|A major new analysis of the finances of Australian households has revealed most people believe that being worth $1 million doesn’t make you rich in Australia anymore.
The research, for wealth management and superannuation advisory firm MLC, reveals earning a healthy salary does not equate to feeling financially comfortable.
In fact, more than a quarter of all household earning between $150,000 and $200,000 and a fifth of all households earning more than $200,000 say they live pay cheque to pay cheque to afford their standard of living.
And almost 60 per cent of Australians admit they shop at discount retailers like Aldi and Costco to save money.
Laura Demasi, a social researcher with IPSOS who conducted the research for MLC, said all Australians appear to be extending themselves as far as their salaries allow.
“Household income was almost irrelevant, what this tells us broadly is that the people are living to a lifestyle that their incomes afford,” she said.
“Higher income households just have generally greater expenses, bigger mortgages and are more likely to live in big urban areas.”
Home ownership, private school fees, overseas travel, technological gadgets and dining out were all listed as “new lifestyle essentials” by the participants.
And almost half of the 2000 people surveyed, said the cost of living in their chosen suburb makes it hard to maintain the standard of living they want.
MLC’s general manager of Corporate Super, Lara Bourguignon, said the research revealed “no one feels as if they are doing as well as we would traditional define them as doing”.
Ms Bourguignon said that while average household income and education levels have increased, so too have the aspirations and spending habits of families.
She said the report findings need to inform a better debate around the future of Australia’s superannuation system, which takes into account the financial priorities of Australian families.
“Certainly we know that we’ve got a savings gap in retirement, and we know that it is a challenge to engage Australians in the superannuation debate despite the fact that for many, it’s their second largest asset after their family home,” she said.
Victorian mum of two Samantha Holland says paying the mortgage and balancing the budget can be difficult, even for a two-income family.
Mrs Holland, an accountant whose husband works in the mining industry, says she feels lucky to own property in the beachside town of Torquay, but meeting the mortgage payments often mean sacrificing on other luxuries.
“We still have to be careful, I have a finance background and we have a budget that we adhere to,” she said.
“You feel like you are never quite on top of it, and as soon as you are on top of it, something will happen.”
Mrs Holland said making additional contributions to superannuation don’t make sense right now for her family, and any extra money they do have is better invested back into their home.
Sydney digital marketing manager Emma Barlow purchased her first property at the age of 26, but despite now owning two apartments in Cronulla she is still conscious about her financial position.
“I wouldn’t say I’m living pay cheque to pay cheque but if something was to happen and I needed thousands of dollars, I don’t have that,” she said.
Ms Barlow, 34, who earns between $100,000 and $150,000 said she has begun making voluntary top-up payments to her superannuation.
“While I’m making good money, if I can put extra into my super, I do,” she said.
“I just have to be really careful about my money, I have a spreadsheet and I track everything.”