family budget
A rising cost of living is tipped to squeeze household budgets come next year. Image – Canva
  • The three biggest areas of budget concern are groceries, petrol, and rent
  • Aussies are feeling more confident in their job security
  • BNPL is becoming an increasing source of debt

Groceries, petrol, and rent are the greatest areas of concern for Australians as rising costs of living are expected to tighten household budgets in 2022, according to a Consumer Pulse Report released by Canstar.

The financial comparison site has reported that only 66% of Aussies feel they live within their means. This is down from 73% in 2020.

Canstar’s Group Executive of Financial Services, Steve Mickenbecker believes the costs of living is rising more rapidly than incomes.

“Canstar’s report findings show that everyday living costs are hurting the hip pockets of Australians,” he said.

“Prices are rising faster than wages, making it tougher to put food on the table and fuel in the tank.” 

Steve Mickenbecker, Canstar’s Group Executive

The Australian Bureau of Statistics (ABS) confirms Canstar’s findings as it reported a 3% swelling of consumer price index over the year to the September quarter. The ABS attributes this largely to rising fuel prices and cost of accommodation.

Greatest financial concerns for 2022
canister-report-2021
Source – Canister Consumer Pulse Report

The budget bright side

Although various household expenses are have become more concerning, there are some areas of relief.

“The good news is that Australians are less concerned about job security and energy costs, with both issues knocked further down the list of concerns in 2021,” Mr Mickenbecker explains.

“This is likely due to the falling national unemployment rate falling this year from 6.4% in January to 5.2% in October and with energy prices also trending downwards.”

BNPL a big debt culprit

Increased debt in Australia creates another source of pressure on household budgets.

Canister’s report found that almost a third (29%) of Aussies owe debt outside of mortgage. This is a 52% increase from the last year. 40% of the debt was accumulated in 2021.

Although credit cards remain the number one debt culprit, Buy Now Pay Later (BNPL) products are growing fast.

50% of indebted Australians owe money on their credit card, down from 56% in 2020.

But BNPL is now a source of debt for a quater (25%) of indebted Aussies, up from only 18%.

Interestingly BNPL debt is not only reflective of younger generations borrowing habits according to Mr Mickenbecker.

“Canstar’s results show 27% of Gen X and one in ten Baby Boomers with debt outside of a mortgage owe money on BNPL, reflecting an ongoing shift away from plastic towards interest-free payment plans.

“The debt story is not all doom and gloom, as the majority – 76%- of Australians with money owing feel that they can manage it.”

Steve Mickenbecker, Canstar’s Group Executive

Saving down, investment up

With ultra low interest rates persisting it is on surprise that savings took a hit while investment spikes in 2021.

Mr Mickenbecker described Australia during the pandemic as a nation of “two-speed savers”.

“Some were able to improve their financial situation due to limited spending opportunities, while others were left worse-off, ” he explained.

“Savings balances took a tumble in 2021 which could come down to a number of pandemic-related factors, including stricter eligibility criteria for COVID-19 relief payments and the end of the early access to superannuation scheme, forcing some people to access their nest egg to get by.”

With one in five Aussies trying investment for the first time, investment was certainly the name of the game in 2021.

 

Of those who invested for the first time in 2021, where did you invest?
canister-report-2021
Source: Canister Consumer Pulse Report

 

Firts time investors were predominantly young people. 34% of them were Gen Z, followed by Millennials (27% ).

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