Life is free, but not cheap
YOU can finally put a price tag on life: $2.17m.That’s the grand total for the average Australian to pay for food, education, housing, health, transport, recreation and all the other basics of living from cradle to the grave.
Using ABS research and economic analysis, the figure estimates just how much money goes into keeping us happy and healthy for our average life expectancy, which is nearing 82 for a child born today.While different people will spend differing amounts, our analysis shows the average Aussie spends more than $400,000 on housing, nearly $350,000 on food and non-alcoholic drink and a perhaps surprisingly high $332,424 on transport during their lifetime.
Recreation racks up nearly $260,000, followed by health expenses ($123,958) and running your household.Just over $72,000 will take care of your clothing requirements, while $61,375 will pay for petrol for your car and power for your home.
And tobacco and alcohol alone will set you back more than $80,000.
The bad news is that the multi-million dollar price tag has gone up 50 per cent in a decade. The biggest jumps since 2003-04 have come in housing, health and education.
Research from IBISWorld, commissioned reveals that in today’s dollars five years of renting would cost nearly $92,000 - 51 per cent more than what a child born in 2003-04 could expect to pay.
Likely preschool costs were also found to have soared, up 50 per cent to $13,760 in current terms, while medical expenses were forecast to be $1000 a year or nearly 30 per cent higher at $4450 versus $3450. IBISWorld industry analyst Craig Shulman said the big increase in the likely cost of rent was due to restrictions on housing supply and greater numbers choosing to avoid mortgage obligations.This was driving up demand for properties for lease.
Pre-school bills were on the rise because of legislated staffing requirements standards were higher, but so were costs, Mr Shulman said.
‘‘Many of the trends that have influenced price changes over the past 10 years are expected to continue,’’ he said.
‘‘A lower Australian dollar and low interest rates will lead to international investors increasing their involvement in the residential property market in coming years, leading to further rises in housing prices.’’
The good news is that Mr Shulman’s analysis also reveals that incomes have grown faster than the cost of living.
Over the decade to 2013-14, and accounting for inflation, IBISWorld said earnings had increased 11 per cent.‘‘The standard of living is improving,’’ National Centre for Social and Economic Modelling (NATSEM) principal researcher Ben Phillips said. He defined the standard of living as wages minus expenses.
Research by Mr Phillips shows that, for the one-third of households with mortgages, the cost of living has not budged for the past two years. This is because home-loan rates have been falling. For most borrowers they are now under 6 per cent. Some are paying less than 5 per cent.
‘‘What might be a risk into the future is people getting used to low interest rates. What goes down comes up,’’ Mr Phillips said.
The estimated total ‘‘cost of living’’ has been calculated by extrapolating the most recent ABS Household Expenditure Survey using the latest Consumer Price Index, then multiplying it by the average life expectancy.