ING Direct runs a quarterly survey of consumers to fathom their appetites for savings. The January result sees a New Year’s resolution to tuck away even more than we have been:
The survey, conducted in January 2013, discloses the median savings level is now $11,798 – an increase on the previous high of $9,735 last quarter.
It also highlighted that Gen Y are the most enthusiastic savers, with 8 in ten intending to save more or get out of debt in 2013 compared to 7 in ten overall.
So why are we saving? Having a savings buffer in case of emergency was the biggest incentive for over half of respondents – with one third of households aiming to bank the equivalent of three months’ income in rainy day savings.
Financial insecurity also played a part, with one in 10 admitting the Global Financial Crisis was a bit of a ‘wake-up call’ and two in five still harbouring concerns about the state of the economy.
For some, it’s a case of just being in a better position financially. A third of households disclosed they are better off compared to 12 months ago, with four in ten revealing their financial situation was about the same. One in five said they could now afford to save more as they had more money at their disposal, whilst 18% had paid off their debts and could use the excess to save.
On the downside, a quarter of Australians admitted to being worse off compared to a year ago, with 15% having no savings whatsoever. Yet, less than one in 10 had difficulty paying household bills.
Stricter budgeting is on the cards for 41% of savers, with 39% planning to cut back on luxuries and discretionary spending including dining out (27%) and holidays (15%). One in five intends to set a savings goal and a third plan to transfer money regularly on pay day
The survey is based on 1016 households and conducted by Galaxy. The results are consistent with national accounts which show a persistently high savings rate. But it does contradict falling term deposit rates of growth clear in APRA data and a declining savings pulse in consumer confidence data. Maybe we are just unable to save quite so much as we have in the past few years as conditions have eroded.
Interestingly the internals of the index show virtually no change from two years ago, although mortgage comfort has dipped then rebounded in the interim:
Full report below.
It is a funny ( perverse might be better) state of affairs when the fundamental economic units – individuals and households – in the economy actually want to save more than they did during a huge credit boom and the RBA insists on fighting that desire by manipulating interest rates downwards to encourage debt growth and savers to shift back to better on stock prices.
Keep in mind that in even with this increased desire to save, our banks are stilll sourcing 40% of the funds they need from overseas and are complaining about the cost involved in attracting term deposits from locals.
Considering the amount of debt that needs rolling over the RBA may find there is a cost involved in forcing down interest rates.
A renewed dependence on cheap hot money from overseas.
What do we want?
A country that generates its own capital or a country living on the funny money of foreigners.
I know it’s just a median, but holy crap, $11k is the median? I must be a better saver than I thought.
That’s the problem with useless reporting of statistics. Without an idea of the variation then nobody knows the actual story. It could be a median of 11k and a median average deviation of 100k indicating a wide range of deposits, many probably 0. If the deviation was around 1k then having a 100k deposit would then really be extraordinary.
I know I go on about variation heaps, but if this was a scientific paper it would never be published for exactly this reason. It’s a wafer thin analysis. And it seems this is a typical kind of analysis in these circles.
Anyone with a mortgage is better off paying down the mortgage. They save interest at say 7% after tax rather than getting interest at 5% pre tax and about 3% after tax.
Anyone with a credit card balance has even more incentive to pay down debt rather than increase savings.
Anyone who can salary sacrifice into super from pre tax dollars gets far more bang for their buck than adding to post tax savings.
There is an apparently optimal amount of savings in bank accounts after which it is perceived that there are better opportunities than further increasing bank savings.
“Seventeen per cent say they are uncomfortable with household bills – a slight increase from 17% in Q3.”
Very slight, apparently.
[...] are yet to respond by increasing their spending, and are in fact still showing a preference to save. Whilst a slackening employment market, a weak housing market, fear over the carbon tax and [...]