It was the pandemic that many feared would ruin Australia financially, but according to a recent survey two in three Australians have more money in their hip pocket at the end of 2020.
A recent survey by money.com.au found government stimulus, combined with tightening our purse strings, and loan deferrals means many individuals exit a true annus horribilis in a better financial position than expected.
Conducted by money.com.au, the survey involved over 1000 participants and asked them about their earnings, spending, and savings between April and October this year compared to the same period in 2019.
The survey took into account government stimulus like JobKeeper and JobSeeker, in addition to any mortgage referrals taken up.
· 21 per cent of people earned more than last year
· 51 per cent earned the same
· 28 per cent of people earned less than the same period in 2019
According to a money.com.au spokesperson the results highlight the unique nature of Australia’s workforce along with success of swift government intervention in the form of stimulus.
It notes many people in the corporate workforce were able to continue working from home, while industries such as construction, mining and the public service were able to continue operating.
Meanwhile, the swift introduction of JobKeeper and JobSeeker also played a major role, particularly when it came to people whose income initially reduced.
After asking about income, the survey turned its attention to spending, finding the vast majority of Australians had tightened their purse strings over the course of the year.
In total, 73 per cent of respondents said they had spent less on expenses between April and October 2020, with 58 per cent cutting their discretionary expenditure and a further 32 slashing their budget for essentials.
In an interesting fact, it turns out the younger generation were able to most effectively cut back their essential spending, with 41 per cent of Australians aged 18-30 spending less on essentials, compared with 33 per cent of people aged 31-50, and 23 per cent of over 65s.
The survey notes this might be a result of young Aussies moving back home to live with family or negotiating reduced rent with their landlord.
As a result of better income than expected and reduced expenditure, many Australians have managed to channel funds into their savings or pay down debt.
Almost two thirds (60 per cent) of survey respondents said they had more money at their disposal than in 2019.
As for what they did with it:
· 36 per cent of respondents saved the additional funds
· 14 per cent used it to pay off additional debts
· 11 per cent took advantage of the extra funds by spending it.
Meanwhile, more full-time workers (67 per cent) saw the money in their hip pocket increase this year, compared with 52 per cent of the unemployed and 51 per cent of retirees.
While many Australians might end the year better off financially than expected, experts are warning we’re not out of the woods yet, and it would pay to start the new year with caution.
In the coming months government stimulus like JobKeeper will end, while mortgage deferrals are also winding up.
In the interim, the nation as a whole has accrued an eye-watering debt that we’ll be paying for in the years to come.
The Covid response is expected to see the Federal Government’s budget deficit reach $213.7 billion this year, falling to $66.9 billion by 2023/24.
Between economic stimulus, wage subsidies and tax cuts, the government is expected to ultimately incur a debt in the vicinity of $1 trillion by 2024.
How have you fared financially in the year that was 2020?