In the current climate of fast-rising inflation and interest rates, nearly half (44 per cent) of Australians have lost their motivation to save, invest or increase their income. A licensed financial adviser warns that this complacency could put them at risk of falling behind the rest of the population.
The finding was derived from a survey of an independent panel of 1010 Australian adults, commissioned by leading Australian finance platform, Money.com.au. The full survey results, including age and State breakdowns, can be found here: money.com.au/research/wealth-building-motivation
More young Australians have lost interest in saving, investing or earning more
Money.com.au asked respondents if they feel less motivated to build wealth in the current climate, 44 per cent admitted they are. Specifically, 23 per cent said they are less motivated to invest, 21 per cent less motivated to save, and 11 per cent don’t feel motivated to earn more at work.
Surprisingly, a higher proportion of young Australians have lost their motivation to build wealth. More than half (53 per cent) of under-30s admitted they don’t feel motivated to invest, save or earn more at work, compared with 46 per cent of 31-50-year-olds and 37 per cent of over-50s.
Licensed financial adviser and Money.com.au spokesperson Helen Baker says: “It is concerning that such a high percentage of the population have become complacent over building wealth. Unfortunately, the risk with complacency is that they will form a habit to not save or invest and it can be difficult to get out of this complacency. Individuals will also fall behind on their financial goals as a result. The longer savings and assets fail to grow, the harder it will be to catch up.
“It’s surprising to see that younger individuals aren’t focussed on building their wealth. They also risk falling behind those who are – and who will likely have better opportunities and funds for the future, such as for their retirement. In contrast, the return of immigration and a more competitive job market will prove challenging for those who have lost their motivation.”
Australians think inflation won’t be controlled
Money.com.au also found a clue in the drop in motivation: more than half (59 per cent) of respondents believe inflation won’t be controlled in Australia, to return to its average 3 per cent growth rate.
Similar proportions of respondents across all age groups and States and Territories don’t believe the Government or RBA will control inflation to normal rates. More than half (61 per cent) of under-30s and 58 per cent of over-30s did not think inflation will be controlled. Across the States, two-thirds (66 per cent) of West Australians, 63 per cent of Queenslanders, and 60 per cent of Victorians indicated the same.
Consumer spending is declining
Money.com.au also asked survey respondents if they have increased or decreased their spending this year. The results suggest that, with lower motivation to build wealth, Aussies are also less inclined to spend their money, with a third (35 per cent) revealing their spending has declined this year. Forty-four (44) per cent have also maintained their spending. Older Australians in particular are decreasing their spending this year: 41 per cent of over-50s, compared with 35 per cent of 31-50-year-olds and 25 per cent of under-30s. This echoes recent data which found household spending had slowed in September, decreasing by 0.5 per cent, the first fall to occur since April, when interest rates began increasing. [1]
Helen says: “While it can take several months for rate rises to trickle into an individual’s spending, it is clear that the increases we saw earlier this year, combined with inflation, has led many Australians to re-think their spending.
“The RBA’s 0.25 per cent cash rate increases in October and November have sent a clue to the population that they might not be able to control inflation – or that the inflationary period will last years. Experts predict that the inflation rate will peak to 7.75 per cent in the December quarter[2] – but that depends on what you spend your money on. Groceries have increased by around 9 per cent this year, petrol by 18 per cent, and household energy bills are tipped to increase 20 per cent by the end of the year. [3] Private health insurance premiums also increased this year, by 2.7 per cent.[4]
“Despite Australians indicating they are slowing their spending, we are approaching Christmas, a period when individuals tend to spend strongly, particularly on retail. I anticipate some households will increase their spending in the last two months of the year, and it is possible we will see a more pronounced decline early next year.”
The full survey results, including age and State breakdowns, can be found here: money.com.au/research/wealth-building-motivation