Tighter Aussie wallets means less spending and more saving

People trying to cutback on expenses by travelling in public transport. (Source: Getty)

Australians seem quite stressed with their budgets in the current economic climate, as more and more cutbacks are visible in their spending habits.  

For example, CommBank data shows that Aussies are spending more on childcare, ditching the car and hopping onto public transport to go to work to manage their budgets and cut out on any extra expenses. 

Further still, a recent report by the Australian Bureau of Statistics, showed a spike in the number of people holding multiple jobs in the March quarter.  

“We’re seeing signs of people cutting spending where they can,” says CommBank senior economist, Belinda Allen. 

“Consumer spending is generally weak, and we expect it will slow further given the RBA’s interest rate rises and with more on the horizon.”  

Moreover, recent changes in the Reserve Bank of Australia’s cash rate have led to increase in interest rates on certain personal finance products. The RBA’s latest cash rate hike to 4.1%, for example, directly affected many home loan rates, leading to a general increase in what the banks are charging homebuyers.  

On the opposite side, the cash rate moves may sometimes lead to increase in the interest rates on  savings accounts, but not always.   

So overall, Aussie consumer confidence is at an all-time low. The ANZ-Roy Morgan Consumer Confidence Index, just one measure of confidence levels, shows that it was 11 points lower than last year for the same week (May 30th – June 5) and at the lowest level since the beginning of 2023. 

Right now, more consumers are spending less money which can eventually translate to less money in the economy. This indicates an eventual slowdown and potentially, as some economists have suggested, a recession.  

Tips to navigate the current economic climate and save 

High inflation, high interest and low confidence can stack up. So, if you are struggling to figure out a way around the current cost of living crisis, then here are some tips that may help:  

  • Firstly, go easy on yourself: the financial crunch you’re going through is not the end of the world. It can be managed, and a solution can be found to help you get on your feet again. Talk to your family or friends if you need some support, or indeed a financial professional, as listed below. 
  • Don’t try to manage everything at once: It’s very easy to get lost in the pool of your financial responsibilities and expenses, but cutting back all at once can lead to further stress. If you end up tackling all your challenges at once without taking a break, it might lead to financial fatigue. Instead, keep it simple! Create a plan and tackle all your financial stressors one by one.  
  • Seek professional help: The National Debt Helpline offers free, independent and confidential financial counselling focused on to get your finances under control. You can call the helpline – 1800 007 007 to talk to a financial counsellor.  
  • Rethink your financial goals: Split up your goals according to short, medium and long-term goals. It’s easier to achieve a goal when there is just one. Short-term goals seem quite achievable compared to long-term ones. Try and break them down in to smaller, more achievable goals to make it easier on you.  
  • Create an emergency fund: unexpected events can sometimes drain your financial resources and hurt your financial goals. To prevent this, save! Build an emergency fund so that you are prepared for any situation that arises. An emergency fund needs a good savings account, so researching your options is crucial.  

  

Our Mozo experts make looking for a savings account easy. They analyse many of the top savers on the market and compare them for you side by side. So why not take b look at the following high interest savings accounts to get started.  

Savings account comparisons on Mozo - last updated 25 June 2024

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^See information about the Mozo Experts Choice Savings Account Awards

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