Struggling with the Cost of Living? You’re Not Alone…

Do some weeks feel longer than others? You may feel a little stressed, but things seem normal, so you’re not too sure why you feel that way. It may seem that everything’s just plodding along nicely. Nothing really changes week to week…including your wages.

This could all be due to the rising cost of living. While wages have remained stagnant, inflation has not. And that means Australians are paying more to live.

Rising energy costs, childcare costs and fuel prices have hit Australians hard.

And according to the Australian Bureau of Statistics (ABS), it doesn’t matter whether you’re retired, living on a pension or have a wage/salary, the cost of living is affecting all Australians.

The UNSW Business School’s Professor Kristy Muir, chief of the Centre for Social Impact, as reported by the ABC, says:

Housing has gone up, whether you’re paying rent or whether you’re paying mortgages.

They’re really struggling with their housing repayments, they’re struggling with their living expenses, and they’re struggling to basically meet debts and to cover the general costs of living’.

While it’s widely assumed that those who live off a salary and wage will generally be okay, that’s not always the case. As Muir continues:

One in three people who are living in poverty actually have wages, so we have challenges not just about how we make sure people have jobs, but we also want people to have stable jobs

We want them to have jobs that are secure, and we need them to be able to get the amount of hours to be able to work to cover their living costs.’

As we’ve seen with the current decline in retail spending by consumers, ABS figures showed that there was a 0.5% decline in spending during the Christmas period. 

Plus, there’s been an increase in financial hardship, according to NAB chief economist Alan Oster:

Looking beyond financial concern to actual hardship, more consumers faced some form of financial stress or hardship during the quarter, and once again being unable to pay a bill (particularly utilities) caused the most stress.’

According to the NAB survey, the median amount Australian’s believe is needed extra per week is $207. Or $10,764 a year.

You can see the detailed amounts in the chart below:

Extra money needed per week to alleviate any cost of living pressures 5-05-18

Source: domain.com

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And with the federal budget approaching, Treasurer Scott Morrison believes the time is right for low and middle income tax cuts.

As he stated at the Australian Business Economists Forum, ‘We will be delivering tax relief to put more money back in the pockets of middle to lower income Australians to deal with their own household and family budget pressures’.

As you can see in the graph below, the proposed tax cuts could provide some welcome relief for Australian households:

Australia Living Cost Indexes 5-05-18

Source: Business Insider

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As previously stated, these concerns are shared by several households, including wage and salary, retirees and pension recipients. And they are all represented on the above graph.

And from March 2017 to March 2018, as reported by Business Insider, the living cost index (LCI) grew by 2% for majority of household, bar self-funded, retirees. The consumer price index (CPI) grew by 1.9%. So households are struggling to keep up.

That’s also just below the wage increase of 2.08%. Not a whole lot of wiggle room. Visible in the table below:

Money Morning 5-05-18

Source: Business Insider, ABS

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But while the government are suggesting tax cuts, they will still increase Australia’s deficit. So don’t expect to see anything more than modest tax cuts.

If you’re concerned about the rising cost of living in Australia, and are looking for ways to create wealth, then check out Money Morning 0editor Harje Ronngard’s new service Wealth Eruption.

This week in Money Morning

In Monday’s Money Morning, you completed Harje’s 12 day Extreme Small-Cap Profits email course. Here, he told you about dumb investing. Many see that a stock has been rising for a while and want to get in on the gains that others have received. However, that doesn’t always work. Harje uses the crypto spike of 2017 to explain his argument. If you want to find out about the area that Harje believes could potentially produce some rising investments, go here.

In Tuesday’s Money Morning, Harje looks at what makes a nation a world superpower? He uses the British to begin with. And while the British were, and in many cases still are, a world superpower, one nation is rising quickly. That nation? China. China’s tech industry is growing quickly, especially with the development of 5G technology. To find out more about China’s tech developments and how you could potentially profit from them, go here.

On Wednesday, Harje again looked towards China. This time, he has juxtaposed China and the US. While the US never really considered China previously, now they both compete in nearly every aspect of world power against each other. But for China, it currently all boils down to one thing…technology. To find out more about how the US and China are competing on the same stage and ways you could potentially benefit from that, click here.

In Thursday’s Money Morning, Harje looked towards the future of cardless payment. In China it’s already huge, with many Chinese choosing to use their smartphones as credit and debit cards. In the near future, it looks as though nearly 80% of Chinese will be ditching their cards for smart phone payments instead. And this is causing Australian businesses to offer these kinds of cardless cash payments, as Australia is a top destination for Chinese tourists. To find out more, go here.

In Friday’s Money Morning, Harje stays with the theme of China. And as he’s been discussing all week, China is rising as one of the world’s tech superpowers. Now, many of you have heard about Silicon Valley in the US. The likes of Faceboook and Google have their headquarters there. But many new tech start-ups are moving away from the US to China. And China has more than one tech valley. To find out more, go here.

Kind Regards,

Alana Sumic,
Editor, Money Weekend


Alana Sumic is part of the editorial team here at Money Morning. She contributes to bringing you Money Morning each day, along with all of Port Phillip Publishing’s many other publications. As the Editor of the weekend edition of Money Morning Alana brings you a summary of the news for the week, and her own take on the week’s most important story in markets. She is also a writer and editor for Port Phillip Publishing’s political publication, The Australian Tribune.


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