As the official cash rate languishes at just 1.50% and it remains a challenge for savers to find a good interest rate on their money, Australian households are putting aside less of our disposable income. As of September 2016, we were saving less than 8% of our income, far less than the 11.8% we were frantically stashing away back in 2012 in our post-GFC belt-tightening phase, according to the Australian Bureau of Statistics (ABS). Reserve Bank of Australia (RBA) data shows the drop back down to single figures started at 9.9% in July 2013. Not to worry, though – we’re still doing better than we were for a long time from the 1970s to the late 2000s.
Why are Australians saving less?
There are many reasons behind households saving less money during different seasons. Unemployment has remained reasonably high at 5.7%, which is low by global standards but high by Australian standards. When people have security of income, they can save more, while those without it must let their savings take a blow.
Over the past few years, Australian households have also been busy paying off our credit card debt instead of building our savings – certainly a worthy goal. According to the RBA, the amount of credit card debt we were paying interest on in July 2012 was a whopping $36.5 billion; in July 2016 that amount was “just” $32.1 billion.
Our home loans might also be having an impact, with a recent survey by Mortgage House finding reasonably high levels of concern over monthly loan repayments, even among double income families.
Compare savings accounts
If you are managing to save some cash, make sure that (particularly when interest rates are so low) you get the best return on your money that you can. Currently on CANSTAR’s database, for example, as at 22 September 2016 savers can earn a total interest rate (base rate plus bonus rate) of up to 3.20% in an online at-call savings account.