With inflation showing no signs of slowing after the announcement of a 6.1 per cent increase in the June quarter Consumer Price Index (CPI), research reveals the rising cost of living ranks No.1 for financial worries among Australians, with 61 per cent saying it’s their top concern.
Nearly half (48 per cent) of Australians said they would have significant challenges meeting their expenses and debt repayments this year.
The findings were derived from a survey of 1018 mortgagors commissioned by Australian finance platform money.com.au. The survey was designed to rank the financial worries plaguing Australians over the next six months. The full survey results, including age and state breakdowns, can be found here.
Respondents were asked to choose their biggest financial worries for the remainder of 2022 from a list of eight concerns, and could choose more than one.
Concerns about the rising cost of living came out on top (chosen by 61 per cent of respondents). Having a financial buffer in case of an emergency ranked second on the list – chosen by 43 per cent of mortgagors.
Having enough cash flow to pay bills ranked third, chosen by 39 per cent of respondents, while meeting healthcare costs and private insurance and being able to afford non-essential spending ranked an equal fourth, with 36 per cent of respondents choosing these as their biggest worries.
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Having adequate cash and assets to retire with ranked fifth, chosen by a third (33 per cent) of mortgagors. The ability to meet mortgage repayments amid interest rate increases ranked sixth – chosen as one of the top concerns for 27 per cent of respondents. Paying off other debt, such as credit cards, personal loans and car loans, ranked seventh – chosen by 22 per cent of respondents.
Money.com.au analysed responses across age groups, and found that financial concerns between under-35s mortgagors and over-35s differed markedly.
Forty-four per cent of under-35s revealed they were most worried about meeting mortgage repayments due to rising interest rates, compared with just 25 per cent of 35 to 49-year-olds and 18 per cent of over-50s.
More under-35s (30 per cent) were concerned about paying off other debts, such as credit cards, personal loans and car loans. In contrast, 23 per cent of 35 to 49-year-olds and 18 per cent of over-50s expressed the same concerns.
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“Beyond mortgages, the findings show that older Australians are struggling to meet expenses and repayments at a similar level to younger age groups, with 44 per cent of over-50s admitting they are facing challenges,” said Helen Baker, financial adviser and spokesperson for money.com.au.
“This is concerning, given that our older population should have a nest egg of savings and are less likely to be navigating home loans and other repayments.
“It indicates that rapidly rising costs are too much even for those nearing retirement age and having to account for higher spending due to inflation may be putting a dent in their retirement funds.
“People also tend to ‘anchor’ on what superannuation was at its peak, however super balances are dropping and many may be starting to realise they have less funds than originally thought.”
Money.com.au also asked respondents whether the measures announced in the Federal Budget earlier this year, the majority of which came into effect in March and July – such as a $250 one-off payment to pensioners, carers, veterans, job seekers, concession cardholders and some self-funded retirees – would help reduce their financial worries.
Half (49 per cent) revealed it would, but only in the short term, while about a third (36 per cent) believed the measures would not ease their concerns, suggesting government stimulus was still coming up short.
“Unfortunately, the short-term stimulus put forward by the government is not enough to effectively impact the finances of those who are struggling this year,” Ms Baker said.
“Increasing inflation and interest rates point to a need for long-term solutions that allow Australians to protect their financial security.”
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Ms Baker’s top seven tips for Aussies feeling the sting of rising inflation.
- Prioritise your tax return. Tax season couldn’t have come at a better time for those who are struggling to make ends meet. Lodge your tax return as early as possible while closely examining the deductions you may be eligible for. On 1 July, a one-off $420 tax offset for more than 10 million Australians came into effect, with low- and middle-income earners receiving up to $1500 for a single income household or $3000 for a dual income household. Employers have until 31 July to submit an income statement. Individuals can also claim work-from-home expenses, including running costs, such as heating, lighting, internet, and phones. Those who run a home-based business may also be eligible for similar deductions.
- Lock in petrol prices. There are some clever ways to minimise the cost of petrol. For instance, petrol apps such as My 7-Eleven allow motorists to monitor prices across several of their local 7-Eleven petrol stations and lock in a price when it’s affordable for up to seven days. The price of petrol is also monitored by the ACCC, which offers predictions and buying tips for motorists across each major city every Monday, Wednesday and Friday. Using this information in conjunction with a petrol app will allow individuals to lock in the best prices possible each week, potentially saving hundreds on fuel costs.
- Consider a second income stream. Several industries are short on staff and facing challenges recruiting workers with total job vacancies jumping 14 per cent since February. The hospitality industry is a sector in dire need of workers. Consider picking up additional hours of flexible shift work at your local café, restaurant or bar for some quick cash.
- Review and switch providers. With utility bills climbing, households could review their suppliers and shop around for a better deal – then take that better deal to their current supplier, asking them to match it or do better. That way, households can reduce their energy and phone rates without the hassle of moving to a new provider. Key benefits to consider when switching or reviewing providers is whether they offer free energy days, free water hours, or other time-specific offers.
- Refinance everything. Individuals and families could review the interest costs on their loan repayments and work out whether it is worth refinancing. Now could also be the time to shop around for a better home loan if a fixed interest rate period is about to end. Those with an existing home loan could consider transferring personal or car debts to their mortgage, if they have the equity. For those with large credit card debts, there are a number of balance transfer credit cards on the market that offer 0 per cent interest on transfers for up to three years, allowing cardholders to get on top of outstanding payments.
- Consider a small balcony or backyard produce garden. Fruit and vegetable prices are increasing fast, with more to come in this sector. Getting the whole family involved in growing some easy herbs or vegetables on a balcony or yard will create savings, help household members learn new skills, help the kids learn about where their food comes from, and generally help the household bond over a rewarding project. A packet of lettuce, broccoli or carrot seeds from a major retailer costs as little as $2 each, while the price of one iceberg lettuce soared to $11.99 at one point.
- Reduce energy usage. Switching to a more cost-effective energy provider may not be enough to reduce bills to what they once were but small updates to the home could potentially reduce costs further, such as re-sealing an old fridge to keep it cooler without using as much power, and installing budget curtains or draft stoppers to keep warmth from escaping out of windows and doors. Some hot water systems continue to run even when they’re not in use and it may be worth turning the heating system off as required, while appliances, such as TVs and microwaves, continue consuming power unless they are switched off at the power point.
What are some simple money-saving tips you swear by? Why not share your suggestions in the comments section below?
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.