While Australians’ financial comfort levels have improved over the past six months, households remain cautious with savings and investments.
The latest ME Bank Household Financial Comfort Report shows overall household financial comfort increased by 4 per cent to an index reading of 5.5 out of 10 during the first half of 2013, the highest level since the report was established in October 2011.
ME Bank consulting economist Jeff Oughton said that in the past six months, Australian households have significantly reduced their overspending and increased their savings.
“There’s been a 4 per cent fall in the proportion of households struggling to save each month to 49 per cent of households, with 51 per cent of households now saving each month, the first time we’ve seen savers outnumber spenders,” he said.
“For those families spending more than they earn, the average amount spent above income each month fell from $701 to $395 in the six months to June 2013, with the largest contribution coming from households with children.
“But despite their improved financial comfort, most households remain cautious with savings and investments.
“Households have preferred to pay back debt, with the number of households putting extra money into loan repayments increasing 6 per cent to 56 per cent in the six months to June.”
According to Mr Oughton, households are most worried about the cost of necessities, with 52 per cent indicating that this was a concern.
“Household behaviour as identified in the ME Bank Report certainly supports the case for further rate cuts by the [Reserve Bank of Australia],” he said.
“The increase in overall household financial comfort had been driven by the rise in share markets and to a lesser extent the housing market, as well as lower interest rates, which have reduced debt repayments and boosted savings.”