But low-income households continue to struggle
Household financial stress has eased in Australia for the first time in six quarters as Australians adapt to ongoing economic pressures, though low-income earners are still grappling with rising financial concerns.
The NAB Australian Wellbeing Survey for Q3 2024 report, authored by Dean Pearson (pictured above left), head of behavioural and industry economics, and Robert De Iure (pictured above right), associate director of economics, found that financial stress fell from its highest level in eight years.
Anxiety also eased noticeably, lifting the overall NAB Wellbeing Index to 63.4 points, up from 63.0 in Q2. Despite the improvement, the index remains below both the same period last year (64.2) and the long-term survey average (64.4).
Australians reported improved anxiety levels, which fell to below average for the first time since early 2023. However, other wellbeing measures, including life worth, happiness, and life satisfaction, dipped slightly to below-decade averages.
Wellbeing was highest in Queensland at 66.5 points and lowest in Western Australia, where it fell steeply to 61.2 points. Regional and rural areas saw improvements, but wellbeing in capital cities remained lowest overall.
Income gap widens amid financial stress
NAB’s Household Financial Stress Index dropped significantly to 47.0 points in Q3, down from 49.5 in Q2, as perceptions of financial strain eased across most areas. However, stress levels among lower-income households rose, particularly regarding their ability to manage unexpected expenses, such as raising $2,000 for an emergency.
Retirement funding remains the largest source of financial stress, although concerns in this area have eased slightly. Stress was highest among Australians aged 30 to 49 and lowest among those over 65, with retirees continuing to report higher levels of wellbeing than other groups.
The survey also revealed a growing income stress gap between high- and low-income earners. Stress for those on lower incomes climbed to 64.6 points, while it fell to 54.5 for higher earners, marking the widest gap since late 2023.
Optimism about financial future remains muted
The share of Australians feeling optimistic about the future rose slightly to 29% in Q3, up from 28% in Q2, though still below the 31% recorded a year earlier. Optimism was strongly tied to income levels, with higher earners generally more optimistic about their financial outlook. However, Western Australians reported the highest level of optimism (39%), despite having the lowest wellbeing score.
On balance, more Australians reported income increases in the past three months (+1%) compared to those who said their income fell, reversing the trend from Q2 (-3%). Those aged over 65 and individuals in higher-income brackets were most likely to report rising incomes.
Despite these gains, income stress remained significant, particularly for low-income households, where 45% reported running down their savings in the past three months, compared to just 14% among high-income earners.
Debt concerns decline but savings under pressure
Australians reduced their concerns over debt, with NAB’s debt stress index falling to 43.9 points in Q3, down from 47.6 in Q2. Worries about credit card debt, payday loans, and personal loans all eased. However, stress surrounding home loans remained steady, particularly for lower-income earners.
Savings aspirations remained high, with 77% of Australians attempting to save in Q3, up slightly from 76% in Q2. Yet, more Australians reported drawing down their savings, and savings stress remained elevated, particularly for lower-income households.
Persistent pressure on lower-income household
While financial indicators improved for many Australians, those on lower incomes continue to face significant challenges. Lower-income households reported increased stress across multiple categories, including day-to-day expenses and emergency funds. These groups also expressed more pessimism about their financial future, with 23% expecting their savings to decline further.
The findings highlight a growing divide between financial outcomes for high- and low-income earners, as higher earners continue to report improving financial conditions and lower stress levels.
Although Australians are reporting some relief from financial stress, ongoing cost-of-living pressures and economic uncertainty are weighing on broader sentiment. While anxiety has eased, other measures of wellbeing, including happiness and life satisfaction, remain subdued, reflecting lingering challenges for many households.
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