Ba­sics bite fam­i­lies

New re­search re­veals house­hold es­sen­tials are caus­ing us the most fi­nan­cial stress, writes An­thony Keane

The Cairns Post - - MONEYSAVERHQ -

AFFORDING ne­ces­si­ties such as fuel, gro­ceries and util­i­ties is the big­gest fi­nan­cial worry for Aus­tralians, a new re­port says.

ME’s House­hold Fi­nan­cial Com­fort Re­port, re­leased to­day, says house­holds are more pes­simistic about the fu­ture, their fi­nances are frag­ile and 40 per cent of those whose fi­nan­cial sit­u­a­tion wors­ened in the first half of 2017 blame the ris­ing cost of ne­ces­si­ties.

“House­holds have been hit with bill shock in the first half of 2017 and are an­tic­i­pat­ing more to come,” con­sult­ing econ­o­mist and re­port co-au­thor Jeff Oughton said, adding al­most 70 per cent of house­holds re­ported stag­nat­ing or fall­ing in­come as con­sumer prices climbed.

“Some items have risen sharply, peo­ple don’t have sav­ings and nearly 27 per cent have had in­come cuts. Th­ese things are com­bin­ing.

“About one quar­ter of Aus­tralians have in­comes of less than $40,000 per an­num and an­other 30 per cent are be­tween $40,000 and $75,000. There isn’t a lot left over to save or for a fi­nan­cial emer­gency.”

Bu­reau of Statis­tics data shows prices of elec­tric­ity, gas, coun­cil rates, wa­ter rates, health, hous­ing and rents have climbed at least twice as fast as in­fla­tion over the past decade.

The ME Re­port says self­funded re­tirees have the high­est level of fi­nan­cial com­fort, much higher than re­tirees re­ly­ing on the age pen­sion, while sin­gle par­ents re­ceiv­ing gov­ern­ment as­sis­tance have the low­est com­fort lev­els.

It says ex­pec­ta­tions of in­ter­est rate rises are caus­ing con­cern, and Mr Oughton said peo­ple should “stress test them­selves for in­creases in in­ter­est rates over the next few years”.

ME’s head of de­posits and trans­ac­tional bank­ing, Nic Emery, said ne­ces­si­ties could eat a large chunk of house­hold in­come, but there were ways to save on es­sen­tials.

“In­ves­ti­gate what you spend your money on and iden­tify if any­thing could be cut out,” he said.

“Ques­tion what you buy and where you shop — could you be get­ting a bet­ter deal? Set a bud­get on costs and stick to it.”

Mr Emery said peo­ple should iden­tify low cost en­ergy providers and con­sider switch­ing, and adopt a sim­i­lar strat­egy with their home loan.

“Ne­go­ti­at­ing your home loan rate or switch­ing lenders could save some peo­ple, for ex­am­ple, up to $130 per month, $1560 a year or $46,000 over the life of the loan,” he said.

Set­ting some ground rules when gro­cery shop­ping was also a good idea, Mr Emery said.

“Al­ways shop with a list — it pre­vents im­pulse buy­ing, which can be a real bud­get breaker. Avoid stock­ing up on prepre­pared foods — you’ll save a bun­dle by opt­ing for home­made.

“Where pos­si­ble, hit the su­per­mar­kets to­wards the end of the day when fresh pro­duce like bread, fruit and meat can be heav­ily dis­counted.”

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