More Australians appear to be financially struggling as the cost of living continues to rise. A survey undertaken by the website Compare the Market found that as much as 15% of people had no savings they could tap into in case of emergencies.
On average, Australians are estimated to have about $19,998 in savings. However, this figure can vary widely depending on which generation is being surveyed. Gen Z, born between 1995 to 2009, was found to be the worst off with as little as $1,019 in savings. This is however attributed to many having only recently joined the workforce, with some having to juggle both work and study commitments.
Millennials, born between 1980 to 1994, were found to have an average emergency savings of $20,746 while Gen X, born between 1965 to 1979, had an average of $23,405. Baby boomers were found to have the highest level of savings with an average of $23,504 stashed away for emergencies.
According to Compare the Market’s Media and Communications Advisor, Natasha Innes, Australians without savings were likely to find themselves in debt, use up credit cards, and take up high-interest loans.
The survey found that 61% of households were particularly struggling with the increased cost of groceries, fuel, and energy. About half of households had reduced their rate of saving, while one in four were digging into their savings to make ends meet. This has been further compounded by the Reserve Bank’s recent decision to raise the official cash rate by 25 basis points which is estimated to increase loan repayments for Australians by an average of $1,200.
For those able to save, the new cash rate does, however, mean they can look forward to record-high interest rates on their savings accounts. Savings rates are estimated to rise past the 6% mark, with smaller banks being the most generous. Savers are however being warned that some high-interest savings accounts come with stringent rules to qualify for the bonus interest.
For instance, the Future Saver account offered by the Bank of Queensland requires account holders to deposit at least $1,000 and make a minimum of five transactions per month to qualify for 5.5% interest, otherwise, they will earn just 0.05%. Australians are being urged to carefully look into the terms and conditions of high-interest savings account to ensure they qualify and carry out comparison shopping to understand their options.
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