Financial stress levels in Australia are at their highest point in 10 years, according to the AMP Financial Wellness Report 2024.
Just one in three working Australians indicated they were financially secure in this year’s report, down from half of working Australians in 2020. Two-thirds of the population, or 13.95m Australians, are facing mild, moderate, or severe financial stress due to sustained cost of living pressures and a period of consecutive interest rate rises.
The flow-on impact of financial stress also has a hidden cost, affecting the mental well-being of working Australians and their families, with a lack of willingness to seek professional help about important financial matters.
Almost one in three Australians who were ‘severely’ or ‘moderately’ stressed turned to friends or family members to help inform important financial decisions, with just one in nine speaking to their super fund and only one in 20 seeking help from a financial adviser.
Equally, one in three Australians have not used any information sources to inform important financial decisions, even if those sources were easily accessible such as podcasts, social media, or a Google search.
With rising financial pressures and people focused on meeting major short-term expenses, long-term planning is being compromised with one in three saying they are never or are rarely planning for their financial futures.
AMP Bank Group Executive, Sean O’Malley said, “It’s clear more Australians aren’t feeling secure with their finances, not surprising given cost of living pressures and housing unaffordability challenges.
“And while the research tells us that most are meeting their mortgage repayments, we know that savings rates are down and many are cutting back expenditure on household basics such as groceries, and other more discretionary items such as streaming services and holidays.
“Amid these cutbacks, it’s also evident that many aren’t taking advantage of the support available to them, with a tendency to bottle up their financial worries, in turn impacting their mental wellbeing.
AMP Group executive, Super and Investments, Ms Melinda Howes said, “What’s also apparent from the research is that with a focus on paying the bills and keeping their heads above water, more Australians are understandably thinking and planning less about their longer-term financial goals.”
Other findings include:
Transition to retirement remains complex
After a short period of relief between the ages of 51 and 54, stress levels lift sharply. Australians approaching retirement age have the highest levels of stress of any age group surveyed, with almost two in five being moderately to severely stressed. For many Australians, this fear is heightened when the rising cost of living eats away at lifetime savings.
Sharp rise in stress for those earning between A$100,000 and A$150,000
A growing number of Australians earning between A$100,000 ($67,285) and A$150,000 said that they were less financially secure. Nearly one in four Australians in this income bracket said they were ‘severely’ or ‘moderately’ financially stressed, up by 150% in the space of just two years and nearly triple of those who reported the same during 2020 – raising further questions around how much is needed to feel financially secure.
Letting go of discretionary spend
Faced with the rising cost of living, more Australians are drawing down on accumulated savings and cutting down on their everyday spending, finding new ways to save on non-essential services. Three in five Australians spent less on groceries this year, two in five went without a holiday and one in three spent less time engaging in regular hobbies and interests. Meanwhile, over half of Australians strongly agree that the cost of living will continue to rise significantly, with less than a third saying they will be financially secure over the next two years. In addition, one in three have cancelled streaming subscriptions and gym memberships due to financial pressures.
Geography
Financial pressure is higher in regional areas, where almost one-third (32%) of residents are in moderate to severe stress, a notably higher figure than the 27% recorded in capital cities and the 28% Australian population average. Bucking the trend, high housing and living costs in Sydney have almost a third (30%) of the city’s residents falling into the higher stress categories, a figure that is equalled in Tasmania.
At 28%, Brisbane citizens match the national average, while those living in Melbourne and Adelaide fare slightly better at 25% and 22% respectively. Canberrans are also at the lower end of the scale, with only 22% reporting moderate to severe stress, while Perth can boast the least number of financially stressed residents, at just over one in five (21%).
Gender
Women are more likely to be in moderate or severe financial stress (35%) than men (21%). They are less likely to have experienced financial gains over the last 12 months (11% vs 24%) and have a bleaker outlook, with only 23% agreeing they will be more financially secure in the next two years (vs 33% of men).
Methodology
AMP commissioned The Behavioural Architects in July 2024 to conduct a survey of 2,475 Australians aged 18 years and over in relation to their attitudes to financial stress and levels of financial well-being. The survey included Australians who are currently employed, unemployed, retired, and also small business owners (0-19 employees).
AMP provides banking, superannuation, retirement and advice services in Australia and New Zealand.