I would guess that quite a few people reading this article are better savers than the average Australian.
A lot of Australians simply aren't in the position to save (or invest) significantly. Retirees are in the spending phase of their lives. A lot of younger Australians have minimum wage jobs, which doesn't leave much to save. Middle class Australia is seemingly being weighed down by high levels of debt.
It perhaps should be no surprise that the Australian Bureau of Statistics (ABS) recently announced that the household savings ratio was 2.5% in the December 2018 quarter. This 2.5% savings ratio was actually an increase compared to last time due to a slight increase of household disposable income alongside lower growth in household spending.
Members of the Financial Independence, Retire Early (FIRE) community may chuckle at a savings ratio of 2.5%, but it wasn't always so low. Between 2008 and 2015 the household savings ratio was almost entirely above 6%, with the savings rate above 8% for a fair amount of time between December 2008 and 2012.
Quite a bit of the decline is likely going towards servicing higher debt values, to the benefit of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and banks. Rising energy costs are another factor, with AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) benefiting.
It doesn't speak good volumes about the state of Australian households that we are saving the least amount we have since before the GFC.
How can households fix this lack of saving? Well, the small amount of wage growth doesn't help things. Therefore, the best way would be to reduce spending a little somehow.
My own household has done a few things that add together to make a difference such as reducing our Foxtel package, eating out less and buying more items from Aldi. Each household budget is different, so only you know what you can change without hurting your happiness. Beyond necessities, it's best only to spend money on what makes you truly happy.
