 2019
    12:52am
    If only they knew the real story OG, or the one you tell us here on YLC'S, poor deluded people, why didn't you donate it all to Vinnies ar the Salvos?, that would have been the decent thing to do.
    Anonymous
    20th Feb 2019
    12:56am
    Good on you OG
    That’s a couple of hundred bucks you can saved to spend on other things
    Old Geezer
    19th Feb 2019
    10:34am
    I had a great Christmas with my free ham, free booze, free turkey and free Christmas hamper. It actually saved my money on my groceries.
    inextratime
    19th Feb 2019
    12:36pm
    Well bully for you. Most people would have declined the 'gifts' and asked them to be given to someone who needed them, not someone who boasts about his $400,000 play dough. No wonder the world is in a mess.
    inextratime
    19th Feb 2019
    12:36pm
    Well bully for you. Most people would have declined the 'gifts' and asked them to be given to someone who needed them, not someone who boasts about his $400,000 play dough. No wonder the world is in a mess.
    Triss
    19th Feb 2019
    4:28pm
    OG that repeat posting is getting old very fast. The fact that you’ve been crowing how comfortably off you are and then grabbing all the freebies doesn’t look good but at least you can never tell pensioners that “however much they get it’s never enough “ ever again.
    Old Geezer
    19th Feb 2019
    10:51am
    Seriously we live in uncertain times where everyone is tightening their belts as even junk shops are struggling to survive.

    I have also been telling sales assistants when they try to sell me stuff that I'll have to wait until after the election to see if I have enough money to live let alone buy extra stuff after Labor takes 30% of my income away. It's a great way to explain what's really happening.
    Knows-a-lot
    19th Feb 2019
    11:51am
    Franking credits having paid zero in tax? If so, you deserve to lose it.
    Rae
    19th Feb 2019
    2:06pm
    I explained that the LNP took away my expected income and as I couldn't change anything I planned on and I would have to mow my own lawn and clean my own house. The Lawnmower man said a few customers had been hit and he was sorry.

    And yes spending was cut with that budget austerity and the penalty rate income cuts.

    I told everyone I could about the bastardly too.

    If Labor do it remember the LNP started it.

    The Franking credit cuts will further the decline in spending. Didn't politicians see what happened in Greece?
    Paddington
    19th Feb 2019
    5:42pm
    They don’t get franking credits in Greece lol. Only Aus does this. Labor invented it and Libs extorted.
    Greece mismanaged and overspent.
    OG, I don’t think you are always consistent in what you say lol.
    Rae
    20th Feb 2019
    8:55am
    Yes Paddington it is a silly idea. Companies should not be paying tax for shareholders at all. They should pay their due tax and then allocate dividends from profit. The whole franking credit idea should be made redundant.
    A lot of the greed we saw in the banking system and the overpricing of shares is a result of this tax policy.
    Yes Greece mismanaged and overspent and the debt finally overwhelmed them.
    I was in Athens the night the GFC exploded into awareness and it was damn scary.
    Five years later the poverty seen was extraordinary.

    Australia has mismanaged and overspent as well. Debt levels are higher than ever before and households are struggling. $4 trillion will have to be paid back. Bad enough without Government choosing favourites and punishing savers.

    The decline in spending from austerity for this group, then that group , then the next group, cutting incomes here and there for the bottom 80% is going to cause spending to decline. It must.

    Anyone not saving extra just in case is foolish.
    Old Man
    19th Feb 2019
    11:31am
    I am at a loss to understand what this article is all about. It says that more people are saving and fewer people are overspending and the reasons for this are many and various. One economist says it could be to build financial resiliency yet it could also be that falling property prices could mean that people have increased saving for a deposit.

    Property prices only matter if one is buying or selling, if neither action is contemplated then the statistics don't mean an awful lot. Incidentally, if a sale and purchase is made on the same market, there are no winners and losers because inflation or deflation applies to both properties.
    Old Geezer
    19th Feb 2019
    11:38am
    Problem with property prices is watching the news where they keep telling you prices are falling. You just don't feel near as wealthy hearing that day in day out.
    Old Man
    19th Feb 2019
    11:40am
    My wealth is my wife and family, the rest is just fluff. If you are so concerned about material things, OG, I respectfully suggest that you have your priorities in the wrong order.
    Old Geezer
    19th Feb 2019
    2:39pm
    I love seeing property prices fall as I might just buy one if they are a big enough bargain.
    HKW
    19th Feb 2019
    11:36am
    Life is too short for those in retirement to just save save, and save !!

