If you're interested in investing in ASX shares then you probably already have saved a bit of money already, so you're off to a good start.
But sadly there are a lot of Australians that aren't in the position to save or invest a decent amount of money.
Retirees are done working and are now spending their investment income. Many young Australians are working low paying jobs which don't leave much left over for saving. The middle class Australians are dealing with heaps of debt these days.
Every quarter the Australian Bureau of Statistics (ABS) announces some interesting financial statistics about Australian households. In the December 2018 quarter the household savings ratio was only 2.5%.
Are you saving more than 2.5% of your household income? If so, then good job – you're already doing better than the average Australian household.
Aussies weren't always so bad at saving. 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.
The fall in the household savings rate can probably be attributed to a few key areas. Payments for property would be taking up more of people's budgets, with the money flowing to Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and REA Group Limited (ASX: REA).
We've seen higher energy prices from AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG), although that may ease a bit over the next couple of years. We're also seeing more spending done through buy now, pay later providers like Afterpay Touch Group Ltd (ASX: APT).
It's not a great position that Australians are saving the least just when things are getting tougher. Low wage growth means people can't just 'earn' their way out of trouble. Therefore we need to reduce our spending somehow.
My own household has done a few things that add together to make a difference such as reducing our Foxtel package to the bare minimum, 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 or your family truly happy.
