Disposable income in Australia

There's no doubt some parts of Australia are more expensive than others. Sydney is famously one of the most expensive cities in the world for property, but it's also home to some of the highest wages in the country.

Finder crunched the data on living expenses and wages to find out which state has the highest level of disposable income per person. We analysed after-tax earnings alongside expenditure on living expenses including rent, food and bills.

For the purpose of comparison, we assumed expenses for a single person under the age of 35.

Which states have the most disposable income?

According to the latest available data, as of November 2024, the Australian Capital Territory (ACT) has the highest disposable income per capita, averaging $2,899 per month. This reflects the ACT’s higher wages and strong public sector employment.

Western Australia follows with $2,832 in monthly disposable income per capita, while Victoria stands at $2,794. In contrast, the Northern Territory has the lowest disposable income per capita, averaging $1,635 per month. These figures highlight the persistent economic disparities among Australia’s states and territories.

How do earnings and living expenses differ by state?

The chart below shows how wages compare with the cost of living in each state. A larger gap between earnings and expenses means more disposable income is left over.

What is the best state to retire in?

Optimising your retirement outcomes means maximising your retirement income while minimising how much you spend on necessities.

With the highest wages in the country, retirees in the ACT receive the highest annual income in retirement, averaging $43,772. Western Australia follows with $43,156, while New South Wales ranks third at $42,157. On average, Tasmanians have the lowest annual retirement income, at $39,484.

However, when you take into consideration the cost of living in each state, the story changes a bit. We looked at the average weekly living expenses for a single person aged 65 and over to see where retirees are left with the most disposable income.

The chart below shows retirees in the Northern Territory have the most disposable income, with an average of $2,062 extra cash per month. Western Australia ($1,979) and Queensland ($1,703) follow closely behind.

Despite having the highest wages in the country, retirees from the ACT have the least amount of disposable income due to relatively higher living costs for retirees than the other states ($1,252).

Our expert says: Increasing your disposable income

"It can be quite difficult to increase the amount of money you're bringing in each month, so try to instead focus on what money is going out as this is more within your control. A quick look at your transactions over the past few months might show you some easy ways to save by cutting down on unnecessaery spending. Then you can tackle the bigger things like your insurances, utilities, rent or mortage. Set aside some time to call your various providers and ask for a better deal - and if they don't give it to you, compare your options and switch. You don't save any money by staying loyal to your bank. "

Alison Banney

Editorial Manager, Money

How to maximise your disposable income

Tighten up your budget. Having more disposable income can give you the financial freedom to go out with friends or travel, but this doesn't mean being reckless with your money. Consistent expenses like Uber trips, food delivery and online shopping can be the silent killers of savings, and don't necessarily make you any better off. The easiest way to maximise your disposable income is simply to cut down on any excess spending – and save your money for something special like a holiday or a home.

Be stingy where it counts. Bills, food and rent or mortgage payments are likely your biggest expenses, so this is a great place to start in cutting down your living costs. If you have a home loan, can you refinance to a lower rate? Or if you have a credit card, can you switch to a balance transfer card? Get into the habit of regularly comparing providers for all your major bills and expenses, and don't hesitate to make the switch if you can get a better deal elsewhere.

Get investing. Interest rates on savings accounts are higher than they were a few years ago, but it's still hard to earn a decent amount of interest on money sitting in the bank (unless you have a large deposit). Instead, investing in the share market gives you an opportunity to earn higher returns on your money. In addition to the potential to boost your net wealth over time, certain shares and funds also pay dividends to investors. Before jumping in, be sure to understand the risks and rewards, and compare share trading platforms so you're not overspending on brokerage fees.

Frequently Asked Questions

• What is the difference between personal income and disposable income?

  Personal income refers to the total income received by an individual, including wages, investments and government benefits. Disposable income is what remains after income taxes and other mandatory expenses are subtracted from personal income.

• How do they calculate disposable income?

  Disposable income is calculated by subtracting income taxes and other mandatory deductions from an individual's total or gross income. The formula is: Disposable Income = Gross Income - Taxes.

• What is the average disposable income?

  The average disposable income in Australia varies depending on factors like household size and location, but as of recent figures, it is around $1,124 per week for a typical household.

Written by

Sophie Wallis

Analyst

Sophie Wallis is a senior insights analyst with a passion for data storytelling. She spends her time turning complex data into digestible stories and uncovering new consumer trends. When she isn't working, you'll find her planning her next overseas holiday or bingeing on a big novel. Sophie has a Bachelor of Economics from the University of Melbourne. See full bio