The household saving ratio dropped in the December quarter of 2021 as COVID lockdowns and restrictions eased, and government assistance gradually dried up.

According to the latest ABS figures, household gross disposable income fell by 0.5% which was driven by a decline in support payments. Ceased government assistance was partially offset by a rise in compensation of employees.

The fall was also driven by increased household spending - which rose 6.3% in the last quarter - exceeding pre-pandemic levels for the first time.

The savings ratio is still higher than pre-pandemic levels, and higher than pre-Delta levels of 11.8% through the June 2021 quarter.

In the December 2019 quarter, the household saving ratio was 3.6% compared to the current rate of 13.6%.

Household spending recovers as people loosen purse strings post-lockdown

Household spending recovered from the fall in September by rising 6.3% - this means spending is above pre-pandemic levels for the first time.

Spending on services rose 6.3% this quarter. Specifically, spending increased by 24.3% in hotels, cafes and restaurants; 17% on recreation and culture; and 7.9% on health.

There was also a 6.3% increase in spending on goods due to pent-up demand from non-essential retail stores being closed during lockdowns.

"Household spending in NSW, Victoria and the ACT rose 9.6%, compared to the rest of Australia which rose 1.6%," said Sean Crick, ABS' acting head of national accounts.

Australian Gross Domestic Product (GDP) also rose 3.4% in the December quarter of 2021 which the ABS attributes to the end of lockdowns in Victoria and NSW.

Spending on services still sits 3.9% below pre-pandemic levels as travel restrictions remained.

Most Aussies want to save but are challenged by debt and expenses

New research from NAB revealed that more than 10% of Australians don't have $2,000 saved for an emergency and 20% have missed a bill or loan repayment in the past three months.

Of the 2,000 people surveyed, more than 40% said they had a decline in their savings over the past three months and one in three report being highly stressed.

However this doesn't mean that they're not trying to save money, as an estimated 75% of Australians are trying to build up their savings accounts but are challenged by debt, repayments, bills and everyday spending.

This is particularly evident among young people as 90% of 18 to 29 year olds reported that they are trying to save.

NAB Group Executive Personal Banking Rachel Slade said while it was positive financial wellbeing returned to pre-pandemic levels, missing bills or loan repayments is stressful for many people.

"Australians want to save but actually doing it is another thing because of household expenses and everyday activities," Ms Slade said.

"We encourage customers to look at their income and expenses. Customers can do a budget and then work out how much they’d need in an emergency fund, so they’re not caught out with a surprise bill or an unexpected major purchase."


Advertisement

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Savings Maximiser (<$100k)

    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money

    Saver Account (<$250k)

    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money
    4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking

    Savings Account (Amounts < $250k)

    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
    05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Maximum Age - 24

    Goal Saver

    • Maximum Age - 24
    02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    No monthly fees
    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    No monthly fees

    Save Account

    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    0200$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings

    Bonus Saver Account (Amounts < $250k)

    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings
    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    For customers aged 14-35 years
    For customers aged 14-35 years

    Future Saver Account ( < $50k)

      010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Boost Saver

        Important Information and Comparison Rate Warning

        All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of March 29, 2024. View disclaimer.

        Image by Kevin Fitzgerld on Unsplash