One in five Australians have less than $250 in savings and two thirds of those have no savings at all, according to new research from AMP Bank.
AMP Bank has put the spotlight on Australians’ savings habits at a time when wages have been weak, the cost of living continues to increase and interest rates are at a record low causing challenges for would-be savers.
The key findings include:
- One in five of Australians aren’t saving any of their monthly income.
- 20 per cent have less than $250 in savings and nearly a third (31 per cent) have less than $1,000 in savings.
- People in Tasmania and West Australia have the least amount of savings, with a third and a quarter, respectively, having less than $250 in their savings account.
- Men, on average, have nearly 20 per cent more money saved than women, with nearly a quarter of women (23 per cent) having less than $250 saved.
- Unsurprisingly, 18 to 24-year-olds have the lowest savings balances, with nearly a third having less than $250 in a savings account.
- Forty-two per cent of Australians are uncomfortable about the amount they have saved and nearly half of respondents (46 per cent) regularly dip into their savings.
The research has found people’s wages are mostly consumed by everyday living costs or bills. Other living costs such as school or daycare fees, however, are also negatively impacting people’s ability to save.
AMP Bank CEO Sally Bruce said: “Our research is reflective of national data, which shows a decline in the savings rate since the GFC. A number of factors have contributed to this including rising housing wealth until recently at a time of weak wages growth and ongoing increases in the cost of living. And with interest rates at record lows it’s little wonder Australians don’t have anything spare to put away, and what they do have saved is only growing slowly.
“For most Australians, having a pot of money to use when times are tough or to fund the nicer things in life such as a new home or a holiday can have a huge impact on health and morale as well as your wallet.”
Make Australia Save Again
According to the research, more than a quarter (26 percent) of Australians currently do not have a savings account. Of those who do, nearly half (43 per cent) don’t know their interest rate. It pays to be engaged, however. The research showed savers who know their interest rate end up saving more than twice as much each month to those who don’t.
Almost half (44 per cent) of Australians agree that a higher-interest savings account would help get their savings back on track followed by a salary increase (41 per cent) and being able to better manage their finances to avoid dipping into their nest egg (29 per cent).
Ms Bruce said: “Our plan to make Australia save again is simple. For starters, we’re encouraging people to be savvy with their savings and to find accounts that deliver them competitive interest rates.
“The more we can encourage Australians to take an interest in interest, the more they will be able to grow their wealth and reduce the impact of unexpected costs or afford the extra things in life they want. As AMP Chief Economist Shane Oliver says there’s power in compound interest!
“It’s common sense, but we’re also encouraging people to work on their financial literacy. Clean up your finances regularly to see where you could be getting a better deal. Review your spending patterns to see where you can save money. Set some savings goals and commit to putting aside a certain amount each month, no matter how small it may seem.
“There’s a wealth of great money-building information available online including AMP’s financial hub, which has some great tips on how to save.”
Other useful links
- How to boost your savings: https://www.amp.com.au/personal/hub/manage-my-money
- Find out more about the new AMP Saver offer: https://www.amp.com.au/saver
AMP commissioned Pure Profile to conduct a survey amongst 1,000 Australians.