Australian households have a lack of cash savings, according to the latest ME Bank Household Financial Comfort Report.
Only 46% of households reported the ability to save each month, according to the June 2014 survey. This is the lowest level since ME Bank began the survey in October 2011. Of the rest, 42% were breaking even and 12% were overspending by drawing on savings, loans or home equity.
For the households that are able to save each month, the amount they are saving has decreased by 12%, whereas the households that are overspending have increased their spending by 13%.
These bad savings habits have revealed that about one third of households have less than $1,000 in cash-on-hand and 24% of households don’t think they could raise $3,000 for an emergency.
Financial expectations for the next year don’t show any signs of improvement, either. The survey reported that household expectations of financial comfort for the next 12 months has fallen by 10% since the last survey to December 2013. These concerns have a strong link to the 2014-15 Federal Budget, with 67% of households expecting their situation to worsen due to the budget cut-backs.
The ‘cost of necessities’ continues to be the biggest worry for Australian households, while the level of cash-on-hand came in as the second biggest worry, and the ability to maintain a certain lifestyle in retirement is the third biggest worry.
The biggest positives that came out of the survey were being able to make ends meet and job security.