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Cash flow emergency: Half of Australians living paycheque to paycheque

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A growing number of Australian workers are struggling to make ends meet, according to new research by Finder, Australia's most visited comparison site.

This comes as treasurer Jim Chalmers unveiled his second budget yesterday evening – a central theme of which is to reduce skyrocketing cost of living pressures.

A Finder survey of 668 Australian workers revealed 1 in 2 (50%) are living paycheque to paycheque.

That's more than 6.9 million people unprepared to cope with a job loss, admitting they couldn't survive financially for more than a month if their income dried up.

Finder's research found 17% – equivalent to 2.3 million workers – are living day to day, only able to make ends meet for a week or less should they become unemployed. This figure is up from 14% a year prior.

Just 40% of people could live off their savings for 3 months or more if they suddenly became jobless.

Graham Cooke, head of consumer research at Finder, said the federal budget won't provide a silver bullet for the cost of living crisis.

"The scary reality is a worrying number of Aussies are running out of money before payday.

"While the government relief announced will be welcome news to some, it's up to consumers to safeguard themselves."

A startling 61% of Australian households with a combined income of $50K–$99K admit they are living paycheque to paycheque, compared to 42% of those in households earning $100K or more.

Cooke said living pay to pay leaves no room for saving or investments, making the cycle very hard to break.

"Having no savings buffer makes it very difficult to achieve long-term financial goals such as buying a house.

"Even if you are happy with your job, you still need to mitigate the risk of something going wrong.

"Having no disposable income leaves you vulnerable to unexpected financial emergencies which can lead to dependence on credit cards, and mounting debt that can be difficult to escape."

Cooke said income protection could be valuable for Australians who are reliant on their income.

"Income protection keeps up to 85% of your income coming in if you get injured or fall ill and are forced to stop working," Cooke said.

If you lost your job tomorrow, how long could you live off your savings?

TimeframeAverageCombined household income of $10,000–$49,999Combined household income of $50,000–$99,999Combined household income of $100,000 or more
Less than a week17%27%21%12%
Up to 2 weeks14%19%16%12%
Up to 4 weeks19%12%24%18%
Up to 2 months11%6%9%10%
Up to 3 months9%9%7%11%
Up to 1 year18%13%13%22%
More than 1 year13%13%11%15%
Source: Finder's Consumer Sentiment Tracker of 668 Australian workers, April 2023.

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