COST OF KEEPING UP WITH THE JONESES
Research has found maintaining an affluent lifestyle is costing Australians dearly, writes Sophie Elsworth
ONE in three Australians is feeling the pressure to keep up appearances and maintain a certain lifestyle, and it’s hitting hip pockets hard.
Australia remains one of the most indebted countries in the world, as new research by Mortgage Choice finds 35 per cent of people feel the pressure to look financially well off.
Susan Mitchell, the company’s chief executive officer, said many people – particularly those who were yet to buy property – were showing off their lifestyles and putting this ahead of buying a home.
“Worryingly, the research revealed that 38 per cent of Australians are choosing to forgo buying their own home in order to keep up appearances,” she said. “Everyone else seems to be able to do everything and you want to participate. That’s part of it.”
Ms Mitchell said soaring house prices in the past decade, particularly in
Sydney and Melbourne, often left first-home buyers despondent.
Buying a home seemed like “such a big mountain to climb”, she said. “Although it’s very tempting to keep up with the trends, it can be a dangerous strategy to live for today and not have a strategic plan for your longer term financial security.” Despite property remaining expensive in many cities, prices are declining. Australian Bureau of Statistics data shows that in the December quarter the national average price of homes fell by $15,700 to $651,100. Single mum Sarah Mudford, 42, slowly climbed the property ladder after buying her first home in 2009, and said it came down to being smart with her cash.
“I saved hard and worked hard,” she said. “In the last five years I’ve saved to get into the investment property market.
“I also got Chinese homestay students to move into my house because I had spare rooms. That enabled me to continue to save and also pay for a holiday over to Europe for six weeks.”
Ms Mudford upgraded to a five-bedroom house in Melbourne in 2012 and then last year purchased an investment property: a two-bedroom unit in Brisbane.
She said it “was not spending on the little things” that helped her get ahead financially.
Financial adviser Scott Haywood warned younger Australians not to get caught up in “FOMO (fear of missing out) land”.
“You should live within your means and reduce debt,” he said.
“In an environment where we have no wage growth, people need to pull their head in, be realistic and understand where you are at financially rather than painting a picture on Facebook that makes you look wealthy.”
The Mortgage Choice research also found that about one in five Australians saves snothing each pay cycle.