Almost one in five Australians would struggle to come up with $1,000 to cover an emergency expense, while one in three people live from paycheck to paycheck, spending everything they earn, according to a recent survey.
The Ernst & Young survey of almost 5,000 people, commissioned by BT, found that 17% of people would struggle to find $500 to $1,000, while 30% had no money left over for savings.
More than 40% said they were able to meet their normal monthly expenses, but a third admitted they were worried about their ability to do so. Deanne Stewart, general manager of BT, says the results clearly show there are a large number of people who struggle to cope financially, and the problems are not always linked to the size of their pay cheque.
“In many instances people are living in the hope that they will achieve their goals rather than planning for a fulfilling and secure future,” Ms Stewart said.
57% of those surveyed had no regular savings plan, and peaks among 45 to 54 year olds, who are often nearing the peak of their earnings capacity.
Close to 40% of people would be unable to maintain their current lifestyle if they lost their income for three to six months, thanks to not enough savings.
Spiralling costs of living, particularly in electricity and water, combined with unemployment or under-employment, mean low-income families are being the hardest hit. A family of four forks out an average of $1,788 a month on household expenses, while the monthly average utilities bill for a family with three kids pay $883.
Utilities companies such as Origin Energy (ORG.AX), AGL Energy (AGK.AX), ERM Power (EPW.AX), and Australian Power and Gas Company (APK.AX) have raised prices due to the introduction of the carbon tax, and the industry has come in for criticism for overcharging users.
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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Origin.