    We cannot even live in dignity !
    Rae
    19th Feb 2019
    2:09pm
    Possibly because you didn't save at all. Saving just 10% of income as a buffer means you can live in dignity. Spending everything or more is the problem and saving the solution.
    Mad as Hell
    19th Feb 2019
    11:40am
    When the sales assistants enquires why I’m not spending more I tell them. The LNP lied and broke an election promise with the changes to the 2017 Pensioner Assets Test and stole my pension assets.
    Old Geezer
    19th Feb 2019
    11:41am
    Well Labor now wants 30% of the income your have left too.
    Rae
    19th Feb 2019
    2:14pm
    Yes because they saw how well in worked for the LNP. We should have rioted.
    Rae
    19th Feb 2019
    2:15pm
    I remember you thought it was a great idea to cut retirees incomes last time OG. It's a different matter when it affects you though.
    Old Geezer
    19th Feb 2019
    2:46pm
    Rae I keep my franking credits under Labor. However that doesn't stop me from campaigning against this unfair proposed policy. That cut to the asset test was fair. However it is not fair that Labor will give back $34 billion in franking credit to high income earners but steal $5 billion in franking credits from low income earners.
    GeorgeM
    19th Feb 2019
    3:14pm
    Agree, Mad as Hell and Rae. Usual crap from OG. LNP's attack on Part-Pensioners left them nowhere to go except to suffer massive income loss. Franking Credits issue is also bad, but can firstly, still be tweaked (say with a Cap on Refunds or Set-offs, or simply applied to all Franking not just refunds then OG can't complain), and secondly, those using such financial arrangements would be able to re-arrange their assets and escape the effects. Not desirable, but the Assets Test change was infinitely worse, with no options and was also a major Broken Promise from Abbott. Liberals MUST pay for that.
    Rae
    19th Feb 2019
    4:05pm
    It would be better if companies just paid the taxes due and then issue dividends from after tax profits. Why companies are paying tax on behalf of shareholders is the issue. Other countries don't need to do this.
    Knows-a-lot
    19th Feb 2019
    11:49am
    We're tightening our belts necessarily because of the gross mismanagement of the LNP government.
    Old Geezer
    19th Feb 2019
    12:00pm
    Good luck then as the alternative government will only make things much worse for you.
    GeorgeM
    19th Feb 2019
    3:05pm
    Liberal & Labor both mismanage and attack retirees, hence both need to be turfed out. They are a Tag Team, one launches one attack, then the other launches the next one. Both use Greens help too, shows all 3 must go!
    floss
    19th Feb 2019
    11:55am
    Prices up wages down how can it be any other way.This Federal Gov. has pushed down wages so much the system can't work any more, not very smart.
    Rae
    19th Feb 2019
    2:20pm
    It's falling over now. I just hope it goes pear shaped before May. It was the oddest time in the US when it happened there. Spending just stopped dead. Wallets slammed shut and it was only weeks until businesses were shutting up shop. Still they brought it on themselves.
    Putting rich and spoilt brats in charge isn't such a great idea. We know they bully, are greedy and won't share and are generally stupid to boot.
    Adrianus
    23rd Feb 2019
    11:48am
    floss wages are going up. Wages Growth running at about 2.3% in the private sector and 2.5% in the public sector. Prices are actually coming down. Unemployment is at an all time low of 5%. There's a lot to be happy about.
    Franky
    19th Feb 2019
    11:57am
    I measure my financial comfort by the value of the A$ as I spend around 3-4 months a year in Asia. I noticed that my costs to do so have increased by around 10%, which is roughly the drop in our dollar vs. SE Asian currencies. It's not a good sign for our economy, means that we will become a cheap destination for Asians soon whilst we can't afford to travel there anymore. Still a way off though, but the trend is worrying. For example 5 years ago in Vietnam I would get around 22,000 dong to the dollar, now it's around 16,000! So yes, I'm definitely reigning in my spending.
    Old Geezer
    19th Feb 2019
    12:01pm
    We are already being swamped by Chinese tourists in all our tourist spots.
    Anonymous
    19th Feb 2019
    2:49pm
    So it’s ok for you to visit Asian countries but not ok for Asians to visit Oz ?
    Hypocrite much ?
    Misty
    20th Feb 2019
    1:02am
    I thought you were leaving YLC'S Lothario?.
    Anonymous
    20th Feb 2019
    1:04am
    I am
    Today is my last day
    Sick of listening to idiots and whighers who care not for this country but only for themselves
    Sundays
    20th Feb 2019
    8:28am
    Leaving means actually going, not returning with a new name!
    Misty
    20th Feb 2019
    12:16pm
    Sunday I think Lothario has an idendity problem, who knows who he will come on here as next, maybe the PM or Donald Trump maybe.
    floss
    19th Feb 2019
    11:59am
    O.G it should be about the needy not the greedy.Does O.G. STAND FOR OLD GREEDY?.
    Old Geezer
    19th Feb 2019
    12:03pm
    Oh well people must think I need help I guess but I'm not about to embarrass them so I just accept it all with gratitude instead.
    Sundays
    19th Feb 2019
    12:12pm
    Rising costs especially those that don’t keep up with inflation like Health Insurance, Electricity, Rates are a concern for many. I hate the way this Government has encouraged a casual workforce. How can people plan.
    sunnyOz
    19th Feb 2019
    2:57pm
    Correct, and pensioners are the hardest hit. They can't offset living expenses against tax or wage increases.
    ace
    19th Feb 2019
    12:36pm
    Who did they survey ! not retirees or pensioners !!My cost of living has only gone up in the 12 or so years I have been retired! when I first got the pensionI had a little left over at the end .No I have to add more & more ! health care costs a fortune (HCF) & when you go to use it you only get part payed you still have to pay more , electicity, Petrol ,rates just go up Thank god for some pensioner discounts ! anyone who was in sales should not be surprised at the slowing spending it happens before every election Now we have both State & Fed in nsw !And I know several people who like me are concerned we will see another GFC type disaster this year & falling share market & house prices are the signs to watch for ! god help us if the banks start taking from our bank accounts like Cypress & Greece did & apparently some say they now have the power to do that ??
    Rae
    19th Feb 2019
    2:23pm
    Yes they do. The G20 asked all their countries to do this. I think they can see how fragile the global banking system is now.

