Households rebuild savings but have no safety net

From Banking Day:

Australian households are comfortable with their current financial position, with average household savings growing and debt under control, but a significant number are ill-prepared for the loss of a job or other unforeseen circumstances.

ING Direct has released the results of its Household Financial Fitness Test, showing median household savings at A$23,440, which is more than three times the level recorded in 2010.

The proportion of households that don’t have a credit card has grown from 13 per cent in 2010 to 16 per cent today.

Thirty-eight per cent of households report that they are ahead with their mortgage payments.

The proportion of households reporting that they are comfortable with their savings, management of their bills, their credit cards accounts and their mortgages has increased in recent quarters (to 95 per cent in the case of mortgages).

However, a significant number of households expressed concern about their ability to manage in difficult circumstances.

Thirty-seven per cent of households said they could survive one month or less on their savings if the main income earner lost their job.

Forty-nine per cent have less than three months of income at their disposal if the main income earner lost their job.

It’s good to see the savings lift but let’s call this what it is, a near total reliance upon public stimulus to prevent any enduring unemployment spike in the event of an economic accident. Sadly, that stimulus will not be forthcoming at anywhere near the levels of the past.