Aussies Living Precariously

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  • Eighty six per cent of Aussies have been forced to sacrifice their financial dreams as the cost-of-living crunch stretches household budgets.
  • At the same time, nearly half of Aussies (49 per cent) admit to being kept awake at night by financial concerns with higher inflation (35 per cent), unplanned expenses (22 per cent) and mortgage or debt and rising house prices (each 14 per cent) causing the most financial stress
  • Home ownership remains Australia’s top financial aspiration, with bucket-list holidays and early retirement rounding out the top three money goals.

Sydney, March 29: Nearly 9 in 10 Aussies are making sacrifices to their financial dreams as the cost-of-living crunch stretches household budgets, according to a new survey from Australian fund manager, Betashares. 
The survey revealed the increasingly high cost of living has forced 86 per cent of Aussies to rethink their financial goals with a view to making sacrifices – of this cohort, 35 per cent admitted to making significant sacrifices to their financial aspirations as inflation and interest rate hikes stretch household budgets to breaking point.
Millennials and Gen Xers were most likely to rethink their financial goals, with 40 per cent from both age groups reporting that “everything’s changed” in the face of rising affordability issues.
Baby Boomers were far less likely to report significant changes to their financial aspirations in the current climate.
In terms of financial aspirations themselves, there were further significant differences in the aspirations of Baby Boomers and younger Aussies, with home ownership more likely to be ranked as the number one financial aspiration by 18–55-year-olds (52 per cent), while those aged 55 plus years were more likely to rank a bucket list holiday or experience as their number one aspiration.
Baby Boomers reported wanting a more comfortable retirement than their parents before them, with holidays on top of the agenda.
Thirty one per cent of those aged 55+ years stated they wanted a more comfortable retirement when comparing their financial aspirations to those of their parents, with 20 per cent saying they would like to travel more.

The great Aussie sleep debt

Financial concerns are literally keeping us awake at night with nearly half of adult Australians or 49 per cent of those surveyed admitting that money worries are causing sleepless nights. Aussie women were more likely to be feeling the stress of money worries, with a staggering 57 per cent of women saying finances have left them lying awake at night. 
Overall, the survey found that the higher cost-of-living was the number one financial stressor for Aussies (35 per cent), followed by unplanned expenses (22 per cent) and mortgage/debt and rising house prices equal third (14 per cent each).
More specifically for young Australians (18-34 years) yet to break into the property market, rising house prices, mortgage or debt and higher inflation were equally weighted (25 per cent), all getting in the way of the great Aussie dream of home ownership.

House with white picket fence still the dream

Ten consecutive interest rate rises have failed to deter Aussies from the dream of owning their own home.
In fact, 38 per cent of 18–24-year-olds say home ownership is more important to them than their parents’ generation.
It’s not surprising younger Australians are looking to build a secure home for themselves given 64 per cent state their family has the biggest positive influence on their financial aspirations.
The survey comes as Betashares’ own mortgage affordability index reveals that the repayment burden on households in Sydney is sitting at levels not seen since the 1990s when the Reserve Bank’s cash rate was 16 per cent – which is a significantly higher than today’s RBA cash rate of 3.6 per cent with another 0.25 per cent rate rise from the RBA on the cards for early April.


Nearly half think being a millionaire will provide financial security

Financial security means a lot of different things to different people – with nearly half of Aussies or 46 per cent of those surveyed saying they would need over $1 million in the bank to feel financially secure.
However, over a quarter of 18–24-year-olds revealed they would need less than $150k in the bank to make them feel financially secure – despite the fact that home ownership ranks as a top three financial aspiration for over two-thirds of the cohort.

Saving is the new black

Another trend to come out of the research was that Aussies are really cracking down on saving, with 28 per cent admitting that one of the key financial goals to have changed in the last 10 years is a greater emphasis on saving.
This is equal to those who admitted home ownership is more important to them now.  
The data found that parents were more likely to prioritise saving for the future, home ownership and their children’s education.
Aussie parents stated that since having children their priorities have changed with saving for the future more important than home ownership and saving for children’s education coming in at third.
Commenting on the findings of the survey, Betashares’ Kirsty Lamont said it’s concerning so many Australians are being forced to sacrifice their financial aspirations amid the ongoing cost-of-living crunch.
“It’s clear that the cost of living and inflation feels like a roadblock for our financial progress. Unfortunately, these concerns are keeping many of us up at night and leaving many more of us feeling as though we need to sacrifice some of our financial dreams,” Lamont said.
“Australia may have changed for the better in recent years, but the Great Australian Dream of home ownership remains key to our financial security, forming the foundation of our plans to build a life, raise a family and enjoy a secure retirement,” Lamont added.
Despite the cost-of-living crunch, Aussies can still pursue their financial aspirations by taking the following steps:

Prepare a realistic and measurable plan to achieve financial aspirations that includes short, medium, and long-term goals.

Take control of your expenses by creating a sustainable budget, cutting back on wasteful spending and paying down any high interest debt, like credit cards.

Save and invest for the long-term by setting aside a portion of your income for emergency expenses and longer-term financial aspirations.

In order to boost savings and start an investing habit, focus on low-cost, diversified investment options like index fund or ETFs relevant to your personal risk profile, and aim to contribute to that investment regularly (e.g. monthly or quarterly).

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