How much does the average Australian save?

William Jolly By on December 19, 2018
average aussie savings

Want to know how your rate of savings stacks up against the average Australian?

Household savings is a topic that’s well-covered in Australia. Every month it seems that there’s a new report by some institution either saying (A) how good we are at saving, or (B) how terrible we are at saving. The truth is that in the face of everything going on in our economy (housing pressures, slow wage growth, having to pay 15c for reusable plastic bags at the supermarket), Australians seem to be doing ok, but there are some worrying signs.

Average savings in Australia

In 2015, a report by Suncorp found that the average savings by Australians was $427 per month. Per year, this figure becomes an average of $5,124. Not too shabby.

Those aged 25-34 were the best savers with an average saving of $533 per month ($6,396 per annum).

So in spite of all the smashed avo and coffees, millennials were managing to save more than their baby boomer counterparts. You could argue that people in the baby boomer generation don’t need to save as much, since they’re more likely to have paid off their home.

More recently, however, Me Bank’s Financial Comfort Report in June 2018) uncovered some worrying signs. This report found that 25% of households have less than $1,000 in cash savings. ME also found that 17% of households couldn’t always pay their bills on time due to a lack of money. So while there are plenty of Australians sitting pretty with their savings, there are still too many struggling to save anything at all.

average Australian comfort with savings

On a scale of 1-10, the average Australian’s comfort with their level of savings has declined.

Source: ME Bank.

What stops Australians from saving?

Overall, $2.6 billion are withdrawn from Australian savings accounts each year, with more than half of us (57%) using our savings for the odd bill or purchase. Why? 

ME’s report details why so many Australians struggle to save. It’s mainly the cost of necessities and everyday items; 53% of households listed it as their biggest financial worry. Other reasons included:

  • Unexpected expenses arising, or a change in financial circumstances (41%)
  • Lack of willpower (27%)
  • Their goal was unachievable (17%)

Mortgage stress is another big factor, with 45% of households contributing 30% or more of their disposable income towards repayments. When so much of your income is going towards bills, rent, or mortgage repayments, there isn’t much left over to save. Combined with the fact that nearly half of all those surveyed reported no increase in income compared to a year ago, then it’s no surprise that so many people are struggling.

Household savings ratio

The household savings ratio – the ratio of household income saved to household net disposable income – fell to 2.40% in the third quarter of 2018, down from 2.80%. This is the lowest level it’s been in six years. The graph below shows how the household savings ratio has changed over the years.

The Federal Treasurer Josh Frydenberg attributed this fall in the household savings ratio to Australians feeling confident about the state of the economy and feeling free to spend, but Shadow Treasurer Chris Bowen said it was because Australians’ budgets are under “real pressure”.

Savings vs debt

So the average household is only saving 2.4% of its disposable income, and as mentioned before, many of us are forced to dip into our savings from time to time. Debt is a big reason for this. UBS found at the start of 2018 that the household debt-to-income ratio in Australia hit nearly 200%, although this does include home loans.

Looking at debt from a more personal level, ME found that 38% of Australians are worried about their debt, with four in 10 people reporting that they’re unable to meet their minimum repayments. Across the nation $45 billion in debt, with interest being charged on $31.7 billion of it. ASIC found that earlier in 2018, the average Australian owed $3,251 on credit cards.

While saving money is something everyone should try to do, paying off debt should take priority, especially if you’re struggling to meet the minimum repayments. We’ve written extensively about the damage low credit and loan repayments can do to your financial health here if you want to learn more.

Why do Australians save?

According to a 2016 survey by Westpac, 85% of Australians who save have an actual target in mind. The average target is around $11,200.

The top reasons for at least attempting to save this money were:

  1. Holidays (53%)
  2. Rainy day funds (46%)
  3. Buying or renovating a home (40%)

Other key reasons include:

Are you trying to reach a savings goal at the moment? Tell us what for in this poll below. 

Do Aussies use their savings account?

More often than not, savings accounts are a cheap, easy to use and accessible product that allows you to store money and earn interest to meet savings goals. Yet according to UBank, 35% of Australians didn’t have a dedicated savings account in 2017.

This could be for a number of reasons:

  • They might not know the difference between a transaction account and a savings account.
  • They might be living paycheck to paycheck
  • They might choose to invest all their savings in equities, bonds or property instead.

Regardless of what your goal is, having a savings account is useful for keeping money in a safe location and accumulating interest. According to ASIC, 52% of successful savers transfer spare funds to their savings account on a regular basis, while nearly a quarter (21%) set up automatic transfers into their savings every payday.

It’s generally a good idea to have at least three to six months worth of living expenses in liquid cash in case something unexpected happens, like losing your job.’s two cents

Try to be better than the average saver in Australia.

Depending on who you ask, you’ll get various answers to the same question: how much should I be saving out of every paycheck? You’ll find that most ‘experts’ will say between 10-30%, but this obviously isn’t possible for people who barely make enough to get by, are experiencing mounting debts or have other expenses, like caring for a sick loved one.

The first step towards savings is budgeting – doing a monthly budget of all your expenses can give you a good starting point. From there, you can cut out unnecessary expenses or prioritise the more important ones. You should then move on to clearing debts if you have them. Having money sitting in a savings account might not mean much if you’re getting charged through the nose in interest.

When you do decide to set a savings goal, start small, and work from there. Achieving a realistic goal can give you the confidence to kick on and save bigger amounts over time.

William Jolly
William Jolly joined as a Financial Journalist in 2018, after spending two years at financial research and comparison website Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.


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