Households are slowing down their consumer spending.
Households are slowing down their consumer spending.

How savvy Aussies are getting better at stashing cash

Exclusive: Cautious Australians are stashing cash at their highest levels in five years and more people are turning to debit instead of credit, according to new research.

Despite Australians remaining the second most indebted country in the world behind Switzerland, the ANZ/Roy Morgan research found the average savings are at their highest level in five years.

The cumulative amount tucked away by the 5000 people surveyed climbed from $29,430 in 2014 to $42,208 in 2019 - an increase of $12,778.

As we head into some of the busiest consumer spending weeks of the year and the

bumper Black Friday and Cyber Monday sales period are behind us, Australian Bureau of Statistics October data showed a rise in retail sales of just 2.01 per cent.

Latest Reserve Bank of Australia figures show Australians owe $43.3 billion on personal credit cards. Picture: iStock.
Latest Reserve Bank of Australia figures show Australians owe $43.3 billion on personal credit cards. Picture: iStock.

Despite Federal Government tax cuts in 2019 and the Reserve Bank of Australia slashing the cash rate three times to just 0.75 per cent, retail spending has remained soft.

ANZ's head of financial inclusion Michelle Commandeur said "people are saving more" and becoming extremely cautious with their finances.

"People are turning their mind to more of a savings mindset and that's responding to a climate where people want to knuckle down," she said.

"But there's still one in three Australians who don't have any savings and are struggling or just getting by."

Latest Reserve Bank of Australia figures showed Australians owed $43.3 billion on personal credit cards and more than $27.7 billion was accruing interest.

Interest rates on credit cards have remained stubbornly high and in many instances are above 20 per cent.

Households are slowing down their consumer spending.
Households are slowing down their consumer spending.

Latest ABS figures earlier this month also showed a sharp rise to the growth of household savings, which climbed by 4.8 per cent over the September quarter.

This was an increase by 2.7 per cent in the June quarter.

HSBC chief economist Paul Bloxham said weak household income growth was the direct result of flat wage growth.

"Households are slowing down their consumer spending because their income growth is weak and they are expecting income growth is going to stay weak for a more persistent period of time," he said.

"Households are becoming cautious."
And he said instead households were building up a buffer on their mortgages and were choosing to use the cash rate cuts to "pay down their debts faster".

Mr Bloxham expects RBA governor Philip Lowe to cut the cash rate again to 0.5 per cent in the first quarter of 2020.

sophie.elsworth@news.com.au

@sophieelsworth


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