The figure is the highest level since 2017, data shows
In the March quarter, 42% of Australians experienced some form of financial hardship amid rising inflation and cost-of-living pressures – the highest level in six years, according to the latest NAB Consumer Insights.
“Financial hardship is trending above average across all age groups, but particularly those aged 30-49 (50% vs. 45% in Q4’22) and 18-29 (49% down from 57% in Q4’22),” said report authors Dean Pearson, head of behavioural and industry economics, and Robert De Iure, associate director of economics.
“Women facing hardship was steady at 44% but rose to 40% among men (37% in Q4’22). By income, it increased in the $50-75,000 (49% vs. 46% in Q4’22) and $75-100,000 income groups (44% vs. 41% in Q4’22) but was broadly unchanged in all other groups (albeit above average levels). There continues to be a large gap among those in lower income groups (unchanged at 51%) compared to higher incomes (32% vs. 31% in Q4’22).”
Who is struggling to make ends meet?
Overall, 24% of Australians believed they were struggling “very much” to make ends meet, up from 22% in Q4 2022. That figure jumped noticeably among those aged 30-49 (31% vs 26% in Q4’22) and among those aged 50-64 (23% vs 21% in Q4’22) and over 65 (16% vs. 14% in Q4’22). By comparison, the share dipped slightly in the 18-29 age bracket (21% vs. 23% in Q4’22). Women (28% vs. 25% in Q4’22) appeared to be struggling more than men (20% vs. 19% in Q4’22) to make ends meet.
By income groups, 33% of people who were earning less than $50,000 really struggled in the first quarter. That same percentage of people struggled among those earning $35-50,000, although that rose from 27% from the previous quarter. In income groups between $50,000 and $100,000, one in four people struggled, compared to 16% in higher income groups (vs. 14% in Q4’22). Hardship trended in a narrow range in mid-range income groups – from 44% ($75-100,000) to 49% ($50-75,000).
What are the key drivers of financial hardships?
Slightly more Australians experienced financial hardship across all measures. The biggest cause, for nearly 24% of the respondents, was not having enough for an emergency (21% in Q4’22 vs 15% in the same period last year).
The next most common causes were not having enough for food and basic necessities (17% up from 16%) and being unable to pay a bill (15% up from 14%).
The inability to pay medical or healthcare bills was experienced by 13% of Australians (up from 7% at the same period last year). And despite the skyrocketing mortgage interest rates, being unable to meet repayments caused the least hardship, at 6% in Q1 from 5% in Q4’22 (vs. 3% a year ago). An unchanged 7% of people suffering hardship reported not being able to pay rent on time, while 8% (vs. 6% in Q4’22) said they were unable to meet minimum credit card repayments or did not have enough to pay off personal loans.
Significantly more women did not have enough for an emergency (28%) compared to men (20%). Women also considerably had less for food and basic necessities (20%) or medical or healthcare bills (16%) than their male counterparts (14% and 11%, respectively). Most people in all age groups were impacted by not having enough for an emergency, but noticeably more so for those in the 18-29 age group (31%).
Nearly one in 10 Australians under 50 experiencing financial hardships reported not being able to pay their mortgage in Q1. By income, those earning less than $50,000 were more impacted by not having enough for an emergency (31%).
Those in the $75,000 income group were somewhat more impacted by being unable to pay a bill (19%) or meeting minimum credit card repayments (10%). They were also among the most heavily impacted for not having enough for food and basic necessities (21%) along with lower income groups (23%). There was also a somewhat higher number in the $50-75,000 income group who were unable to pay their mortgage, at 11% – that’s about twice the national average.
Missing bills and loan repayments
When it comes to paying bills, 24% said they had missed theirs in the last three months, up from 20% in Q4’22 and 18% the same period last year.
In the 18-29 and 30-49 age group, around one in three people missed a payment. The figure was largely unchanged in the 18-29 group (33%) but spiked in the 30-49 age group (32% vs. 23% in Q4’22). In the 50-64 and over 65, 16% (up from 14%) and 8% (up from 7%), respectively, also missed a payment.
Compared to men (22% vs. 20% in Q4’22), more women (25% vs. 20% in Q4’22) missed a payment Q1. The figure was highest (and increased) in both the $75-100,000 (32%) and $50-75,000 (30%) income groups, and lowest (and fell sharply) among those on higher incomes (10% vs. 17% in Q4’22).
When asked to specify what payments they missed, 11% said electricity, gas, or water bill (up from 9%), 10% said phone or internet bill (up from 9%), 9% said a repayment on loans from family or friends (up from 7%), and 9% said credit card repayments (up from 6%). An unchanged 3% of Australians who experienced hardship said they missed an investment loan repayment, while 5% missed a payday loan (up from 4%) repayment, and an unchanged 5% a mortgage repayment.
By age, more Australians in the 18-29 group missed a payment on loans from family or friends (16%), BNPL (14%), rent (11%), and personal loans 10%). In the 30-49 age group, more people missed a payment on electricity, gas, or water bills (14%), credit cards (14%), and home loan or mortgage (10%).
Pearson and De Iure said the biggest outlier by income in Q1 was the $50-75,000 income group, which saw highest number of people who missed a payment in nearly all categories, particularly loans from family or friends (13%), BNPL (12%), rent (10%), home loans or mortgages (11%), and payday loans (9%),.
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