Average household income $145,400 but savings only 7% of income

Research from IBISWorld showed while the average household income now sits at a high $145,400 across Australia’s 9.3 million households, savings including superannuation, are only around 7% of income.

IBISWorld chairman Phil Ruthven described Australian savings as “lumpy”, sometimes negative ­and “rarely at the desirable level of 10% to 12% of gross incomes that can ensure a dignified and comfortable retirement of around one-third of average household incomes.”

“Savings were negative through the middle of the last decade, well before the impact of the global financial crisis at the tail end of the decade, which was a wake-up call to recalcitrant and spendthrift households,” Ruthven said.

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So if we aren’t a nation of savers, what are we spending our cash on?

The major expenses include 14% tax man, 13.6% rent and other dwelling costs, 12.3% capital related and 8.1% financial services. However most of our total income is being put towards “non-durable” retail spending, such as tobacco, alcohol, clothing and vehicle costs at 16.9%. See how much you could save by giving up a bad spending habit by using Mozo's vice calculator here.