    19th Feb 2019
    1:41pm
    The real reason is that unemployment is at an all time low and housing affordability is the best its been in years.
    Aussies have more disposable income and nothing more to spend it on , so they're investing and saving
    jackie
    19th Feb 2019
    4:59pm
    Those that are working are saving for property and their future. They are the younger Australians from Asian and Indian descent.
    TREBOR
    19th Feb 2019
    5:52pm
    Tell it to the unemployed and the homeless..... they're all ears...
    Misty
    20th Feb 2019
    10:16am
    Are you trying to be the joke for the day Lothario?.

    19th Feb 2019
    1:41pm
    The real reason is that unemployment is at an all time low and housing affordability is the best its been in years.
    Aussies have more disposable income and nothing more to spend it on , so they're investing and saving
    inextratime
    19th Feb 2019
    4:02pm
    LOL... nothing to do with the uncertainty of the economy which is under stress, house prices that rose 25% in two years, the pressure on groceries when the effect of the drought is fully realised, the probable increase in interest rates as they cannot go much lower, the massive increase in public service jobs which may take up the unemployment slack but ultimately cost taxpayers more, the rapidly increasing electricity prices, the increased costs of infrastructure due to a rapid increase in population.
    No its all about housing affordability, when banks have put the skids on lending. Dream on Lothario.
    inextratime
    19th Feb 2019
    4:02pm
    LOL... nothing to do with the uncertainty of the economy which is under stress, house prices that rose 25% in two years, the pressure on groceries when the effect of the drought is fully realised, the probable increase in interest rates as they cannot go much lower, the massive increase in public service jobs which may take up the unemployment slack but ultimately cost taxpayers more, the rapidly increasing electricity prices, the increased costs of infrastructure due to a rapid increase in population.
    No its all about housing affordability, when banks have put the skids on lending. Dream on Lothario.
    TREBOR
    19th Feb 2019
    10:52pm
    You call this all time low unemployment? You must be twelve years old!
    Anonymous
    19th Feb 2019
    11:06pm
    Idiot - check your facts . It’s tjebkowest on record since official recording commenced
    Misty
    20th Feb 2019
    1:09am
    On Sky News Agenda yesterday yhey read out the numbers for employment, some work1 hour, 2 hours, 3hours, 4 hours, 5 hours, all are classed as employed, it was in the thousands for wach category but I cannot remember the correct numbers. Today I noticed Colesd has upped their packaged fresh meats by a dollar and goodness only knows what else has gone up in the food line.
    Misty
    20th Feb 2019
    1:11am
    Should have checked my spelling before posting but I am tired and in a hurry to get to bed, so excuse the odd letters please.
    ardnher
    19th Feb 2019
    1:44pm
    i did my belt tightening when younger...now I spend what I want and have what I want. I am not a drain on the taxpayer either as I am self funded, so it is my money that I have earnt, saved and invested over my lifetime to enable a care free retirement.
    Anonymous
    19th Feb 2019
    1:46pm
    Good for you ardnher. Unfortunately Bull Shitten and so many of the leaners on her would love to take from you to support their welfare
    Anonymous
    19th Feb 2019
    1:46pm
    Good for you ardnher. Unfortunately Bull Shitten and so many of the leaners on her would love to take from you to support their welfare
    Paddington
    19th Feb 2019
    5:47pm
    Lothario, what a nasty comment and so unnecessary!
    TREBOR
    19th Feb 2019
    10:53pm
    Just another stupid and insulting comment from a loser - pay Lothario no mind. He sadly can't help himself...
    Adrianus
    22nd Feb 2019
    4:23pm
    ardenher, very well done!!
