ING Direct Household Financial Wellbeing Index reveals two out of three households struggle between pay days

AUSTRALIANS are battling to get by with two in three admitting to being strapped for cash between pay days. This is the reality of our cost of living hell.

Australian households may be suffering financial stress but many would still rather save

AUSTRALIANS are struggling to get by with two in three admitting to being strapped for cash between pay days.

And one in three households have used credit cards to tide them over, while almost half reveal they would need an extra $300 per week in their take home pay to be financially comfortable.

But while many Aussies may be struggling between pay days, more than 80 per cent admit they would still rather save a five per cent payrise than spend it, given the chance.

Those are the key findings of the latest ING Direct Household Financial Wellbeing Index which reveals many Aussies are not only struggling to make ends meet but are battling to build personal wealth as well.

According to the ING Direct report, only nine per cent of Australians are entirely comfortable with their current take-home salary.

And of the 63 per cent who admit to feeling the pinch between pay days at some stage, 15 per cent say it is always a stretch.

Of those who are struggling, 35 per cent have dipped into savings to get by and 33 per cent have used their credit card.

One in ten households have even borrowed from family.

Australian households may be suffering financial stress but many would still rather save than withdraw any extra money extra spending money they have.

The quarterly financial Wellbeing Index rates household comfort levels across six key aspects of personal financial wellbeing including credit card and mortgage debt, savings, investments, household income and ability to pay bills.

Michelle Hutchison, Money Expert from comparison website finder.com.au, said it was concerning that so many Australians are struggling to get by, particularly when interest rates are at an all-time low.

Ms Hutchison said with the Reserve Bank cash rate sitting at 2.50 per cent home loan borrowers should have more disposable income due to lower repayments.

“However there are good signs that many households are in a better position and saving more money, with a record $648 billion in total household deposits by banks according to the Australian Prudential Regulation Authority (APRA),” she said.

“Because of the lower interest rates, it’s important that savers make their savings work as hard as possible by choosing a high interest savings account.

“Our research shows that savers are missing out on over $1 billion by keeping their savings in an average savings account.”

According to the ING report, NSW and QLD households were the most likely to experience a cash shortfall overall (65 per cent) and were also the most likely to admit they would need $300 to feel comfortable (51 per cent) compared to 37 per cent of South Australians.

Those in NSW were also the least likely to save that extra cash, 79 per cent, compared to 87 per cent of frugal South Australians.

But according to Executive Director of Customer at ING DIRECT John Arnott the news wasn’t all bad.

He said while many households are struggling, the report showed most people were sensible spenders and would rather save than splash out.

“Although many Australians are experiencing a shortfall of cash between pay cheques, these households are likely to be including savings and debt repayments into their monthly commitments,” Mr Arnott said.

“With this in mind, Australians continue to take a sensible approach to household financial management.

“Further supporting this is the fact that 82 per cent of households would put a 5 per cent pay rise towards growing savings or paying down debt.”

One in three people have relied on one of these to get by.

Mr Arnott told news.com.au that the report showed a definite shift from spending to saving compared to pre-GFC levels.

“It’s a healthy sign that Australians have become more disciplined,” he said.

He added that Australians had taken note of how overseas countries such as Britain and the US had handled the GFC and simply didn’t want to find themselves in the same situation and end up in dire straits.

In terms of household bill payments, the ING report also found six per cent of homes said their income wasn’t enough to cover immediate bills and debt, while seven per cent said it was impossible to pay all monthly bills on time.

As for savings, 15 per cent of people admitted they had none, while one in four households said they didn’t have any investments or assets at all.

But in good news for homeowners thrifty Australians were more likely to be ahead on their mortgages too with 42 per cent paying down ahead of time.

Chief economist at ABC Bullion Jordan Eliseo said he wasn’t surprised to find the majority of Australians would rather grow savings or pay down debt if they were given a pay rise.

Mr Eliseo said Australians are facing low wage growth, increases in the cost of living, and rising unemployment.

“For those with a mortgage, they’re also sensibly trying to get ahead there, fearful of a rise in interest rates,” he said.

“With that in mind, building up savings or paying down debt is a very sensible option.

“It’s just a shame that the RBA has pushed interest rates so low, as the return everyday Australians (who can’t afford to buy stocks or property) get on cash is barely in line with inflation.”

Some Australians are really struggling each month to get by.