Who’s copping the most from the cost of living crisis?
78% of us have cut our spending. But who is copping it the worst?
Young people, parents, renters and mortgage holders are all impacted by the ongoing cost of living crisis, according to our new Cost of Living Report 2023. But what can they do to help ease the pressure?
How they're being affected...
- Mortgage holders: Finder estimates that the 10 RBA cash rate rises in 2022 and 2023 have increased a typical Australian mortgage holder's repayments on a $600,000 loan by $12,061 per year. This figure will be significantly higher for mortgage holders with larger loans.
- Renters: The increased costs of repaying loans, together with supply and demand issues, has had a knock-on effect in the rental market. Over 2022 there was a substantial increase in the percentage of people saying they struggle to pay their rent.
- Parents and families: 87% of parents have had to reduce their spending on at least 1 expense due to the increased cost of living. This is compared to 74% of consumers without children.
- Young Aussies: The research shows younger Aussies are most heavily affected by the rising cost in living. Higher vulnerability from their lower savings has led to over half (56%) of younger Australians (gen Z) feeling financially pressured to look for a second job in 2023 and 90% of gen Z reporting reduced spending.
...and what you can do about it
Mortgage holders
"Many Australian borrowers can shop around and find a new home loan with a lower interest rate," says Finder's home loans editor Richard Whitten.
"This will save you a lot of money. Often even your current lender will offer a better deal for new borrowers, so call up and ask for a better rate. If your lender says no, it's time to refinance.
"For borrowers who are really struggling, it might be too late to switch. Talk to your lender about hardship assistance before you miss a repayment. You may be able to get a repayment holiday or make interest-only repayments temporarily until you're back on your feet."
Renters
"Rent pressures aren't going to disappear quickly, so it's crucial to keep other costs under control," says Finder's editor-at-large Angus Kidman.
"Look for other ways to save – for instance, make sure you're not paying too much for your mobile plan. Most people can get everything they need for well under $40 a month. Haven't switched in a while? It's time to shop around."
Parents
"Groceries and petrol are 2 areas causing families a lot of stress at the moment, so look for ways to save. It might be possible to car pool the school run with other parents, or see what the options are for public transport?" says Finder's money expert Sarah Megginson.
"Cut back on your grocery bill by shopping online instead of in store, so there's less temptation to add extras to your trolley; shop the sales for 50% offers, and bulk up meals like spaghetti bolognaise with frozen veggies and lentils, to stretch them further. Also check out programs like Everyday Extras, where you can save 10% on one grocery shop per month.
"Make sure you've checked if you're eligible for any government support, like the childcare subsidy or parenting payments. If you're not already doing so, put together a household budget to help you stay on top of your spending and find areas where you could save more."
Young Aussies
"If you've got your money sitting in a regular bank account, you're missing out on a bunch of free money each month," says Finder's money editorial manager Alison Banney.
"Instead, a high interest savings account can help you earn interest on your money, and luckily for you the best rates are often reserved for young people.
"Not only will this help your money grow quicker thanks to the magic of compound interest, but it'll help you build up an emergency savings fund which will be invaluable if you're faced with an unexpected, large expense."
Other key takeaways
- Almost 4 in 5 (78%) Aussies have had to reduce their spending to cope with the cost of living crunch.
- Grocery spending has taken the largest hit, with 50% of respondents cutting back on their shop.
- More than 1 in 2 (52%) have experienced financial stress, but it's younger Aussies and women who are the most stressed.
- 70% of gen Z said they experienced financial stress, followed by 60% and 45% for generation Y and X respectively. Baby boomers (29%) were the least likely to report financial stress.
- Women (58%) were more likely to report financial stress than men (46%).
