Over two in five Australians report fall in disposable income, but more optimistic about next year

Amid these turbulent times, consumers are seen to place higher importance on insurance and savings, followed by money management

The global economy is facing significant challenges, as the remnant effects of Covid-19, supply chain disruptions and rising inflation rates are felt globally. New YouGov data indicates that consumers in Australia are feeling the pinch, with over two in five saying their disposable income has fallen over the past year (46%). This compares to a fewer three in ten who say their income has remained the same (30%) and more than double those who say their spending power had increased (19%).

When asked about their financial outlook for the year to come, Australians appear to be slightly more optimistic. Fewer expect a fall in disposable income (38%) and more expect an increase (23%) although slightly more express uncertainty (13% for next 12 months, versus 6% for past 12 months).

YouGov’s latest report, Financial Outlook 2023: Navigating the storm, uncovers who has been most affected by these ongoing crises, changes to consumer financial priorities, and how financial institutions can support the changing needs of different consumers. By understanding these, financial services marketers can gain a better understanding of consumer sentiment, behaviour, and attitudes around the evolving financial landscape.

The report additionally highlights what people in Australia are doing with their money. Insurance and savings emerged as the most common financial activities in the last 12 months for two in five locally (38% for health insurance, 37% for savings) – with those above 55 most likely to prioritise insurance (45%) and those aged 45–54 most likely to save (45%). Paying for home, pet, or automotive insurance was the third most common activity (36%).

The next tier of activities comprised mostly money management. Making regular payments on mortgages or home loans was done by one in five Australian consumers (22%), and most among those aged 35–44 (34%). Another one in five used Buy Now Pay Later services to cover purchases (21%).

At the same time, growing inflation, rising cost of energy, and higher interest rates are pushing consumers to take increasing measures to track, review and adapt their spending – changing the dynamics of how they manage their finances. Though almost half of Australian adults (45%) state that they do not need help with managing their money, the situation is significantly different among young consumers. Three-quarters of 18–24-year-olds (74%) and four in five 25–34-year-olds (82%) report that they need some kind of assistance to manage their money better.

An understanding of how to use investments to grow their money is the top priority of those aged 18–34 (34% for 18–24, 36% for 25–34). This is followed by help in budgeting and tracking expenses (28%), planning for future life events (27%) and bettering their money management (26%) for the younger group. Those aged 25–34 are of similar opinion, with the addition of assessing and improving their financial situations (40%) and advice on mortgaging and homeowning interest rates (26%) as the fourth and fifth most important avenues of help.

For more insights and analysis, download the full Financial Outlook 2023: Navigating the storm whitepaper here.

Methodology:

The insights in this report are drawn from a recent YouGov global survey on the future financial outlook, specifically, exploring the global outlook for household living standards, changes in disposable income, how consumers are dealing with and managing their finances as a result of the changes and how financial institutions can help and support.

Covering 18 global markets of more than 19,700 respondents, our survey results were further bolstered by connecting respondent level data to YouGov’s proprietary syndicated data solutions, Profiles, allowing us to merge our respondents and their answers to the 100,000s consumer attributes that we collect on an ongoing basis for audience segmentation and profiling. Our survey was fielded the week of 11th – 25th October 2022.

The YouGov panel provides a naturally accurate and representative view of the population. Data is adjusted using a mild weighting team using interlocking demographic characteristics—methodology considered advanced in the market research space.

Data for Australia was based on a nationally representative sample (aged 16+) of 1,058 respondents.