Costs up as wages cop the squeeze

A GROWING number of cash-strapped Australians are spending every cent they earn each month and many have been hit with significant wage cuts.

The latest biannual ME Household Financial Comfort report released today examined household finances over the past six to 12 months.

It revealed 52 per cent of households spend all their income each month – an increase of 3 per cent from the previous report. And a quarter of households have suffered a fall to their household income in the same period.

ME consulting economist and report co-author Jeff Oughton said many Australians had little or no savings buffer and it was putting heightened stress on families. More than half of those surveyed had cash savings of less than $10,000; another 26 per cent said they had savings of less than $1000.

“Non-discretionary items like putting petrol in your car and turning on the lights and keeping warm, those costs are rising much faster than general prices and people’s incomes,’’ he said.

“There’s a cashflow squeeze on and equally about 50 per cent of people don’t have a dollar left at the end of the week.”

ME surveyed 1500 households and found that for people with low financial comfort, things are only getting worse.

The report also showed in the past year, 17 per cent of households could not always pay their utilities.

Another 19 per cent sought help from family and friends to help make ends meet.

Financial Counselling Australia’s chief executive Fiona Guthrie said that there was an increasing reliance on credit cards.

“We can’t continue with these big debts problems and not have an impact of people’s individual financial welfare,’’ he said. “A lot of it comes down to easy credit card debt.”

Latest Reserve Bank of Australia figures show Australians owe more than $52.2 billion on credit cards and $33.1 billion of that is accruing interest. Many credit cards carry interest rates of 20 per cent or higher.