- Knowing how your finances compare to the average Aussie household can help you get on track and set realistic financial goals.
- It’s possible to save money to invest at every stage of life.
- Increasing your investments can be a great way to improve your future life.
Humans are hyper-comparers. Especially when it comes to money. How much are our mates spending and saving? How and where are they investing? These questions fill our minds, though we never speak about it. It’s a shame because knowing your position relative to others can be a great way to assess your financial position and get motivated to grow your wealth.
Given your friends are unlikely to start divulging their financial profile anytime soon, we’ve put together some data you can use. We’ve combed through recent Australian Bureau of Statistics (ABS) household data to find out where other Aussies find themselves financially. Their income. Their spending. How much they’ve got saved. How much they’ve invested and where.
Oh and something to point out – ABS data is based on households, not individuals, so use your approximate household finances to compare.
Let’s get into some high-level benchmarking. We’ve broken the data up into four major career phases:
- Early Career (25-34 years old)
- Mid-Career (35-54 years old)
- Pre-Retirement (55-64 years old)
- Retirement (65+ years old)
If you’ve got your financials handy you can compare them with those of your peers in the table below. You’ll notice the data includes the ‘net worth’ of households – this is simply a household’s total assets (what you own) minus their debts (what you owe).
The figures below are averages rather than medians. Ideally, we’d use medians—which aren’t skewed by a few super wealthy/lucky folks in each group, but sadly we couldn’t find the data. All things being equal the medians would be lower for each group.
Table 1: Average household finances by career stage
|Average Household Financials||Early Career: 25-34 years||Mid-Career: 35-54 years||Pre-Retirement: 55-64 years||Retirement: 65+ years|
|Weekly disposable income (after tax)||$1,734||$2,057||$1,825||$1,063|
|Potential weekly savings*||$256||$571||$357||$177|
|Financial Asset Value (TOTAL)||$133,500||$391,000||$544,200||$438,400|
|Bank savings accounts||$21,800||$39,400||$66,400||$78,800|
|Bank offset accounts||$13,400||$13,800||$8,800||$1,300|
|Non-Financial Asset Value (TOTAL)||$381,700||$762,450||$906,000||$841,800|
Note: Calculated from ABS data1, to be used as a general indication. Ages are based on the age of the main survey respondent in the relevant ABS survey. Averages are based on mean data. Data on 35-54-year cohort calculated from data on 35-44 and 45-54 years cohorts combined. The sub-items of ‘Financial Asset Value’ and ‘Non-Financial Asset Value’ don’t add up to the total as we haven’t included every type of asset in the list.
But what if you don’t fit the average profile? Within each career phase, there are different numbers depending on your household type. We’ve compared a few different households to give you an idea of how things can vary.
Early Career: 25-34 years old
You’re starting out, saving for your future. Perhaps you’re saving for your first property or you’ve recently bought a home. You’ve made a start with super and you might have made some investments. But what about kids? Data shows that kids have a big impact on your financial picture.
If you’re one of the affectionately called DINKs (double income, no kids), you’ll likely have a higher income than the group in general. In theory, you should be able to save more (up to $500 a week more) and while it doesn’t immediately translate to a higher net worth, it will over the long term.
|Average Household Financials||Early Career: 25-34 years||Double income, no kids (<35)|
|Weekly disposable income||$1,734||$2,372|
|Financial Asset Value (TOTAL)||$133,500||$134,000|
|Non-Financial Asset Value (TOTAL)||$381,700||$358,300|
Mid-Career: 35-54 years old
You’ve been in the workforce for some time. You’ve been working hard to pay off your mortgage and invest for retirement. But what if you’re a single mum or dad?
For these households, you’ll find yourself with less income but not necessarily lower expenses. After all, you still have to pay for your home, food and kids’ education, just on a lower income than the general group. The amount you could potentially save each week is less. But remember, small amounts can grow into a solid investment over the long term. Every bit adds up.
|Average Household Financials||Mid-Career: 35-54 years||Single parent 35-54 years,
with dependent kids:
|Weekly disposable income||$2,057||$1,231|
|Potential weekly savings*||$571||$48|
|Financial Asset Value (TOTAL)||$391,000||$125,600|
|Non-Financial Asset Value (TOTAL)||$762,450||$328,200|
Pre-Retirement: 55-64 years old
Pre-retirement is usually when your financial net worth peaks. After decades of working you’re now trying to add extra to your retirement funds which you’ll start to draw on in the next decade. It comes as no surprise that pre-retirees who still have adult kids at home typically have less in financial assets.
|Average Household Financials||Pre-Retirement: 55-64 years||Couple with adult kids at home||Couple only|
|Weekly disposable income||$1,825||$2,571||$2,038|
|Potential weekly savings*||$357||$723||$624|
|Financial Asset Value (TOTAL)||$544,200||$601,600||$677,200|
|Non-Financial Asset Value (TOTAL)||$906,000||$1,090,500||$1,000,900|
Note: We assumed that the primary age group for the couple with adult (non-dependent) kids at home is 55-64. Empty nesters are a couple-only household.
No longer in your saving phase, you’re hopefully enjoying a well-deserved time in your life. For many of us, the goal is to stick to your drawdown plan to make sure your money lasts.
If you’re able to save a little from your retirement income, your funds will last even longer. Same goes for people who are single.
|Average Household Financials||Retirement: 65+years||Couple||Single person|
|Weekly disposable income||$1,063||$1,237||$617|
|Potential weekly savings*||$177||$163||$81|
|Financial Asset Value (TOTAL)||$438,400||$671,200||$194,000|
|Non-Financial Asset Value (TOTAL)||$841,800||$1,077,200||$441,900|
Start small, start today
I hope this data has given you a good idea of how your household’s finances compare to that of others like you. If you’re ahead – awesome. If you’re not on track yet, consider how you could increase your income or trim your expenses to save more. In Am I ready to invest? and Why do I need to invest? we offers a few ideas to help get you started.
Never had a chat to your mates or family about money? Why not start today? Be open, honest, and humble. Do it over a bottle of wine. You never know what you’ll learn. More likely than not, you’ll discover you’re all facing the same issues and find some creative ways to tackle them.
Whatever stage you’re at, the smallest of changes can make a really big difference to your future.
© Morningstar Investment Management Australian Limited (‘Morningstar’) and any related bodies corporate that are involved in the document’s creation. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third-party providers accept responsibility for any inaccuracy or for investment decisions by any person on the basis of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment. Any general advice has been prepared without reference to your investment objectives, financial situation or needs. You should consider the advice in light of these matters and if applicable, the relevant disclosure document before making any decision to invest. Refer to our Financial Services Guide for more information.
Sources:1. Australian Bureau of Statistics, Household Expenditure Survey, 2015–16. Released September 2017. Australian Bureau of Statistics, Household Income and Wealth, Australia, 2015–16. Released October 2017