Australians are in financial stress as the gap between rich and poor widens

Rhona Wise/AFP/Getty Images

Australians worry most about how to pay for fuel, utilities and groceries, according to ME’s latest Household Financial Comfort Report.

The overall financial comfort of Australians is not improving with ME’s Household Financial Comfort Index stuck at 5.49 out of 10.

Comfort with paying monthly living expenses fell 3% to 6.40 out of 10 during the six months to December, the lowest it’s been since mid-2014.

“Many households’ financial situation is getting worse and again the culprit is living expenses, with 40% reporting this as a key reason,” says Jeff Oughton, ME consulting economist and co-author of the report.

“It’s unsurprising households are still feeling the pinch, given subdued income growth and the rising costs of energy, childcare, education and health.”

Wages have risen by an average of 2% in Australia while the cost of health insurance will rise by an average 3.95%.

Here are the financial stress points, according to the ME Household Financial Comfort Report based on a survey of 1,500 households:

Source: ME

Some 30% of households reporting their financial situation worsened in the past year while 35% said it was the same and 35% saw an improvement.

Around 61% of households with low levels of comfort reported a significant worsening in their overall financial situation in 2017 while almost 70% on high levels of comfort reported that their financial comfort improved.

“In other words, the rich are getting richer and the poor are getting poorer,” says Oughton.

The hardest hit are those with incomes below $40,000, 45% of which said their financial situation had worsened, as well as single parents and baby boomers.

More than half of those earning $100,000 or more reported income gains while only 29% of those earning between $40,001 and $75,000 had wage rises.

More than half (56%) those renting or paying off a mortgage were contributing more than 30% of their disposable household income towards this cost — a common indicator of financial stress.

Some 72% of renters were spending 30% or more of their disposable income on rent.

The Household Financial Comfort Index:

Source: ME

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