Cost of living chews through savings, according to survey

Cost of living pressures have continued to challenge the spending and saving habits of Australians, as a new survey from Compare the Market has revealed just how dire a loss of income would be.

Just under one quarter of the 1,005 Australian survey respondents (24.68 per cent) said they would only be able to live for one month or less on their savings if they lost their job or ability to work. This falls to 12.04 per cent when taken up to two months. Approximately 16.52 per cent said they would survive on their savings for at least 12 months or more.

“The study reflects the difficult economic times individuals and families are facing in order to live everyday – on the back of multiple interest rate hikes and an inflation spike in recent years,” Compare the Market spokesperson, Chris Ford, said.

“Australians also had the highest amount of debt compared to Americans and Canadians – likely due to recent homebuyers stretching their budget further, with debt highest for those under 41-year-olds – but was offset by Australians putting $964 into savings per month on average.

“Despite the financial challenges, savings are still critical. That’s why it pays to compare on the essentials – including insurance, home loans, electricity, and fuel – and have a more money-wise mindset to help with accumulating savings.”

The survey also covered individuals in the United States (1,003 individuals) and Canada (1,002 individuals), with 24.23 per cent of those living in the US able to live on their savings for one month or less; Canada reported almost exact results at 24.25 per cent. However, both countries performed slightly better than Australia regarding savings lasting for at least 12 months, with the US recording 15.85 per cent and Canada seeing 12.97 per cent.

Australians also recorded the highest amount of debt – including student loans, home loans, personal loans and buy now pay later (BNPL) debt – compared to Americans and Canadians, with AU$145,140 (US$93,935). The US almost halved this amount at US$50,157 and Canada recording even less at CA$50,967 (US$37,032).

The research also found that American and Canadian 26-to-41-year-olds were more likely to dip into their savings once a month to help with expenses (37.62 per cent Americans and 33.35 per cent Canadians). In Australia, the younger Generation Z aged 18 to 25 years was more likely to do this (27.61 per cent).

However, Australian adults with children were the most likely to have used or prevented their child’s savings in order to save money for themselves (15.48 per cent), followed by Canadian parents (12.54 per cent) and American parents (11.82 per cent).