    You have a lot to be proud of. If only there were more people who had your inspirational attitude and dedication to self.
    Well done mate!! Enjoy yourself and pay no mind to those who put you down. Its just the envy, greed and hatred they have developed over the years. Nothing to do with you. Its what you represent that brings out the worst in them.
    Adrianus
    22nd Feb 2019
    4:23pm
    ardenher, very well done!!
    You have a lot to be proud of. If only there were more people who had your inspirational attitude and dedication to self.
    Well done mate!! Enjoy yourself and pay no mind to those who put you down. Its just the envy, greed and hatred they have developed over the years. Nothing to do with you. Its what you represent that brings out the worst in them.
    Mad as Hell
    19th Feb 2019
    5:01pm
    If a car manufacturer sold a car with seven years warranty. Then after five years the manufacturer said we are only going to offer five years warranty they would still have to honour the seven year warranty because that is called grand fathering and the honorable thing to do.
    If politicians bought the same car as pensioners we’d all be driving around in BMWs with free fuel.
    Until politicians are driving the same cars as pensioners they’ll keep using helicopters and flogging the gold pass.
    Honour being something present day politicians are lacking.
    Old Geezer
    19th Feb 2019
    5:13pm
    I actually had a similar thing happen to me. I was offered 5 years warranty and after 3 years they said I didn't have any warranty. Found the paperwork and got the extra 2 years.

    Problem with pollies is that it not their money so they just don't care what it costs.

    I used to work in a job that took me all over the country and was given very lucrative allowance and if for some reason it cost me more they paid the difference as well. If it cost me less I pocked the difference. I used to find the best deals I could and pocket about half the allowance tax free.
    TREBOR
    19th Feb 2019
    5:47pm
    a. privatisation
    b. greed is good
    c. piss poor management from the top down
    d. adherence to the myth of a 'global economy' that only works for a few
    e. gutlessness in politicians to support their own people first
    f. endless pursuit of every whining complaint by a vocal minority instead of looking to the interests of all
    g. rising cost of food and services
    h. 'user pays' - meaning that now a person becomes a user whether they do or not.
    Misty
    20th Feb 2019
    1:14am
    Coles has certainly put up their prices this week on fresh packaged meat, but refuses to add the extra $ to their milk, SHAME ON YOU COLES AND ALDI.
    Rae
    20th Feb 2019
    9:45am
    Buy a branded milk. A2 actually froths properly in the coffee maker. The watered down cheap brands are not that great.

    Meat will continue rising. A drought and flood will devastate the herd and the flock. Check out pork, chicken and eggs. Tinned fish when on special and remember sugar too as the cane has gone too.

    I buy pork shoulder and use the inside meat for stir fry, kebabs and meat pies and the skin strip for a treat baked or use it to feed the kookaburras that visit or the cat.

    It is reasonably lean.
    Misty
    20th Feb 2019
    10:20am
    Good points Rae, I think we will all look and spend more carefully now, I certainly will check out the weekly supermarket brochures much more carefully now. I feel sorry for all the young families with children, they must be finding it increasingly difficult to budget with the cost of living rising but wages stagnent.
    Adrianus
    22nd Feb 2019
    4:04pm
    People are worried, there is a great fear out there that Bill Shorten could be dancing on the coffee table in the lodge. He has $200B in taxes lined up for all of us.
    People are not stupid, they recall what happened last time we had a Labor government. Many projects were put on hold.


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