Confidence down after RBA rate cut, but Aussies know how to budget

Consumer confidence dropped 2 points to 87.7 over the past week after a significant increase the week before, says Roy Morgan.

The upward momentum that might have been expected following the Reserve Bank’s interest rate cut didn't hold and this is notable because last time the RBA cut rates in late 2020, confidence rose for two straight weeks and for five of the six weeks after the cut.

When optimists outnumber pessimists, the number moves above 100. However, ongoing inflation pressure hasn't helped confidence levels of late.

How do Aussie families feel about their money?

Consumer confidence can be measured in many ways and one of the more interesting angles for households is around personal finance. 

Specifically, only about a fifth of Australians (23%) say their families are ‘better off’ financially than this time last year, while 47% say their families are actually ‘worse off’, as per Roy Morgan.

Further still, views on personal finances over the next year weakened significantly (after being the biggest positive driver a week ago) with 34% of respondents expecting their family will be ‘better off’ financially this time next year, but 29% still expect to be ‘worse off’. 

Spending money as needed

Contrary to these recent confidence figures, spending on goods pushed up overall spending in late 2024, and there was a 1.5% rise for services in January, as per the Australian Bureau of Statistics.

This came as households spent more on health services, air travel, and sports and physical recreation services.

NAB data from earlier this year supports this idea: it showed that four in 10 Australians are actively budgeting for a major expense, with almost half of those (47%) saving for travel.

Other goals included new cars, household gadgets and home deposits, the report said.

These differences can be a bit confusing but indicate that Aussies are budgeting for certain costs when they need to, even if consumer confidence ebbs and flows.

Saving up: handling higher living costs

Higher living costs won’t just disappear and in fact Bendigo Bank recently reported that for households, “the most important outcome in 2025 will be moving on from the cost-of-living shock.” 

There's no easy way to combat steeper costs but having a savings buffer in place can be a good idea in uncertain economic periods. Indeed the government's Moneysmart site recommends setting up a separate high-interest savings account as an emergency fund.

"A separate account will mean you're less tempted to dip into it for everyday expenses," Moneysmart says.

This is why we monitor savings accounts rates closely at Mozo because we don’t think it’s worth sticking to a meagre rate - not when every penny counts!

Take a look at our Savings Accounts hub page to compare some of the best savings rates in the Mozo database. Or you can simply start with the savings rates in the table below!