An analysis of incomes and household expenses shows that even with a seemingly solid income, many families are struggling to put money aside. Although the average yearly income has climbed above $104,000, weekly costs related to rent, mortgage payments and daily living continue to rise just as quickly, especially in capital cities.
Data from the Australian Bureau of Statistics indicates that the average household earns around $2,410 per week after tax. However, typical weekly spending amounts to roughly $2,076 for renters or $2,301 for mortgage holders. This leaves between $109 and $334 each week available for saving, which is often not enough to cover unexpected expenses or to put towards a home deposit.
The situation is even more difficult in cities like Sydney, where the cost of living is significantly higher. Weekly expenses reach about $2,257 for those renting and $2,546 for those with a mortgage. In these cases, some households are actually falling behind financially. Despite a national average savings rate of 4.5% for homeowners and 13.8% for renters, long-term financial security remains out of reach for many younger Australians.
One of the biggest hurdles is saving for a home deposit. Renters aiming for a 20% deposit on an average $1 million home now need around 12 years to reach their goal, including stamp duty. This projection assumes 4% annual interest on savings and no major financial disruptions. Government initiatives like the Home Guarantee, which allows first-home buyers to purchase with only a 5% deposit, have cut that timeline down to around five years and already helped more than 230,000 people enter the property market.
Homeowners are not without challenges either. The average mortgage now sits at around $624,000. A person who devotes all their annual savings—roughly $5,668—to loan repayments could reduce a standard 30-year mortgage by seven years, yet would still be repaying well into their late 50s. With the average first-home buyer now aged 36, many will be paying off debt close to retirement.
This timeline leaves limited opportunity to build a sufficient retirement fund, making the scheduled increase of the superannuation guarantee to 12% more vital. If Australians are unable to save enough on their own, compulsory savings schemes become increasingly important. However, achieving long-term financial stability might also depend on adopting more disciplined financial behaviours from the past, such as budgeting carefully, delaying non-essential purchases and spending more selectively. These habits helped previous generations, including Baby Boomers, become financially independent.
