Inflation may no longer trending upwards, but cost of living issues are still taking a toll across Australia, with Lifeline reporting increased volumes of people calling to talk about financial distress.
Currently, the biggest cause of stress is living costs, health, and personal financial issues – according to the NAB Australian Wellbeing Survey – as average household savings have plummeted from 20 per cent in 2020 to 3.75 per cent in 2023.
Inflation may be cooling off, but the cost of living for many is still high.Credit: Trevor Collens
This same report found 70 per cent of mortgage holders are facing mortgage stress.
When inflation’s not an issue, the typical rule for personal household cashflow management is 50/30/20 – 50 per cent on non-discretionary expenses, 30 per cent for discretionary and 20 per cent for savings.
Now, the cost of living has increased so much, due to rising interest rates, higher rental costs and essentials price hikes, that a more realistic figure for many Australian households is 70/25/5.
If you can try to save at least 5 per cent, it gives you a buffer if something goes wrong, and helps ensure that you come out the other end of these trying economic times with some savings set aside for the future.
By doing these things you can help maintain your financial stability and hopefully thrive in the face of rising costs.
If saving is not an option, and you’re finding it hard to meet your current expenses, you’re under financial stress. This can be mentally overwhelming, and there are a number of options providing professional help including phoning Lifeline or accessing their financial stress support toolkit.
If you have some wriggle room after essential spending, here are six useful strategies to manage household cashflow and still be able to save: