Low wage growth keeping Australians from hitting their 2020 financial goals

If it’s seeming more and more difficult to save money nowadays, you can take some solace in knowing you’re not the only one. A recent study by ME found that inadequate incomes are the main thing keeping Australians from reaching their financial goals in 2020. 

Of 1,000 people surveyed, 52% admitted their income was holding them back, while 48% listed the cost of living expenses as another significant barrier. Poor discipline and lack of financial knowledge rounded out the list.

Overall, most Australians aren’t too optimistic about their ability to save, with only a quarter of respondents saying they were ‘very likely’ to hit their financial targets.

As for what those targets are, ME found that most Aussies were saving for a holiday, car, or expense other than a home. In order, the top five most important financial goals were:

  • Saving for a holiday, car, or non-property expense
  • Building up rainy day savings
  • Saving for a home
  • Reducing expenditure on expensive habits
  • Tackling debt

Low wage growth the new normal

Australia has been contending with sluggish wage growth for a while now. For the past five years it’s remained anchored at around the 2% mark, considerably lower than the 3-4% increases that were standard prior to 2012.

And while there’s little risk that aggregate wage growth will drop any further, it’s unlikely we’ll see an improvement either. At a conference in November last year, RBA Deputy Governor Guy Debelle called low wage growth the new norm in Australia.

"The share of jobs that experience a wage change of more than 4% has fallen from over one-third in the late 2000s to less than 10% of jobs in 2018,” he said.

What’s keeping wages down?

Low wage growth can be chalked up to a few factors, such as the decline in the number of Australians receiving promotions or switching jobs since 2012, something which typically translates to a 5% increase in hourly wages. 

There’s also been an uptick in enterprise bargaining agreements which provide annual wage increases of only 2–3%. While these made up only 10% of all such agreements in the 2000s, they’ve since risen to almost 60%.

Another factor putting downward pressure on wage growth is the number of older Australians either delaying retirement or looking to re-enter the workforce, likely as a result of high levels of household debt.

How can you improve your financial situation?

While we might be waiting a while for a lift in wages of the kind we saw pre-2012 it might be worth examining your current situation and seeing if there’s any room for improvement. Here are just a few ideas to improve your financial health.

Push for a raise at work

Ideally, your yearly income should be going up at least in line with inflation. If not, rising costs of food, transport and housing will end up hitting your wallet hard. If you haven’t received one already, you should consider asking for a raise

Start budgeting

If you’re unable to increase your income, the second best thing you can do to help you save is reduce your expenses. Creating a budget will give you a clear picture of where your money is going each month, and from there you can identify what you can afford to cut out.

Find a high interest savings account

Most people don’t pay too much attention to how much interest they’re earning on their savings account, which is a shame, because it’s one of the easiest ways to make extra money. 

Nowadays, most savings accounts (and term deposits for that matter) don’t offer much to get excited about, but there are still some that offer interest of 2% or more. If you think you could benefit from a better place to keep your savings, be sure to check out our savings account comparison page for a look at some quality options.

Savings account comparisons on Mozo

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Last updated 8 September 2024 Important disclosures
  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first 4 months.

    Enjoy a high interest savings account with no account keeping fees to pay. Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace. Multiple 2024 Mozo Experts Choice Award winner.

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  • Mozo Expert Choice Badge
    High Interest Savings Account

    5.75% p.a. (for $0 to $250,001)

    4.40% p.a.(for $0 to $250,001)

    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.

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  • Mozo Expert Choice Badge
    Savings Maximiser

    5.50% p.a. (for $0 to $100,000)

    0.55% p.a.(for $0 and over)

    Yes up to $250,000

    Deposit $1,000 into a personal ING account, make 5 eligible transactions with a linked Orange Everyday account and grow the balance each month.

    Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

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  • MoneyMAX Account

    No Current Offer

    4.75% p.a.(for $1 and over)

    Yes up to $250,000

    Unlimited access 24/7 via Banking App, Phone & Internet Banking. Interest is calculated daily and paid monthly. No transaction fees or monthly service fees. No minimum balance or withdrawal restrictions. Online access only.

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  • Savings Accelerator

    3.55% p.a. (for $0 to $50,000)

    2.85% p.a.(for $0 to $50,000)

    Yes up to $250,000

    New customers receive an introductory bonus 0.70% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.

    Enjoy the flexibility to access your funds with no monthly deposit requirements or lock-in terms. No ING fees to pay. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

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^See information about the Mozo Experts Choice Savings Account Awards

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