Finder’s Cost of Living Pressure Gauge: Australians under extreme stress
Australian households are nearing the top of their financial pressure limits, according to new research by Finder.
Finder's Cost of Living Pressure Gauge – which combines data from Finder's Consumer Sentiment Tracker (CST) and the Reserve Bank of Australia (RBA) – assesses the economic strain experienced by Australian households.
The pressure reading takes into account housing stress, salary expectations, household debt, financial stress, household savings, holiday plans, credit card spending, the RBA cash rate target, property prices and inflation.
At an "extreme" pressure level of 79% at the end of November:
- 78% of Australians feel extremely or somewhat stressed about their finances
- 37% of homeowners and 44% of renters are struggling to pay for a roof over their head
- The RBA's cash rate target of 4.35% is its highest since 2011
- As of September 2023, annual inflation is at 5.4%
- 64% of mortgage holders cite mortgage stress as a key financial concern
Comparatively, at a "moderate" pressure level of 45% in November 2020:
- 68% of Australians were feeling extremely or somewhat stressed about their finances
- Only 18% of homeowners and 32% of renters were struggling to pay for a roof over their head
- The RBA's cash rate target was significantly lower at 0.10%
- Annual inflation was recorded at 0.9% in November 2020
- 42% of mortgage holders cited mortgage stress as a key financial concern
Graham Cooke, head of consumer research at Finder, said the cost of living crisis is deeply impacting individuals across the country.
"The November 2023 reading of the Finder Cost of Living Pressure Gauge at 79% is a good indication of how under the pump Aussie households are feeling.
"Despite a slight decline from the May 2023 peak of 85%, current levels remain considerably higher than most of 2020 and 2021.
"As households look to stretch their budgets further, this affects their ability to create a decent savings buffer to protect themselves from further pressure."
Cooke said households looking for ways to trim their budget should identify areas they can cut back without compromising their basic needs.
"Recognise areas of spending that don't provide significant value and consider cancelling or downgrading.
"Our gauge's results show a stark reality – rising costs, housing stress and the reliance on credit cards for financial management are putting millions under the pump.
"Whether it's refinancing or switching energy providers, there are big savings to be had by shopping around and comparing your options."
See the full reading here.